Crown Forestry

Quick facts

• A net stocked area of just under 1% of all New Zealand's plantation area*
• A current harvest of around 850,000 cubic metres – a little under 3% of the total new Zealand harvest.
• Estimated revenue for 2015/16 is $93 million, with expenditure of $69 million. 
• Projected annual trading surpluses of about $20 million will remain steady until about 2020.

* (February 2016 annual stocktake)

About Crown Forestry

Crown Forestry is a commercial trading organisation managing the Crown's commercial forestry assets. Its role is to prudently manage and administer this portfolio of forestry assets to achieve the best return for the Government and also meet the Crown's legal and contractual obligations. As a direct participant in the New Zealand forest industry, Crown Forestry stands apart from the fundamental policy, regulatory and service delivery roles of MPI.

The assets which Crown Forestry administers includes:

• the Crown's forestry leases on Māori land
• Crown forest on Crown land
• forestry leases by other businesses on Crown Forest land
• a forestry loan portfolio.

Forests on land leased from Māori or in other tenure

Location

There are 16 forests in the North Island and one in the South Island. The total planted area is 15,85515,947 hectares up to JuneApril 2016.

Most of the forests are planted on Māori-owned land (90% by area). The remaining forests are on land under other tenure types, including land returned under Treaty of Waitangi settlements.

Harvesting, financials and projections

Harvesting will produce an estimated annual cut of 0.8 million cubic metres in 2016/17.2015/16.

The level of harvest will remain over 0.7 million cubic metres a year until about 2021. After 2021 it will steadily decline as the mature forests are harvested and leases surrendered.

Afforestation leases

Crown Forestry's assets also include 6 afforestation leases. This is Crown-owned land leased to other forestry companies who pay rent to the Crown.

Forestry Encouragement Loans

The former New Zealand Forest Service granted loans to local authorities which were repayable on harvest. As of April 2016, there is one loan to City Forests Ltd which is owned by Dunedin City Council. No new loans have been made since the mid-1980s.

Policy to exit from commercial forestry

Government policy is for the Crown to exit from its forestry assets on commercial terms. Crown Forestry considers selling a forest when the potential sale price matches the financial benefits from ongoing Crown ownership.

A positive impact of the exit policy is on Māori economic development. For example, non-assignable leases can be varied to reduce the term of the lease so that Māori landowners (the lessors) can become forest owners earlier than would otherwise have been possible.

In the case of Crown-owned land, the land (and sometimes trees) are transferred to successful claimant groups as part of Treaty of Waitangi settlements.

The Crown Forestry team

The Crown Forestry team is based in Wellington and Rotorua. Staff carry out strategic, business and financial planning, modelling and auditing of the forestry assets.  The day-to-day operational management of most of the forest estate is outsourced to forest management companies.

The team consults with stakeholders and interested groups such as leaseholders, iwi, the Office of Treaty Settlements, and commercial forestry companies.

History

Crown Forestry was created when Māori forest lessors wanted to retain direct links with the Minister when the Government proposed assigning their leases to the then newly-formed Forestry Corporation in the late 1980s.

Other Crown forestry assets were subsequently added to Crown Forestry:

• in 2001 when the residual business of the Forestry Corporation was wound up
• in October 2008 when the Crown purchased forestry rights over two forests from Matariki Forests (both subsequently sold)
• in January 2009 when the assets and business of the State Owned Enterprise Timberlands West Coast were transferred prior to the SOE being wound up (the West Coast plantations were subsequently sold to landowner Ngāi Tahu Forest Estates Ltd in August 2014).