Forest Owner Commodity Levy

From the 1st January 2014, a compulsory Forest Owner Commodity Levy ("Levy") of 27 cents per tonne is being introduced on all products sourced from trees in plantation forests.

What is the Levy?

The levy is a forest growing levy and applies to the commodity harvested by forest owners. The levy applies to all products sourced from trees in a plantation forest. This includes logs, posts, poles, forest waste, binwood, hog fuel and woodchip, exported or processed in New Zealand. Woodchip produced as a by-product from sawmills is excluded, as the levy has already been applied at an earlier stage to the raw material received at the mill gate. The levy does not apply to Christmas trees, domestic firewood or bark. Plantation forest is defined as planted forests and forests that have grown as a result of a planted forest such as wildings and regeneration. Production from planted native forests will be levied while production from natural native forests will not be levied.

The levy is applied on a tonnage basis (if a transaction is in m³ or JAS m³, then a 1:1 conversion will be used i.e. 1 JAS m³ = 1 tonne) to all such material and the point of application of the levy will be where this volume of material is being assembled prior to the next stage of the wood use – i.e. either at a domestic processing facility or at the wharf. The measurement at these points was selected as being the most practical option as data was already being collected and agreed between parties. The levy in year one (i.e. 1st January 2014 to 31st December 2014) will be 27 cents per tonne, with the maximum levy rate over the six years of the levy not to exceed 30 cents per tonne.

Why introduce a Levy?

Previously most work done on behalf of all forest growers was funded by voluntary levies and subscriptions paid by members of the FFA and FOA. The new levy means that non-member forest owners will also contribute. As FFA & FOA members represent about 80% of the harvest, they will still continue to pay the lion's share of the costs. Money is not the main reason for the levy. It's about bringing all growers into the industry loop, so they know what's happening and can play their part in a more cohesive industry. This will be particularly important in the next few years as forests planted in the 1990s are harvested. Many owners of these forests do not belong to any industry organisation and suffer because of that, as does the industry.

What is the Levy being used for?

  • Work to improve the sustained profitability of forest growing relative to competing land uses.
  • Research based on the NZ Forestry Science and Innovation Plan.
  • The promotion of timber through the NZ Wood brand and other activities including the promotion of wood as the preferred material for the Christchurch rebuild.
  • Communication with all forest owners about industry activities, news and trends relevant to their forest growing business.
  • Policy development, codes of practice, advocacy and other activities designed to reduce the risks and costs associated with forestry and to ensure the industry maintains its 'licence to operate'. This includes work in forest health & biosecurity, fire prevention and management, environment/RMA, health, safety and training, local body rates and transport.

Who collects the Levy?

The Forest Growers Levy Trust ("Levy Trust" or "FGLT") is responsible for the collection of the levy. The Levy Trust will rely on the provision of the data already collected by processors and marshalling companies to be able to generate levy invoices which will be payable by the owner of the commodity. In the case of a domestic processing facility the levy will be imposed on the product owner just prior to the mill gate. At a port, the owner of the product after the port gate will be invoiced for the levy. In most cases this will be the forest owner or log trader. Where it is not the forest owner, there is provision in the Act for the levy to be passed back down the purchasing chain to the forest owner.

Can I opt out of paying the levy?

The levy has been approved under the Commodity Levies Act 1990 and is compulsory on all forest owners. The Act's principal role is to provide a mechanism for primary industry groups to fund activities on behalf of all producers in a sector.

What do I need to do?

If PF Olsen is your manager, it is acting as agent on your behalf. PF Olsen will be identified as the owner or manager of the levied product, and will receive an invoice from the FGLT for the levy due on your products. PF Olsen will then deduct the levy from your harvesting revenue.

Where can I find more information about the levy?

Further information about the levy can be found at Forest Voice.