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November, 2020

Forest Growers Levy Board increases Levy to 33 cents per tonne

The Board of the Forest Growers Levy Trust has increased the Levy rate to 33 cents per tonne of harvested wood materials, the first increase in the Levy rate since the Levy was introduced in 2013.

The rate will apply from 1 January 2021.

Commentary from Geoff Thompson, Chair Forest Growers Levy Trust (FGLT)

2020 has been a remarkable year for the plantation forest industry, as for most sectors of forestry.

The Trust felt the Covid-19 impact early and hard as China shut down and export logs slowed to a trickle. As the Trust secures its income, based on volume harvested, the sharp income drop required a fresh look at how spending commitments could be met.

The Trust had identified research projects as a top priority, funding a number of Scion activities. Two other sectors taking high priority are the Forest Industry Safety Council and its projects to make forestry a safer place to work after the horror stories of the early-decade and the need for rigorous surveillance to keep out pests. A biosecurity officer is now part of the Secretariat’s staff. Projects like these allow leveraging of other funding from the Government sector. 
The Trust had reached the point of expecting to have a respectable income of about $10 million each year. The Covid-19 trade cut back seriously threatened this in early 2020 but instead of seeking to reduce commitments the Board identified other funding options. Spending reserves, borrowing from the bank and other sources, particularly the rebuilding of funds through an increase in the Levy rate. The Levy renewal referendum a year ago was very successful and in particular identified a willingness to pay a higher Levy rate. This had stayed steady at 27c per tonne from commencement in 2013 and with the expiration this year of a promise to keep the rate steady, the combination of issues has persuaded the Board to look at the issue again, and it has acted. From the start of 2021 the rate is increased on all harvested logs.

This decision followed close consultation with Forest Owners Association and the Farm Forestry Association emphasising the prudence of recognising inflation since 2013 and the need for rebuilding reserves so that prime projects are protected.

The change also will help address new challenges in the industry such as the attack on carbon farming and the opportunities opening up in the timber fibre sector – with research work on resins that replace plastic, transparent timber sheets that can replace glass and biomass use for no emission energy production.

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