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Forestry reform impacts New Zealand log traders and advisers

Recently passed legislative updates impose new regulatory standards on forestry advisors and log traders, introducing new levels of professional compliance for a previously unregulated area of ​​the forestry sector.

In this article, we look at the Forestry Amendment Act 2020 (Regulation of Timber Traders and Forestry Advisors) and consider its impact on those operating in this space.

The precursor to the Forests (Regulation of Log Traders and Forestry Advisors) Amendment Act 2020 (“Law”) was originally introduced amid public debate around the high proportion of logs directly exported in raw form to international trading partners – and the comparatively lower proportion of logs left for processing in neo- zeelandese.

This protectionist context has informed some of the Act’s stated objectives, including “to support the continuous, predictable and long-term timber supply, and equity of access to timber, for domestic processing and export”but also “supporting a more transparent and open market for log sales through the provision of professional advice” as well as “enhancing the confidence and informed participation of businesses and investors in the forestry and wood processing sector”.

The law seeks to achieve these objectives by introducing a number of consumer-type protections for traders and advisers operating in the forest sector, notwithstanding the “business-to-business” context.

What activities are covered by the Act?

The law targets “log dealers”, that is, a person in the trade who:

  • Buys logs before or after harvest;
  • Exports New Zealand logs;
  • Processes the New Zealand logs they have grown; or
  • Acts as agent with respect to the foregoing.

There is a prescribed volume threshold of 2,000 cubic meters of New Zealand logs per year for the law to apply. We note that this would generally concern operators in the commercial log exporting market. Companies involved in logistic and forwarding or transporting logs are not covered by the law.

The law also targets those who undertake “forestry advisory services”. This is a person who, in the normal course of business, provides advice on:

  • Establishment, management or protection of a forest;
  • Management or protection of land used or intended to be used for any purpose in connection with a forest or a proposed forest;
  • Valuation, harvesting, sale or use of timber or other forest products;
  • Evaluation of a forest, land or forest heritage;
  • Application of the emissions trading system to forestry activities;
  • The beneficial effects of forests (including, for example, how they contribute to environmental and economic outcomes).

It also encompasses those who act on behalf of others in relation to their sale or purchase of timber or other forest products, but the law does not apply to professionals already regulated by other professional bodies such as agents real estate agents, lawyers, financial advisers and accountants. , assuming they are acting in a professional capacity.

Ongoing Compliance and Reporting Standards

Those wishing to register as a timber trader or forest adviser will need to satisfy the Forestry Authority (established under the Ministry of Primary Industries) that they meet the standard of ‘fit and suitable person’. They may also be required to provide evidence of their qualifications and experience in the forestry and wood processing sector – although details are yet to be provided on minimum qualifications.

In addition, ongoing compliance, reporting and record keeping obligations are imposed on log traders and registered advisers. A Disputes/Complaints Body is also established under the Act to hear and administer complaints.

The Forestry Authority may, on the recommendation of the Minister, establish standards for any matter relating to forestry operations and the provision of forestry advisory services, including:

  • Land preparation, planting, forest management, harvest planning and site preparation and assessment
  • Biosecurity, Sustainable Land Use, Biodiversity and Emissions Trading;
  • Sale and purchase contracts for domestic transactions or exports; and
  • Other Sale and Purchase Requirements.

However, the rules do not impose any conditions or requirements that would fall under a commercial agreement between the parties.

Penalties are established under the Act for those who do not comply, with potential fines of up to $40,000 for individuals and up to $100,000 otherwise.

Registration deadline

Te Uru Rākau – The New Zealand Forest Service is currently developing a registration system which is due to start on August 6, 2022. By law, log traders and forest advisers must register to operate from this date .

There is a one-year transition period from August 6, 2022 for log traders and forestry advisers to register before penalties apply.

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