The NZ and Indian Governments are actively working to increase the import of NZ logs as India looks to new markets to fuel its surging economy.
The commitments were part of a joint communique that followed bilateral meetings between Minister Shri Piyush Goyal from the Indian Commerce and Industry and NZ Trade and Export Growth Minister Damien O’Connor.
As reported last week, Minister O’Connor is part of a 50-strong delegation of NZ key stakeholders returning from Mumbai after a week of meetings.
Michael Fox, Chair of the India and New Zealand Business Council, led the delegation with forestry identified as one of seven priority areas by the Indian government.
According to the NZ Ministry of Foreign Affairs and Trade, logs and wood products are among the key drivers of the relationship, but past concerns with using methyl bromide on products led to a restriction on trade.
From February 2022, the NZ Ministry of Primary Industries has mandated the recapture or destruction of methyl bromide emissions at the end of fumigation.
The decision created issues with trade. India previously stipulated that methyl bromide must be used for log imports from New Zealand.
Last year, NZ Forest Owners Association President Grant Dodson said the decision led to the collapse of New Zealand’s NZ $250 million export trade with India.
“New Zealand log exports to India fell to only $28 million last year (2021),” he said.
“It’s vital to get back into India. The longer we are out of that market, the harder it will be to get back in.”
In April 2022, the New Zealand Environmental Protection Authority approved the EDN fumigation of export log stacks.
Under the EPD ruling, ethanedinitrile can be used as a replacement for methyl bromide to fumigate logs in New Zealand.
According to the NZ Forest Owners Association, EDN is a far more environmentally friendly fumigant.
“It is effective on insects and pathogens but breaks down quickly in the environment,” they said in a media statement.
“It is neither a greenhouse gas nor depletes the ozone layer.”
India is a potential market for NZ forest products amid the slowdown in Chinese activity.
Last week, Wood Central reported that weakening Chinese demand for logs led to a 14.5% decline in bulk trade at PrimePort Timaru in New Zealand’s Central South Island.
Port CEO Phil Melthopt said, “The China log export market remained subdued, and the low ‘at wharf gate’ rates on offer to forest owners meant many decided to leave them on the stump.”
According to a report by Stuff NZ, the total trade passing through the port in the last fiscal year amounted to 1.77 tonnes—a drop of 300,000 tonnes compared to the previous year.
Nonetheless, India is a lower-priced and more challenging market, with Australian softwood prices – which now make up 98% of Australia’s exports – experiencing a drop in prices at the port.
Yesterday, the ANZ Agri Focus report highlighted the challenges faced by exporters.
According to the report, “international markets for logs remain weak, and it is unlikely the situation will improve soon.”
“New Zealand’s supply of logs for export dropped over the winter,” it said, “partly in response to lower returns but also due to wet conditions and damaged roads.”
It also noted that “demand for land to plant trees for carbon fell sharply over winter, as did the planting volume” due to uncertainty around the ETS reforms.