Round Produce, Price Control and the Economics of Silviculture

Authors: R. Fenton
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 1959, Issue N.Z.J.For. 8(4) 1962, pp 648-659, Jan 1962
Publisher: New Zealand Institute of Forestry

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Abstract: The market for round produce in New Zealand is relatively limited, but it is of considerable interest because the produce is not subject to price control. Treated round produce, both posts and poles, sells at the equivalent of nine shillings per cubic foot, compared with equivalently treated sawn timber at about the same price. Approximation of the price of sawn timber to that of equivalent round produce contrasts markedly with the trends prevailing overseas. This anomaly is due to price control which, together with moderate sawmill profits, results in a low residual stumpage for sawlogs. From an examination of the implications of this situation, the following conclusions may be drawn:
(1)   If half the ratio prevailing in the United Kingdom between the stumpage for sawn material and that of equivalent round produce were to apply in New Zealand, timber prices would rise by about 30 percent, and stumpages by 450—500 percent.
(2)   Profits in the preservation industry are high, and stumpages could be at least eightpence per cubic foot for round produce.
(3)   It would pay farmers handsomely to grow their own fencing material.
(4)   Pole supplies will be adequate from the second rotation crops, and pole markets should be expanded. Post supplies are likely to be grossly over-supplied.
(5)   Preservation techniques are likely to improve very rapidly, and will give flexibility to silviculture and forest management.

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