A Sustainable Future for Forestry

1998 Forest Industries International Conference Convention Centre Rotorua
Hon John Falloon, Distinguished Guests, Ladies and Gentlemen. The timing and topic of this conference - sustainable forestry - is most appropriate, both domestically and internationally. There has been a range of speakers, all of high quality, and I trust it has been useful for everyone involved to have two days out to focus on the future. I commend New Zealand Forest Industries magazine for its organisation and add my welcome to our guests from overseas.

I've enjoyed my first year as Minister of Forestry. I was far from an expert on the industry when I took over from John Falloon, and there is still much more for me to learn. But I'm convinced there's a great future for the industry. What's more, forestry, third only to dairy and meat in terms of export receipts, fits in well with my responsibilities as Trade Minister. The difficulties in Asian financial markets are presenting major challenges to the industry.

But these are likely to be relatively short-term. In the long term, you will overcome those difficulties with new opportunities ahead. As Trade Minister, one of my key objectives is to liberalise trade in forest products, regionally through APEC and globally through the WTO. The APEC deal at the end of last year was a tremendously important step for the sector. It was a good example of the Government and the industry working together towards a common goal. It was far from easy to achieve that goal. When I arrived in Vancouver there were few optimists to be found.

But the New Zealand team and I worked hard to build support for a comprehensive package of sectors to be liberalised and I was determined that forestry, along with fisheries, would be included. The details of the deal will be finalised this year and we also want to take it to the World Trade Organisation for possible global application. Getting better access to markets is of critical importance to our forestry industry here in New Zealand. With the exotic harvest expected to increase by over 70% over the next few years, we simply don't have a big enough market here to take it all.

Within the next five years, the percentage of our harvest which will have to be exported will increase from two-thirds to three-quarters. It is for the industry to take full advantage of the better access I'm determined to get. I'm well known as an advocate for the new investment in processing - some of it from overseas - that the industry will need to take advantage of the growing harvest.

We are not in the wood business. We are in the building products, interior design and communication business, in competition with plastics and steel, and telecommunications and the Internet. There is no future trying to compete with powerful industries like these by merely churning out logs and pulp. We need consumer products that latch into the values of consumers. High on the list are environmental values. While at present there is no apparent "green" premium for wood products and paper certified to have come from sustainably managed forests, I believe there could well be in the future.

And looking further into the future, it is possible some markets will require eco-certification as a condition of access. In New Zealand, we have a fairly good image in terms of our management of the environment. There are still one or two areas in the South Island where overcutting of native forest is allowed, but inevitably that will stop. The Government is working on proposals right now to manage the end of that unsustainable harvesting Pressure for an worldwide ban on unsustainable forestry is growing, and New Zealand stands to benefit from it. Worldwide, over 90% of the harvest comes from indigenous forests, and much of that is logged unsustainably.

Should political and consumer pressure lead to its prohibition, we'll be well-placed to fill that drop in supply with our growing harvest from exotic plantation forests. But our ability to fill the gap is dependent on the world - and particularly the Europeans - accepting planted production forests as legitimate and environmentally sound alternatives. The pressure for action on the environmental front is certainly there, particularly following the Earth Summit in Rio in 1992.

Right now, the Intergovernmental Forum on Forests is considering whether to work towards a legally binding convention on the sustainable management of forests, and, if so, when. The Government has an open mind about whether to be involved in the development of a convention. Currently, we are committed to voluntary processes. These can be effective, some are in place, while others are in the pipeline. The Criteria and Indicator processes for sustainable management are being implemented right now by about 100 countries throughout the world. These are voluntary, and therefore slow, but, in some circumstances, they are delivering. The need for a legally-binding convention has not been proven. Nevertheless, if the rest of the world does chose to work towards a convention, we will need to be involved to ensure that the terms of any convention are acceptable to New Zealand.

The stakes are high. It's vital that both the Government and the industry work together to keep abreast of developments, and to be at the forefront of the process if the world decides to move towards a legally binding convention. Whether or not the world moves towards a compulsory convention, the New Zealand industry must be at the leading edge of providing to consumers the environmental guarantees that they will increasingly demand. I'm pleased that this conference devoted time to consider key issues of environmental certification of products and eco-labelling. We need to look at all existing and developing certification processes with an open mind. In our discussions over which process is preferable we must not forget that our major competitors are not fellow wood producers but producers of substitutes, like plastics, steel and concrete.

The industry will need to ensure it has a full understanding of the environmental values of consumers, and recognise that they may be broader than we might expect. Consumers and governments may not restrict their concerns to how individual forests are managed, but how New Zealand sustains all forests - indigenous and planted - and their fauna and flora. Criteria and indicators, backed up by measurement and reporting systems, are needed to ensure that our products meet those values. And we need to develop tools which communicate to consumers that our products have met these standards. I know that the industry is already aware of these issues and working towards meeting the need for environmental guarantees. I endorse that work.

Even if a green premium is never able to be extracted from the world market, eco-labelled products will undoubtedly help protect and enhance our market share. As I said at the outset, the forestry industry faces major challenges with the financial difficulties in Asia. Export returns will no doubt be down. But the longer-term outlook remains very bright. New markets will become available.

Pressure to end unsustainable forestry internationally will provide us with even more opportunities. The industry is already investing in the greater processing infrastructure we need. And, as this conference has demonstrated, our thinking is heading in the right direction in terms of consumer demand for environmental guarantees. I look forward to working with you as Minister of Forestry for the next two years and well beyond.