A new forestry company is targeting owners of small forests in a bid to boost returns on what it describes as a looming “wall of wood”.
United Forestry Group, backed by Australian timber marketer Pentarch and Chinese conglomerate Xiangyu Group, says the production could be worth $30 billion dollars over the next two decades.
UFG wants to consolidate the country’s 14,000 forests under 1000 hectares to create one large, competitive forest which can be harvested sustainably over time.
“The high harvesting and transport costs faced by the owners of single small forests, and their weak negotiating position with buyers, means the potential value of these forests may not be achieved and the final return to their owners … may be disappointing”, says UFG’s acting managing director Malcolm McComb.
Mr McComb says UFG brings major resources, logistics expertise and international business connections.
The Wellington-based company will offer owners of small forests a range of sale options including: buying the forest, with the owner keeping the land for future use; buying the timber and land; or a deal that includes cash and shares in UFG.
UFG is already operating in the lower North Island and upper South Island.
Some of the production would be exported as logs to meet growing construction demand in China.