Economic impacts of forestry

It is worthwhile to have some factual information to add to the discussion around forestry and the negative headlines about its effect on New Zealand’s rural communities and overall economy.

Forestry and farming are not mutually exclusive land uses at the strategic level and New Zealand needs both functioning to improve economic resilience and biodiversity.        

Forestry has a greater economic impact per hectare than sheep and beef farming, according to a PwC report commissioned by the government forestry agency Te Uru Rākau.  Economic Impact of Forestry in New Zealand compared the impact of the forestry and animal farming industries, including processing and other parts of the value chain using data from 2018.

The sheep and beef value chain created almost 124,551 full-time equivalent jobs (FTEs) annually, almost double that of the forestry industry at 64,889 FTEs, but takes much more land to do so.

Sheep and beef farming utilises 7.5 million hectares in New Zealand while forestry only uses 1.7 million hectares.

When broken down to an average equivalent basis, forestry creates 38 FTEs per 1000ha, whereas sheep and beef creates 17 FTEs for every 1000ha.

Similarly, sheep and beef farming contributes more to GDP than forestry, at $12.8 billion and $7.9 billion respectively, but not when based on contribution per hectare. 

Forestry contributes $4.6m to GDP annually per 1000ha, compared with $1.7m from sheep and beef.

The report said, “Overall, the forestry value chain is a smaller industry than the sheep and beef farming industry but generates significantly more value-add on a per hectare basis.”

However, land use isn’t entirely substitutable, with sheep and beef farming using large areas of low productivity land not suited to forestry, such as the Sound Island High Country.

The full report can be found here.