State Forest profitability

Press, 19 June 1986, Page 20

State Forest profitability

Sir,—B. J. Swale contests the media’s description of the Forest Service’s exotic production deficit as a "loss,” claiming that it is an “investment” which will yield a valuable dividend (June 10). According to the Forestry Corporation Establishment Board (F.C.E.8.), this deficit is now about SIOOM a year. This deficit should, on past performance, be regarded as a loss. The Forest Service recorded a production forestry deficit for every year (except for 1924) since its establishment in 1920. The combined interest-free deficit for exotic forestry amounted to $2.258 in 1984. The service then valued, the State’s exotic estate at $2.38, implying an annual rate of return on capital of less than 1 per cent. But the F.C.E.B. considers that the service “substantially" overstates this value.- This would result in a negative rate of return (loss) on public money invested in forestry. Confident predictions notwithstanding, forestry has proved to be a liability to the taxpayer.—Yours, etc., P. S. GRANT. Nelson, June 12, 1986.

Sir,—l support B. J. Swale (June 10). When 90 per cent of the radiata resource is aged 20 years or less and 58 per cent is under 10 years, a cash deficit is

inevitable until the cost of planting and tending young stands is balanced by a larger proportion of the estate becoming harvestable. Of the 262,000 ha planted over the last 15 years, 52,000 ha was for special employment (and not commercial) reasons dictated by the Government. Profit-and-loss performance is further clouded by lack of consensus on the value of the radiata resource. The Forest Service puts this at S3B, the Treasury suggests a higher figure, while the Establishment Board believes both are substantially overstated in rela'tion to market worth. Politicians and others who should know the facts are less than honest when they try to justify decisions taken for doctrinal reasons on alleged departmental shortcomings and inefficiency.—Yours, etc., ERIC BENNETT. Wellington, June 11, 1986.