Business Environment Profiles - New Zealand
Published: 15 January 2025
Availability of plantation trees
1734163 Hectares
0.8 %
This report measures the net stocked forest area in New Zealand, which is used as a proxy to represent the availability of plantation trees, including softwood, hardwood and other varieties. The data for this report is sourced from the Forest Owners' Association and is measured in available hectares per year ending in April.
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IBISWorld expects the availability of plantation area to fall by 0.2% in 2024-25, representing 1.73 million hectares. This decline can be attributed to several interrelated factors, including increasing competition for land usage and changing land management practices. As urbanisation expands, agricultural land is often converted into residential or commercial developments, limiting the space available for new plantations. Also, economic pressures lead landowners to prioritise short-term profit from alternative crops rather than committing to long-term forestry investments, which can take years to yield results. This situation is compounded by the maximum emissions budgets decreasing yearly until 2035, starting at 71 million tonnes in 2024 and dropping to 49 million by 2035. The anticipated decline in plantation availability highlights the challenges of land competition and raises concerns about meeting these ambitious emissions targets.
Natural disasters have also contributed to the decreased availability of plantation trees in recent years. Cyclone Gabrielle in February 2023 caused considerable damage to apple orchards in the Hawkes Bay and Gisborne regions. While this specifically affected fruit trees, it highlights the vulnerability of plantation areas to extreme weather events. Furthermore, the forestry industry is grappling with weak timber demand, which puts pressure on the industry. The industry is facing a market downturn, which has reduced the national harvest cut to match the decreasing demand. This reduction mainly affects small-scale forest owners and regional private sectors, potentially losing skilled labour and infrastructure that may not easily recover when the market improves.
A series of government programmes have altered trends in the availability of plantation forests. Forestry New Zealand (Te Uru Rakau) implemented the One Billion Trees Programme in 2018. The One Billion Trees Programme aims to plant one billion trees by 2028 and is designed to create better social, environmental and economic outcomes for New Zealand. The initiative aims to support increased planting of permanent trees and plantation forests by offering grants, partnership projects and joint ventures. The New Zealand Government seeks to use its comparative advantage in production forests to develop wood and wood-based products as a viable replacement for petrochemicals. This trend has made the availability of plantation forests an increasingly central plank in the New Zealand Government's plans to reduce carbon emissions. Through these government initiatives, landowners have sought to establish and manage forests in a way that will increase carbon storage. These initiatives have contributed to a recent upturn in the availability of plantation trees since 2019-20, bucking long-term trends towards decline. Overall, the availability of plantation area is forecast to rise marginally at a compound annual rate of 0.8% over the five years through 2024-25.
IBISWorld expects the availability of plantation trees to rise by 0.3% in 2025-26 to 1.74 million...
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