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Forestry in New Zealand:The Role of Japanese Companies
43rd Joint Meeting of the
Japan New Zealand Business Council
on 23 Nov. 2016
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED.
Introduction: Business Field
1
Domestic
Overseas
Forestry &
environment business
Overseas tree planting
business
Domestic forestry
business
1950~1691 1960~ 1970~
Upstream Midstream Downstream
Distribution of timber
and building materials in
Japan and overseas
Wooden building
materials distribution
business
Domestic
manufacturing
business
Overseas
manufacturing
business
Wooden building
materials manufacturing
business
Housing-related
business
Custom-built home
construction & sales
business
Remodeling, leasing, other housing-related
business
Overseas housing
business
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED.
Introduction: Our Forest
2
Hokkaido
18,199 ha
Kyushu9,181 ha
Shikoku14,783 ha
Honshu4,280 ha
PlantationsNatural
forestOther =500 ha
Company-owned forests in Japan
46,443 ha
Indonesia160,000 ha
Papua New Guinea31,000 ha
New Zealand36,000 ha
=3,000 ha
Owned or managed overseas plantations
Approx. 230,000 ha As of March 31, 2016 As of June 30, 2016
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED.
General Information of NZ’s Forests
3
Source: NZFOA (2013) / Dana (2014)
• Land area:27.1M ha(Japan: 37.8M ha)
• Forest area:10.1M ha(Japan: 25.1M ha)
• Forest cover:38.6%(Japan: 66.4%)
• Forest owner:Public 60%Private 40%
43%
26%
24%
6%
Pasture/arable Other (non-forest)
Naturan Forest Plantation
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 4
Plantation Forest in NZ
• Almost all logs are produced from plantations。
• There were 3 plantation booms which occurred: in the 1930’s,from the late 1960’s and early 1980’s.
• Current plantation area is about 1.75 million ha. This is about 6% of the land area and 20% of all forests areas.(41% of the forest area is plantation in Japan)
• 56% of plantations are FSC certified as at 2014.
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 5
Radiata Pine
• Radiata pine accounts for 90% of plantations.
• Radiata pine is suitable for the climate of NZ and it growth relatively fast.
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 6
History of Plantation Forestry in NZ
• 1st plantation boom (1925-1935)• Plantation by public and private sector is actively
conducted.
• 2nd plantation boom (late 1960’s - early 80’s)• Government subsidies for private plantations.
• Newly established/expanded pulp mills.
• 3rd plantation boom (1991-1999)• Triggered by the privatization of state forests (1989).
• Rise in the price of logs accompanying the development of forest industries.
• Restoration of tax incentives for plantation investment by revision of income tax law.
• Conversion of pasture to plantation.
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 7
Ownership of Plantation Forest
• Classification of owners;• Forest processing company
• Investment fund
• Small/medium scale owner
• Investment for acquiring forests due to the privatization of state-owned forest since 1989.
• Characterized by many large-scale owners.
• Acquisition of plantations by US investment fund.• Privatization of state-owned forests and improvement
of investment environment lead to the ownership of forests by overseas investment funds.
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 8
Ownership of Plantation Forest
• TIMO: Professional fund manager who owns forest assets backed by investment funds.
• Main incomes are 1) gains on sale of logs, and 2) gains on sale of timber land, and plantations are sold after a certain period of time.
• 5 of 6 large-scale owners are TIMOs.
Owner Area (ha) Category
Hancock Natural Resource Group 200,000 TIMO
Kaingaroa Timberlands 175,000 TIMO
Rayonier/Matariki Forests 123,000 TIMO
PF Olsen 109,000 TIMO
Ernslaw One 113,000 Private
Global Forest Partners 85,000 TIMO
Forest owners (> 50,000ha)
TIMO: Timberland Investment Management Organization
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 9
Expansion of Plantations in NZ
• 1.26M ha in 1990 to 1.83M ha in 2003, and has stabilized around 1.75M ha in recent years.
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
1,0
00
ha
Radiata P. Douglas fir Other conifer Non conifer
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 10
Increase in Resource Amount
• 233 million m3 in 1991 to 502 million m3 in 2015.
0
100
200
300
400
500
600
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Mill
ion
m3
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 11
Production: Round wood
• Resource volume is increasing based on expansion of plantations.
• Production volume has also continued to increase.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
19
51
19
54
19
57
19
60
19
63
19
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
20
05
20
08
20
11
20
14
1,0
00
m3
Natural log Planted log
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 12
Export & Domestic use
• About half of the logs produced are exported as logs.
5 000
10 000
15 000
20 000
25 000
30 000
35 000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1,0
00
m3
Export Domestic use
Source: NZ MPI
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED.
Exports from NZ
13
$3,518M
(7.2%)
$=NZD (FOB)
• Forest products are the 3rd biggest export value.
• Forestry is an important industry next to dairy farming.
2015
Dairy Products Meat Forest Products Fruits
Drinks Special categorised Others
2014
Dairy Products Meat Forest Products
Special categorised Fruits Others
2014
$50,075M
$3,668M
(7.3%)
2013
Dairy Products Meat Forest Products Special categorised Fruits Others
2013
$48,044M
$3,859M
(8.0%)
$48,974M
2015
2015
Dairy Products Meat Forest Products Fruits
Drinks Special categorised Others
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 14
Trend of Main Forest Products
• Despite the fact that log exports are increasing, the export value of products such as lumber, wood panel & pulp are flat.
• New Zealand needs to increase exports of value-added products.
Source: FAOSTAT
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000M
illio
n U
SD
Industrial roundwood Sawnwood Wood-based panel Wood pulp
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 15
Forest Management by JPN Company
• Japanese companies have not only plantations but also factories (pulp mill, MDF factory, sawmill) in NZ.
Company Group Area (ha) Location
Pan Pac Forest Products Oji 35,000 Napier
Juken NZ Wood One 32,000 East coastWairarapa
Tasman Pine Forests,Nelson Pine Industries
Sumitomo Forestry(SFC)
36,000 Nelson
Summit Forest NZ Sumitomo Corp. 24,000 Northland
Southland Plantation Forest Company
Oji, Itochu, Fuji Xerox
10,000 Invercargill
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 16
Forest Industries
Company Group Location Business
Oji Fibre Solution Oji Auckland Pulp, paper
Daiken NZ Daiken Rangiora MDF
Juken NZ (JNZ) Wood One Kaitaia, GisborneMasterton
plywood, LVL, sawn wood, PB
Marusumi Whangarei Marusumi,Marubeni
Whangarei Wood chip
Pan Pac Forest Products Oji Napier Pulp, Lumber
South Wood Export Itochu Invercargill Wood chip
Nelson Pine Industries Ltd. SFC Nelson MDF, LVL
• Forest management (upstream) and manufacturing (downstream) tie up.JP companies are exporting added value from NZ.
• JP companies aim to maximize the value of plantations from a long-term perspective and conduct forestry management rooted in the region.
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 17
China Australia Korea Japan India
(NZD FoB) $ 1,969 M $ 693 M $ 462 M $ 434 M $ 271 M
Logs & poles
80.5% 0.3% 69.6% 21.6% 87.5%
Sawntimber
6.5% 21.8% 7.4% 6.3% 0.8%
Wood pulp 9.2% 12.3% 16.6% 14.0% 2.7%
Paper & paperboard
2.3% 16.3% 4.6% 0.1% 2.9%
Panel0.9% 12.5% 1.7% 43.9% 1.6%
Others 0.6% 36.9% 0.1% 14.1% 4.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
Top 5 Export Destinations
• China, Korea & India are mainly importing logs. On the other hand, Japan imports products.
• There is no added value in logs.
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 18
Creation of New Value: LVL
• LVL (Laminated Veneer Lumber) is excellent in strength and dimensional stability, and attracts attention as a structural material.
• In Japan, construction of large buildings using LVL has also been started.
• It is expected to be a new value-added product.
LVL Large scale building with LVL under construction by SFC
SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED.
19
Conclusion
• Forest management by Japanese companies involves high value-added products processing such as pulp & MDF.
• Add value in NZ. Protect industries in NZ.
• Japanese companies & NZ companies work together to develop the forests and the forest industries of NZ.
Forest management
rooted in regionProcessing in NZ
Export and domestic use
the added value products
Tasman PineForests Ltd.
Nelson Pine Industries Ltd.
ExportDomestic use
20