11 September, 2013
E aku rangatira, tēnā koutou katoa. Ka nui te honore ki te mihi ki a koutou.
Good morning everyone and thank you for inviting me to open this important and timely meeting. Thank you to Francis (CEO of Grow Rotorua) for the warm welcome.
I bring you apologies from Hon Steven Joyce who was unable to be with you on this occasion, and asked me to speak on his behalf.
Firstly, I would like to acknowledge Brent Apthorp and his team for organising this major event on the forestry calendar; and the guest speakers and exhibitors who have come from far and wide. Thank-you also to the major industry associations who have assisted in promoting the event; to the Rotorua District Council for their sponsorship; and to Forest Industry Engineering Association and their members, who continue to support technology events for the industry.
It is a pleasure to be here in Rotorua, the heart of New Zealand’s forestry and wood products sector. A more appropriate location for Woodexpo 2013 would be hard to imagine.
This vibrant region is home to a third of the plantations in the central North Island – and probably two thirds of the forestry processing capacity. Just down the road is Mt Maunganui, home to our biggest export port and the place through which as much as 40 percent of export logs pass. Today’s programme and the technology workshops look comprehensive and relevant. I wish you well for the next three days.
I note that the first of today’s sessions asks the question: International Wood Processing Competitiveness – Where does NZ rank? I’ve always believed the most important thing to do if you want to get anywhere is to know where you’re starting from. So it’s great to see WoodExpo start by getting the basics ‘right’.
I’m also pleased that the timing of another conference speech I’m delivering later today in Auckland, on immunisation, permits me to stay and hear most of the morning sessions.
Forestry – an enduring role
The forest industry continues to make an important contribution to New Zealand’s export economy, as it has for more than a century and a half. The sector remains a leading player among our primary industries.
As our third largest exporter, forestry provides $4.3 billion in annual exports. Making up three percent of GDP, the sector directly provides 18,000 valuable jobs, particularly in rural and provincial areas.
My overall message today is that this number could – and should – continue to grow with the right kind of support.
The Government’s Business Growth Agenda supports Kiwi businesses and the broader community by focusing on practical initiatives that enable growth and create jobs. We expect much of the required future growth in the forest industry will be derived through addressing two vital BGA goals – innovation and export markets. These are the areas I want to talk about today.
Vital role of innovation
Too often, people think of forestry as straight forward. Just plant a tree, wait 25 to 30 years, cut it down, and put the logs on a boat. That’s all there is to it. The people I’ve met in your sector do not for one moment represent that sort of view. Happily they want much more for your sector.
Industry leaders are working hard to challenge and overturn this outdated view. They understand that a flourishing future depends on lifting the value of exports. And they see science, R&D and innovation as the building blocks of this activity.
I’m not surprised that this afternoon’s session is looking at topics like making sure leading edge scientific research gets transferred across to industry.
NanoChrystalline Cellulose is a good example of one of these leading edge products and processes. The information to date about this wood-based material suggests it isn’t one of those that are ‘the best thing since sliced bread’. It could be even better than sliced bread! And let’s not forget 3D printing, plant automation and robotics, the bio-refinery and new timber construction technologies.
My colleague, Science and Innovation Minister Steven Joyce, recently announced that the Government is investing $2.5 million over a maximum of five years to support research that will increase the productivity of the forestry industry.
The funding will support the development of new technologies that can be used by pine tree breeders to reduce the time it takes to breed and plant new improved trees by 15 years.
The Radiata Pine Breeding Company, which has formed a partnership between 16 forestry organisations, Scion and the University of Canterbury, is researching and developing the new technologies. The project will bring companies and industry bodies together to find solutions, through science and research that will enable us to develop a more technologically advanced and economically successful industry.
The bottom line is that there are lots of exciting new products and innovation and real potential for this sector to add real value. In doing so, the sector stands to achieve, or even exceed the goals it has set for itself.
Primary Growth Partnership
Government has always been aware of the need to invest in the forestry sector. It has made a significant contribution to funding forestry research and development over many decades.
The Forest Research Institute (FRI), for example, was established in 1947 to coordinate all scientific research for the then Forest Service. The Rotorua-based FRI, (later Scion), has gone on to become an internationally recognised leader in plantation forestry science.
More recently, government has been playing its part in driving innovation activity through the flagship Primary Growth Partnership (PGP) scheme.
PGP activity is about harnessing innovation to lift both productivity and profitability across the wider primary sector, and that includes forestry and wood products. Schemes depend on commercial partners coming forward with workable ideas that have some prospect of success. The forestry-related PGP programmes have considerable potential to help transform the industry.
The first of these is the Steepland Forest Harvesting scheme being led by Future Forests Research. It is investigating steep hill country harvesting and ways to reduce the costs of this. This seven-year PGP scheme is addressing an important industry issue.
We know that as much as half of current harvest involves steep lands. Looking ahead, up to three-quarters of the projected increase in wood supply harvest will be from steeper lands.
Government/industry funding of up to $6.5m has already been agreed, with total net benefits flowing from this activity estimated at more than $100 million by 2016.
A second forest industry related PGP scheme is exploring alternatives to methyl bromide for export product fumigation.
Annual savings of about $13.5 million in chemical costs and port costs could be achieved by replacing methyl bromide with viable alternatives. This audience will be aware of the environmental issues associated with the use of methyl bromide. Looking to the future, controls on its use are likely to be more stringent than at present. And the real costs associated with the use of methyl bromide are likely to be higher than now.
The third forestry PGP related scheme recently funded is $6.75 million approved for a ‘Stump to Pump’ PGP programme to investigate producing biofuels from forestry waste.
Partners Norske Skog and Z Energy will match funding of $6.75 million, bringing the project’s total funding to $13.5 million. This exciting partnership has the potential to make an important economic and environmental contribution to New Zealand. If the technology can be proven and commercialised, the economic benefit for New Zealand over the next 20–25 years could boost GDP by as much as $1 billion a year. The Stump to Pump PGP programme could also create as many as 1200 regional jobs.
The sustainability and environmental benefits of the scheme are obvious. In short, local production of biofuels from forestry waste could be a game-changer for New Zealand.
I am pleased to see your industry starting to match its primary industries counterparts in investing more heavily in PGP activity and attracting government support. Unless the forestry sector invests to add value to products and forests, there is a real risk that your competitiveness relative to other land uses will decline.
As part of its BGA activity, Government is committed to lifting the value of exports from 30 to 40 percent of GDP by 2025. This will require a doubling of our primary sector exports. This ambitious goal is an important part of current activity to build a more productive and competitive economy. As a major player in the primary sector, forestry has a significant role to play in helping to achieve the Export Double. At the same time, getting there will require significant changes in the way industries like yours, operate.
The 2012 WoodCo strategic plan laid out the major challenges and opportunities facing the forest and wood products industry. A business-as-usual approach based on growing the export of logs might make you a $6 billion export sector by 2022. Government believes you can do better.
The good news is that your sector broadly agrees. I am delighted to note that your sector has recently set itself a goal of more than doubling the value of its exports to $12 billion by 2022.
The WoodCo strategy talks about the 166 percent increase needed to make it a $12 billion export sector. It stressed this can only come about by increased local processing and a higher proportion of value-add products.
I encourage the industry to keep paying attention to this thoughtful and practical road map for its future.
Engineered timber products
The WoodCo plan places considerable emphasis on greater levels of wood processing. High-value products will play an especially important role here. Greater use of engineered timber products is a practical way to draw more value from wood products. Engineered timber can be easily manufactured into large panels for floors, walls and roofs. It can be made into pre-fabricated structural components, such as long-span beams. These products allow multi-storey commercial buildings to be constructed from laminated veneer lumber and cross laminated timber components. Examples can already be seen in the Christchurch rebuild.
There could also be opportunities to develop and export high-value, pre-fabricated buildings or technology to the Asia-Pacific region.
The Government is prepared to look at new ways to help promote greater use of these emerging and innovative technologies.
Developing higher value products and getting these to market isn’t a simple task. I expect David Turner’s presentation this afternoon will outline just how challenging that can be.
Australian Illegal Logging Prohibition Act
Trade rules never remain static and when rules change they can create opportunities. I would suggest that new Australian laws to restrict illegal logging represent just such an opportunity for the New Zealand forestry sector.
Once it comes into force next year, the Illegal Logging Prohibition Act 2012 will restrict the movement of illegally logged timber into Australia. We know that close to 99.9 percent of the New Zealand harvest comes from plantation grown material. That means your industry may be better placed than many to meet Australia’s new requirements.
I also note that every bit of illegal material removed from Australia’s market is an extra opportunity for suppliers of legal material. This represents an opportunity that wouldn’t otherwise have existed.
Government can do things to help industry access these opportunities. But in the end, it is up to industry to turn opportunity into a tangible real gain for itself and for New Zealand.
In conclusion, your sector faces a number of challenges in the coming years and this will require innovation to remain competitive.
I see a host of opportunities – and the potential for great success. To achieve its potential, however, your industry is going to need to work hard at adding value to its base product. But if you get it right, there is much to gain.
Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.