Parity with the Australian Dollar Won’t Help Timber Exports

Jobs will go and sawmills may be forced to close if the Australian dollar continues to lose value against the Kiwi dollar says John McVicar, President of the New Zealand Timber Industry Federation.

Australia is a very important market for New Zealand timber representing 21% of the value of our timber exports. More importantly it has been a higher value market that the industry has relied on to make money. However since 2012,
the rising value of the New Zealand dollar has eroded 20% of the value of our timber sold in Australia. Mr McVicar says there simply isn’t that sort of margin in the product and mills will now be supplying at a loss to stay in the market.

That scenario is not sustainable and will be devastating for many mills.

NZ timber exporters compete in a global market and must be price competitive. Australian customers of NZ timber products have other options including buying from Australian mills, importing from other countries or using substitutes. Mr McVicar said it would be difficult to get a price premium to offset the loss caused by the exchange rate movement.

The effect of the exchange rate movement almost totally impacts on New Zealand sawmillers because there is very little imported content in timber so there is no countervailing benefit arising from the adjustment in the exchange rate.

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