Govt’s forestry policy deferred

Press, 25 February 1985, Page 24

Govt’s forestry policy deferred

Wellington reporter The Government’s new forestry policy was not simply a licence to sell State forest resources at cost plus, said the DirectorGeneral of Forests, Mr A. Kirkland. “It would obviously be iniquitous to admonish the private sector for adding on cost increases and not looking at cost savings if State commercial organisations were doing just that,” he said. The new policy was concerned, at bottom, with ensuring that in the long run returns exceeded costs in public production forestry. This was basic to any business staying in existence. Mr Kirkland also accepted that both costs and returns should bear critical examination in meeting that goal.

It was the intention of the Government that the prices of all exotic State wood should be aligned in the five-year period to April 1, 1990, with present market values as revealed by sales of similar quantity and type throughout New Zealand and overseas. For existing long-term sales, prices were to be brought up to the weighted average prices realised in recent contracts by April 1, 1985. This would be the first stage, and in the second stage of the alignment, prices for existing longterm sales would continue to be renegotiated regularly to maintain equivalence with present sales. Mr Kirkland said there were six main implications of the new policy: ® Short-term sales and log exports would assume much greater importance in the

procedure for setting and reviewing State wood prices. • Significant volumes of wood, accordingly, would be offered for short-term periods. • The volume sold as log exports by the Forest Service would be decided on commercial grounds, as it was by the forest companies, and not fixed by Ministerial approval as in the past. • Negotiated revenues would be based mainly on present market values, rather than taking into account all factors relevant to stumpage prices. • Negotiated reviews would be more frequent. • A definition of “replacement cost” would be needed by the Forest Service in setting reserve prices.