6.2.b Annual investment and expenditure in forest- related research, extension and development, and education

Rationale

This indicator provides information on annual investment and expenditure in forest- related research, extension and development, and education. Research underpins scientific understanding, including the ability to practise improved forest management and develop and apply new technologies. Education, including extension activities, increases public awareness of the multiple benefits provided by forests.

Current state

In New Zealand, the principal source of research and development (R&D) funding is central government. In the three years from 2011/12 to 2013/14, expenditure averaged $779.1 million, while the 2014 Budget figure for 2014/15 year is $966.6 million.

The Ministry of Business, Innovation and Employment (MBIE) is the agency that manages and co-ordinates the allocation of the bulk of research funding and monitors the effectiveness of the public sector investment. The Draft National Statement of Science Investment 2014–2024 provides an approximate split of current government research spending by “driver” or proposer of the research.

The projected government science investment profile over the next 10 years (to 2023/24) peaks at around $1456 million in 2015/16, followed by a reduction to a relatively stable $1350 million to $1374 million per annum over the following seven years. Virtually all of the reduction in forecast government science funding is due to projected changes to two funding areas. The first is a reduction in MBIE funding of sector-specific research (a forecast reduction in funding of around $30 million per annum from a high of $218 million per annum to $189 million per annum in 2023/24). The second is a $60 million per annum reduction in government funding of Callaghan Innovation. Forestry is still likely to represent between 4 percent and 5 percent of total government research.

Historically, government science investment has been heavily focused on the primary sector and, in 2013, nearly 20 percent of government R&D was allocated to agriculture or forestry. Over 10 percent of the country’s research effort was directed towards environmental research, some of which supports the primary sectors by exploring matters such as sustainable land use.

Additionally, at least 2 percent of the 24 percent attributed to university funding is also attributable to research related to primary industries.

Overall, it is likely that, in some form, well over a quarter of government R&D expenditure supports primary industries, including forestry. Finally, while not all research in areas such as transport, industrial production, energy and general advancement of knowledge (in total over 30 percent of all government R&D) is necessarily relevant to forestry, the potential is clearly there for forestry to benefit in some cases.

The forestry sector’s own contribution to R&D funding is difficult to calculate, due to the numerous research consortiums and research provider and industry arrangements. In many instances, there are also significant in-kind contributions to research programmes.

Forest growers levy

This levy illustrates the difficulties in isolating and defining forest-related research, extension and development expenditures. The levy was grower driven and resulted from a vote for approval by growers.

The forest growers’ levy came into force on 1 January 2014 and is paid on logs harvested from New Zealand planted forests. Forest owners are primarily responsible for payment, which is made to the Forest Growers Levy Trust (FGLT). The FGLT sets the levy rate and is responsible for overseeing spending of the money raised. For the 2014 calendar year, the levy rate is set at 27 cents per tonne of harvested wood material (excluding non-commercial domestic firewood).

The FGLT is able to strike different levy rates for future years, but after five years (and again after every subsequent five-year period) all growers must vote on whether or not they wish to continue with a levy. At this, and all subsequent five yearly votes, at least 80 percent of those voting, by number and by harvest volume, need to vote in favour for the levy to continue. (The system is designed to avoid the risk of a few large owners being able to dictate outcomes that are not acceptable to a much larger number of smaller growers.)

The general purposes for which the FGLT may spend the levy are:

  • research and development
  • forest biosecurity
  • the National Forest Health Surveillance Scheme
  • health, safety and education
  • supporting implementation of the Wood Council of New Zealand’s Strategic Action Plan
  • facilitation of industry collaboration on issues of general concern, for example, health and safety
  • generic industry and product promotion
  • information dissemination
  • representing the interests of forest owners and the industry
  • administration costs.

The levy is not to be spent on any commercial or trading activities. With the current harvest level, it should raise around $8.2 million annually.

Primary Growth Partnership

The Primary Growth Partnership (PGP) is a government–industry initiative investing in significant and/or transformational programmes of primary sector research and innovation. The aim is to boost the productivity and profitability of the sectors delivering a significant increase in longer-term economic growth and sustainability.

PGP programmes are business-led and market-driven innovation proposals working along the primary sector’s value chains. PGP is managed by the Ministry for Primary Industries (MPI) and is open to any entity, including firms, industry bodies, private research organisations, individuals, Crown Research Institutes and local government businesses. PGP investments cover education and skills development, R&D, product development, commercialisation, commercial development and technology transfer. While most PGP proposals contain a significant science component, the PGP is not mainly a science fund.

One of the goals in creating the PGP was to encourage more private investment in primary sector research and development. Core to the idea of the partnership approach is matched funding by industry, which must contribute at least 50 percent of any programme’s funding.

As of April 2014, total government funding paid to programmes already under way (including three forestry programmes) was $99.9 million. In 2014, the total committed investment in PGP proposals over the duration of the established programmes is $708 million. This figure includes $333 million of Crown funding. Three forestry programmes (described below) represent 3.2 percent of the total investment. A mānuka honey project, represents another 2 percent of the total, as mānuka is a valuable non-wood forest product. Again, this highlights the challenge in identifying value add forestry-related research investment. The three forestry programmes are:

  • The Steepland Harvesting programme - this aims to reduce steepland harvesting costs by 25 percent; grow harvest machinery manufacture in New Zealand to future- proof the sector; and make harvesting jobs safer. The centrepiece of this programme is the development of a steep-slope, feller–buncher machine which can operate safely and efficiently on steep slopes without endangering workers. Government and industry have committed $3 million each over 6 years from 2010.
  • The Stakeholders in Methyl Bromide Reduction (STIMBR) programme - this researched sustainable and effective alternative phytosanitary and biosecurity treatments for the fumigant methyl bromide. Methyl bromide is an ozone depleting substance, though its continued use for quarantine and phytosanitary treatments is allowed. It is used for New Zealand logs and other primary sector exported products. The STIMBR programme ended on 30 June 2014. The total programme funding was $2.65 million, with $1.19 million from government.
  • The Stump to Pump programme - this investigated how to generate more value from forestry waste by converting it to liquid biofuels. This feasibility study into the commercial viability of a biofuels business using radiata pine residues was a comprehensive and rigorous assessment of all key aspects from feedstock characteristics and availability, to design and technical viability of a test plant, to fuel distribution and logistics. The programme provided the partners with a significant amount of technical understanding around the potential to produce biofuels from forestry waste. The total programme funding was $3.62 million, with $1.81 million from government.

Sustainable Farming Fund

The MPI Sustainable Farming Fund (SFF) invests in farmer, grower and forester led and aquaculture projects that deliver economic, environmental and social benefits to New Zealand’s primary industries. Funding was up to $8 million a year. Examples of forestry projects include establishing the best silvicultural practices for adding value to new durable eucalypt planted forests; an investigation of the potential of redwoods and eucalypts by investigating timber quality, durability and growth strains; and initiatives to support the national wilding conifer strategy.

Education and training

Over the 2011–2014 period significant structural change has occurred in the industry training sector. At the start of 2011, 38 sector or industry-based industry training organisations (ITOs) were servicing ongoing industry training needs. Forestry establishment, harvesting, solid-wood processing, wood panels, forest health, and pulp and paper production were under the Forest Industries Training and Education Council (FITEC). By January 2014, mergers (including that of FITEC with Competenz in 2012) among these ITOs had reduced their number to 12 larger organisations that are multi-sector or multi-trade focused.

In 2013, there were 5253 forestry and wood manufacturing trainees registered with Competenz.

At university level, forestry education throughout the period 2011–2014 period continued to be based at the University of Canterbury’s School of Forestry. Graduate numbers from the university (forestry and forest engineering degrees) over the past few years ranged from 14 to 20 per annum (average 18).

Achieving the goals outlined in the Wood Council of New Zealand’s 2012 Strategic Action Plan will require a larger forestry workforce, increased education and training, with the focus being on engineering, building and business rather than forestry.

In 2013, total funding for Competenz was $19.5 million. Government funding was around two-thirds of this with other sources (industry in the main) providing the last third. Of the 21 292 learners, a quarter were enrolled in either a forestry or wood manufacturing course. The split between forestry and wood manufacturing was around one-quarter wood manufacturing and three-quarters forestry.

Funding for the University of Canterbury degree courses in forestry science and forest engineering totalled $3.5 million in 2014 ($2.2 million in 2007).

Trends

Since 2008, the data indicate that there has been a slight decrease (in real terms) in clearly identified purely forestry-related research expenditure. However, during this period, overall research expenditure has increased significantly as has expenditure on a growing number of collaborative, multi-disciplinary research projects that either have some forestry component and/or involvement of researchers from an institution with a forestry orientation. Expenditure has also increased on training and obtaining skills that will likely be required if the sector is to fulfill its perceived potential.

Over the three years from 2005/06 to 2007/08, the average vote to Research, Science and Technology was $642 million. In the three years from 2011/12 to 2013/14, expenditure averaged $779.1 million, while the 2014 Budget figure for 2014/15 year is $966.6 million.

Trend Status

Data Quality L / M

Supporting Material:

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