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Crystal Ball Predictions for 2023

We touched on it at our 2022 FICA AGM - the various challenges that we have struck from the time of the COVID lockdown back in 2020. It has been a roller coaster. There were many of those challenges that were not predictable and some you could argue were, but the world is definitely a changing place and New Zealand is so heavily influenced by what other countries and nations do that solutions are not easy to define.

We can look at the market reports, we can make assumptions based on the information provided by the principals, but does anyone really know what’s going on out there? Maybe we should reach out further afield and take on a bit of investigative work to see some parallels with other forestry regions across the world. Maybe just looking at New Zealand, the trends are too narrow and the lessons learnt from somewhere else around the globe may help or safeguard against similar mistakes.

Places like British Columbia are reporting job losses across the province that have been predicted for more than a decade. However, Industry analysts say this pattern marks a fundamental shift in B.C.'s forestry future, whose origins can be traced back to a tiny insect more than 20 years ago.

Mountain pine beetles were not new to B.C. when they first started making news in the late 1990s. But the combination of a warming climate and forest practices that artificially inflated the amount of mature pine available, led to an explosion in the insect's population in northern and central B.C. The pine beetle’s infestation should have been devastating but the government increased the annual allowable cut of forests available to industry, so trees could be harvested before they were no longer viable for the market — an expansion that would lead to an inevitable collapse.

The change also came with widespread clearcutting in an effort to get to as much pine as possible, a policy that impacted other tree species, as well, along with a rise in raw log exports as the trees were pushed to market elsewhere, and industry consolidation in which smaller companies were absorbed or defeated by a handful of industry giants.

A former corporate manager for a forests’ products company says the worry was that eventually, the stock of beetle-killed pine would run out, leading to job losses throughout the province. And while they are glad to see the problem being taken seriously today, they wish more people had listened nearly two decades ago when they first started raising the alarm.

The state Premier acknowledged the need for change in a mandate letter sent to the forestry minister, writing that B.C.'s forest economy has "never been under greater stress”. The Premier appointed several people to an advisory council to help transition forestry communities and has asked for a plan to reduce the export of raw logs. Sounding familiar? Yes, sounding like the Industry Transformational Plan, so this is where some serious thinking is needed about where the forestry industry in New Zealand should head, to make ourselves sustainable and not reliant with most of our logs into one market.

So, we start the year with the best update that we can on what is going on around the country as we head back into work post the festive break which seems like the holiday period has been cut short compared to other years. If there were some signs from the December market report that the Chinese economy was on the way up, and the housing markets and developers were all chomping to get houses built then that would certainly be an opportunity to celebrate, but they are not so I am not getting any aligning of the stars with the feedback I am getting from those contractors going back to work at pretty much 100% within the usual two-week start up period. Woodlot contractors, I believe might be less likely to have the GREEN GO button and that is understandable in uncertain export markets. However, as they make up about 40% of our volume for harvesting this year and potentially more next year, that’s a concern about sustainability in a new year within the industry supply chain. Equally of concern, is that with many mills in New Zealand taking longer end of year breaks than they have in the last couple of years, one would assume the harvest volumes in New Zealand will be lower than normal.

The general comment post New Year for start-ups around the country is business as usual for corporate contractors with the general “two-week easing back period” on the way up to 100%. The woodlot contractors will no doubt be influenced by what the first quarter will look like, with the Chinese New Year nearly upon us and uncertainty on the Chinese stocks. Then throw on top of that our first challenge for the East Coast, with Cyclone Hale, when some contractors have not even had the opportunity to start, and some may not even start with access to the forests.

We are into a new year and another new normal!