Tree Talk with Peter Harington Woodmetrics Regional Manager

The ongoing debate during the last few months about the sale of the Crafar farms has raised a lot of issues regarding foreign ownership of New Zealand productive land, and perhaps especially Chinese ownership.

Is this particular fear of Chinese ownership just good old-fashioned xenophobia? I suspect it is a recognition that China is becoming the dominant force in the Asia-Pacific economy, if not the world.
New Zealanders, like the rest of the world, are concerned they will be sucked into the economic vortex that is China, and life as we know it will never be the same again.
Another recent sign China is the centre of the universe, so far as world economies are concerned, is the fear the problems in Mediterranean Europe, especially Greece, will cause a ripple around the world until, horror of horrors, the Chinese economy loses some of its momentum.
There is no doubt the New Zealand economy is becoming increasingly dependent on China. The majority of our commodity trade is now heavily dependent on Chinese markets.
Unfortunately our log trade is no exception. The log export trade started in the 60s with Japan, and in the 1990s, Korea became a major player, but in just the last few years, China has taken a very dominant position in the Pacific Rim log trade.
Not only has the New Zealand log export trade become dominated by China, but the entire New Zealand log trade has become totally export orientated. This follows the major collapse of the New Zealand domestic sawmill and wood processing industries as a result of a major decline in domestic construction, and tough trading conditions exporting sawn timber, especially into the USA.
The New Zealand log traders are now in the position where everybody is looking to China the whole time. When the log yards are full in China and Chinese demand drops, the result is an instant drop in the log prices in New Zealand. When the log stocks in China get low, the response is a price increase in New Zealand.
This is a terrible position for the New Zealand forest industry to find itself in. We have become the tail that gets wagged.
As an industry, we have to learn to live with price fluctuations which we have no control over. One of the worst victims is harvesting and transport contractors who get turned on and off with the fluctuating market prices.
As all New Zealand commodity producers have also become more dependent on China, I suspect this may become a common thread for all New Zealand exports.