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The forest industry is New Zealand's third largest export sector, generating around $3.3 billion annually from overseas sales of logs and processed wood products. But that is well below its capacity.
By 2025, the available wood supply from the country's pine plantations is expected to exceed 40 million cubic metres - almost three times that of 1998. But with the domestic market already at its peak, almost all of that extra wood will have to be marketed overseas.
That presents a major marketing challenge for the industry, particularly in the current (2005) climate where the combined impact of a high-priced kiwi dollar, rising freight rates and volatile energy pricing in New Zealand are behind widespread retrenchment and restructuring.
Although the log trade will continue to provide valuable earnings for forest owners, there is broad acceptance that the industry must embrace a value added future. In partnership with government and trade unions, the industry is developing various wood processing, infrastructure development and investment strategies to increase the level of local manufacturing before export.
The keys to the forest industry's future success will be built on: better international marketing, product innovation, internationally competitive processing, better infrastructure and a conducive political, regulatory and investment environment.
Given the right conditions, the industry associations still say that by 2025 the forestry sector could be the country's biggest export earner, generating $20 billion a year and employing 60,000 people.
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