Clarky's Comment - Forest Growers' Levy

The Forest Growers’ Levy was established in New Zealand for the first time ever in March 2013 and is coming up for its 6-yearly re-vote in April 2019. Having been involved in leadership roles across several pan-industry topics and organisations during my 40-year forestry career I thought it timely to reflect on the purpose, success and importance of this levy.

With its mix of large and small owners, forestry is different to other primary sectors that are characterised by multiple small and similar sized producers feeding into just a few processer/marketing channels. Nor has forestry ever had the history of a producer board or cooperative structure. Hence it has been a latecomer to the world of commodity levies. That was only achieved for the first time ever in March 2013 following a couple of false starts in earlier years. The 2013 vote was supported unanimously by the large forest owners and the clear majority of small owners that voted.

The Forest Growers levy raises about $10 million per year. While this sounds large it is less as a ratio of industry revenues than most primary sectors. The levy is applied to fund pan-industry initiatives that benefit all or most forest owners. About 2/3rds of the levy so far has been used for research across a wide range of topics but notably improving the productivity and profitability of growing plantation forests, including species other than NZ pine. Other research is covering pest and disease management, bio-security readiness, and environmental factors that are important for our social license to operate. The levy also funds forest safety initiatives, training and careers promotion, fire research and awareness campaigns, timber use guidance resources and raising the public understanding of the value of plantation forests to New Zealand’s economy, bio-diversity and recreation.

Forest owner funds are usually leveraged with funding from government or other sources. In addition, the operating committees that oversee or carry out the work programmes are in most cases well-supported by the larger forest owners through provision of senior staff and travel as in-kind contributions.

Prior to the introduction of the levy the NZ Forest Owners’ Association did its best to attract forest owners to join it and raise funds from members using a voluntary levy system plus projects funded by the willing on a case by case basis. This system is problematic for three reasons:

  1. Funding is never secure for more than a year, giving no confidence to enter multi-year projects with either the government as co-funders or with providers. This is unhelpful if you are a university or Crown Research Institute seeking to attract and retain the world’s brightest and best scientists.

  2. The voluntary system never raised enough money to do even half the job. Pan-industry project funding was always an early casualty in company cost cutting exercises.

  3. The system was patently unfair. The IP and value of the pan-industry projects was available to all forest owners but not funded by all. The free-loaders win.

One criticism I heard from time to during my tenure as President of NZFOA was that funding was directed to enhance the business of large forest owners rather than smaller owners. The Board of the Levy Trust listened to this and boosted both projects that clearly benefit non-radiata and smaller owners. If more needs to be done in that space the opportunity is to feed ideas into the Forest Growers Levy Trust as a part of this re-vote process. The other point is that the benefits of nearly all pan-industry funding is not scale-related. It matters not if you are a large or small forest owner when it comes to improving the safety and productivity of steepland harvesting or bio-security readiness.

I urge eligible voters to support the continuation of the Forest Growers Levy. Complacency of supporters is the greatest risk so please make the effort to vote. The counterfactual of a return to a voluntary system would be a big backwards step.

Further information including who is eligible to vote and the process to do so is on the Forest Growers Levy Trust website: https://levyvote2019.nz/