Forestry export revenue is forecast to rise 2 percent to $6.3 billion in the year to 30 June 2026 — well behind dairy at 5 percent, and meat and horticulture at 7 percent.
The gap is worth understanding, because it reflects structural features of the sector rather than a temporary dip.
The log export dynamic
A substantial proportion of New Zealand’s harvest is exported as raw logs rather than processed domestically. Export log prices are set by international demand, principally from China, and at some price points exporting logs returns more than processing them.
That produces a structural tension. Domestic processors compete for the same logs against exporters, so when export prices are strong, processors face input cost pressure or supply difficulty. When export prices weaken, forest owners’ returns fall.
For processing businesses this is the defining commercial risk and it is not manageable through efficiency alone. Supply agreements, forest ownership or integration are the levers that exist.
Shipping and freight exposure
Log export is bulk freight over long distances, which makes the sector unusually exposed to shipping rates and vessel availability. Freight cost movements can consume the margin on a shipment, and New Zealand is a small market at the end of long routes that gets deprioritised when capacity tightens.
The ETS layer changes the economics
Post-1989 forest land can be registered in the Emissions Trading Scheme to earn units as trees grow, with a symmetrical obligation to surrender units on harvest.
Points that catch owners out:
- Harvest liabilities can be substantial, and they arrive when your cash position depends on timber price rather than carbon price. A weak log market and a harvest liability at the same time is a genuinely difficult position.
- Averaging accounting changes the profile of what you earn and what you owe compared with the older stock-change approach.
- Registered land carries obligations that follow the land, affecting sale value and how a buyer views it.
- Planting decisions made purely on a carbon price are exposed to a market that policy settings can move sharply.
This is a long-term commitment deserving proper advice rather than enthusiasm about a unit price.
Harvest safety is the sector’s defining risk
Forestry carries one of the highest work-related fatality rates of any New Zealand industry, concentrated in tree felling, breaking out and machinery operation on steep terrain.
The controls that work follow the hierarchy:
- Mechanisation — removing people from under trees and off steep slopes. Mechanised felling and steep-slope harvesting technology has changed the risk profile where it is used.
- Exclusion zones rigorously applied, with nobody under a suspended load or in the felling zone.
- Communication systems that work in terrain and weather.
- Competence verified rather than assumed, with training records.
- Fatigue management, since crews work long days in physically demanding conditions.
Overlapping duties apply throughout the chain. Forest owners, managers and contracting crews all hold duties, and the owner cannot contract out of responsibility for work it influences — including through the rates and timeframes it sets. Rates that only work if a crew cuts corners are the owner’s problem.
Land use and the wider question
Forestry competes with pastoral farming for marginal land, and the balance shifts with relative returns including carbon. That has consequences for rural communities, for the servicing businesses around them, and for regional freight patterns.
Regions with concentrated forestry — Tairāwhiti, Northland, the central North Island — also carry the transport and erosion consequences of harvest, which has driven regulatory attention to harvest practice on erodible land.
Where to look
MPI publishes the Situation and Outlook for Primary Industries and forestry statistics under an open licence. WorkSafe publishes forestry safe work guidance, and the Climate Change Commission publishes ETS and emissions material under CC BY.
Figures: Ministry for Primary Industries, Situation and Outlook for Primary Industries, forecast for the year to 30 June 2026. General information only, not financial advice.
