What, Why and How

Forestry is New Zealand’s third biggest export industry. Yet more than 75% of forest growers are not part of any industry organisation.

  • Many of their forests are not monitored for biosecurity threats
  • They are often unaware of best practice and how it could help them maximise profit from their forest
  • They’re often the last to hear about research findings and news of market developments that directly relate to the profitability of their crop
  • They’re often unaware of council and government decisions that affect them
  • They have no say in industry decisions
  • They don’t contribute to the cost of providing services that directly benefit their bottom line.

The world of forestry, like farming, is changing rapidly. To protect our interests and to make forestry more profitable, we need a more cohesive industry. Owners of all forests and woodlots – large and small – need to have their interests advanced by a new pan-industry organisation.

In summary, here’s what will be funded by the levy:

  • Work to improve the sustained profitability of forest growing relative to competing land uses
  • Research based on the NZ Forestry Science and Innovation Plan. For more details, see below.
  • 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 forest management; and to ensure the industry maintains its ‘licence to operate’.

    This includes work in the following areas:
    + Forest health & biosecurity
    + Fire prevention and management
    + Environment/RMA
    + Health, safety and training
    + Local body rates
    + Transport

This work is explained in more detail in the Plantation Forestry Work Plan 2013-2019.

In the last two years, there has been a complete review of all aspects of plantation forestry research. This is in response to:

  • A demand from government that growers must pay a greater share of industry-good research
  • A recognition that a greater research effort is needed to make forestry a more productive and profitable land use
  • The need for the industry to be better prepared for exotic pests and diseases
  • Dissatisfaction among growers about the value of some existing research programmes

The NZ Forestry Science and Innovation Plan published in January 2012 has been enthusiastically adopted throughout the industry. Its vision is to improve profitability by doubling production per hectare, while also improving wood quality and increasing the resistance of trees to pests and diseases, particularly those not yet present in New Zealand.

The Levy will make it possible for research in the following areas to go ahead:

  • Forest biosecurity: finding answers to existing and potential pest and disease threats
  • Improved productivity: through improved tree breeding, silviculture and harvesting systems (especially on steep hills)
  • Sustainability: alternative species, verification systems to maintain market access, reduced chemical use
  • Rural fire: More effective fire prevention and response

The NZ Forestry Science and Innovation Plan is an integral part of the Plantation Forestry Work Plan 2013-2019. (Note this was reviewed in 2015 and is available here (.pdf 549 KB)

See also the Research section of this website, for a selection of research case studies.

These case studies highlight the returns achieved from investment in research to date. They also identify issues and opportunities that can only be addressed by making an ongoing collective investment in research.

The plantation forest levy under the Commodity Levies Act will apply to products you sell from your forest including logs, forest waste, binwood, hogged material, wood chip, posts and poles. This means you only pay a levy in those years when you have an income from your forest.

Bark sold separately, domestic firewood and Christmas trees will not be levied.

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. But because FFA & FOA members represent about 80% of the harvest, they will still pay the lion’s share of the costs.

Indeed, money is not the main reason for the referendum – 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.

The Commodity Levies Act was introduced in 1990. 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.

Under strict rules, industry groups can elect to impose a compulsory levy with legal backing upon all producers of a commodity. The Act requires the industry to consult with the potential levy payers and conduct a referendum every six years to determine if there is grower support for the levy.

The levy proposal is put to the Minister for Primary Industries who determines whether the Levy Order is made. This empowers the industry group to collect the levy.

This power is a considerable privilege, but also a responsibility which carries obligations. Fulfilling all the requirements of the Act and having a compulsory levy imposed is a complex process that cannot be done quickly. It can take about a year to carry out consultations and prepare for a referendum, and a further year from a successful referendum to when the levy comes into force.

For more about the levy, click here.

MPI Guide to the Commodity Levies Act
Commodity Levies Act 1990, 2012 Reprint

When the Minister for Primary Industries is asked to recommend the making of a Levy Order, he/she must be given a written plan showing how the levy will be spent in the first year.

There must have been a referendum (meeting the requirements of the Commodity Levies Act), where more than half of the participants supported the levy proposal.

The minister must be confident that:

  • The organisation conducting the referendum has consulted adequately with those persons likely to be affected by the payment or collection of the levy
  • The uses of the levy relate to the interests of those primarily paying the levy
  • The advantages outweigh disadvantages
  • The organisation represents adequately the views and interests of the levy payers
  • Persons opposed to the levy have had a reasonable opportunity to put their views to the minister
  • There are adequate systems for accounting for the levy.

For a full list of requirements see Part 1, Levy Orders of the Commodity Levies Act.

The Plantation Forestry Work Plan 2013-2019 will be funded by a Plantation Forest Levy for the next six years. It will be the responsibility of the Forest Growers Levy Trust to ensure that levy funds are used for this programme only.

Each year, before the start of the levy year, the Trust will prepare a broad-based work plan and budget that includes a recommended levy rate. To enable levy payers to provide feedback on the levy rate and how it is allocated, the plan and budget will then be put out for consultation.

The plan will be drawn broadly to provide flexibility to cover changing circumstances and priorities. For example some programmes may be extended beyond a single year, some may be of short duration and others may arise at short notice.

Once the plan and broad-based budget have been finalised, the Trust Board will contract external agencies to carry out the components of the plan. The Board will not micro-manage the day-to-day work of the contracting agencies, but will closely monitor performance against agreed benchmarks and outcomes.

At year-end or at the conclusion of a project, contracting agencies will provide a report to the board, covering funding provided and its use, together with the outcomes achieved.

If, after five years, forest growers want the work of the Trust to be continued for a further six years, a new mandate will need to be obtained in another referendum