This is a tree fungus that grows prolifically in Taranaki and in the early days was called 'Taranaki Wool'. This was collected dried and exported to Singapore and at one time was a bigger revenue earner for Taranaki farmers than butter. We went for a walk with the dogs yesterday and my husband pointed the fungus out to me. When he was a teenager, he used to collect it and sell it to a well known fungus collector called Chew Chong. Finally he decided to get other people to collect for him and he organised to export it to Singapore himself, making enough revenue from the venture to buy himself a section by the time he was 16 years old.
The little red things in the photo are some kind of grubs or larvae. I didn't notice them until I downloaded the photo onto my computer.
