WoodWeek 19 June 2019
Looking to export markets – and China in particular – the news continues to be good. In-market inventory levels have passed their annual peak and offtake from ports is still brisk. Commentary from the markets team at PF Olsen suggests that supplies of softwood logs from other countries is reducing. Logs from the US have been hit with further tariffs of up to 25%. Southern yellow pine imports are well down and US Pacific North West log volumes are expected to slow considerably.
In Australia, details in a recently released report by ABARES – the National Wood Processing Survey – brings some interesting facts to light. The number of sawmills in Australia has decreased significantly since 2006–07, with hardwood sawmills decreasing by 64 per cent and softwood and cypress pine sawmills by 31 per cent. The volume of hardwood and softwood sawlogs harvested for domestic processing has also decreased by 38 per cent and 2 per cent, respectively, over the same period. However, the decline in mill numbers has slowed since 2012–13 and total sawlog processing volumes have increased.
Finally we look forward to seeing many of you at our biggest forestry event of the year – HarvestTECH 2019 here in Rotorua. We’ve got lots of keen suppliers with loads of new technology and plenty of iron to put it in. We are also entering our busy season with our national food technology conference ProteinTECH 2019 following in July; our WoodWorks/Changing Perceptions mass timber conference in early September and our WoodTECH 2019 sawmilling technology conference in mid-September. See you out there!
This week we have for you:
Post-fire log recovery a massive jobAfter the Nelson fire, tonnes of burnt trees are being reused - The recovery of damaged wood in the wake of the Pigeon Valley fires has been hailed as one of the country's biggest-ever efforts.
About 10,000 tonnes of burnt pine trees are being plucked from the ground for use in Canterbury construction projects, Nelson housing developments and to prevent future fires in Tasman. The large-scale fire started in a farm paddock on February 5 and soon spread to an area of 2300ha. About 1400ha - or 60 per cent of the total area burnt - was owned by Tasman Pine Forests.
Chief operating officer Steve Chandler said harvesting crews were still in the process of extracting burnt wood as well as clearing younger burnt standing trees. At the same time, replanting was under way to begin a new period of growth in the area.
"The burnt area was in radiata pine and that is the most productive species so we're putting that back in - there were also some native areas burnt - some reserves and other pockets - and we're going to be working with DoC to restore those back to what they were or even enhance them going forward."
"We're making good progress but it's probably going to take a couple of years before we get everything done that needs to be."
Four months on from the fire, Chandler said he was pleased with the level of log recovery that had been reached. However, any actual cost of the event? would remain unclear until the salvage operation was complete.
"When you look at the majority of logs it's only the outside bark or around that first 5cm that have been affected - the logs themselves are perfectly good inside that zone so it's really just a matter of getting industry to recognise the logs are still good," Chandler said.
1BT - Tracking tree planting progressTracking progress of the One Billion Trees Programme - Find out about the Government's One Billion Trees Programme and how many trees have been planted so far.
A billion trees by 2027 - The Government has set a goal to plant a billion trees in the next 10 years – between 2018 and 2027.
Initial estimates suggest about half that number will be achieved through existing planting programmes. The Ministry for Primary Industries (MPI) will be helping boost planting rates to achieve the goal.
It will take a combined effort by government, landowners, commercial foresters, conservation groups, regional councils, iwi, communities, and others.
China log market updateChina log market inventories pass annual peak – Total softwood log stocks across China have reduced slightly from last month to around 3.8 million m3. Daily uplift from the ports is averaging about 78,000 m3 per day so demand is still reasonably healthy. Construction activity in China has started to slow with the start of the hottest months of June and July. Most industry commentators expect the China government to introduce some stimulation spend into the construction market, but it will take a few months before the effect is felt in the log market.
The CFR sale prices for pine logs in China dropped a further 4-6 USD through May and the A grade sale price is now around 130 USD per JASm3.
Supply of softwood logs from other countries continues to reduce. Logs from the US have been hit with further tariffs of up to 25% introduced by China’s Ministry of Finance on June 1st within the Harmonized Tariff Schedule (HMS). The Southern Yellow Pine (SYP) from the South East of the US had already significantly reduced and is now just a trickle of container volume. There has been more volume from the Pacific North West, but this is now expected to slow considerably.
Many harvesting operations in South America have stopped and this will also reduce softwood supply into China. Current stocks in China are being heavily discounted in an effort to move this stock before the hot sticky season in China. The smaller sized South American softwood logs are more perishable than the New Zealand pine logs.
Source: PF Olsen Wood Matters
Meanwhile, on the couch in NorthlandShane Jones dodges questions over jobs created - Shane Jones won't say how many full-time, long-term jobs have been created under the $3 billion Provincial Growth Fund (PGF).
A spokesperson from Jones's office said on Thursday 900 jobs had been created to date, including 52.5 under the 'One Billion Trees' programme. But the spokesperson didn't have the number of new full-time, long-term job statistics on hand.
The National Party's spokesperson, Paul Goldsmith, said Jones's office had refused to provide him details about exactly how many jobs had been created, with job details of only 36 percent of projects provided to him.
In a press release on Thursday, Jones said more than 160 workers had been referred to forestry employers as part of a push to support the 2019 planting season.
"Through the One Billion Trees Programme we are supporting training initiatives across the country that will help build a sustainable, domestic workforce in the coming years."
More (RNZ interview with Shane Jones) >>
More (Newshub story) >>
More drones in forest operationsThe increasing use of drones in forest management - In this short video, Dr Christine Stone of New South Wales Department of Primary Industries discusses how her team has put Unmanned Aerial Vehicles (UAVs) into action. She explains the opportunities for improved forest management thanks to increased use of the technology.
As part of a recent WoodChat podcast episode, we explored some of the ways that drones are being used to support Australia’s forest managers.
SNAP Story: Forestry export revenues
Supporting a vibrant forestry workforceOver 160 workers have been referred to forestry employers as part of a push to support the 2019 planting season, Forestry Minister Shane Jones says.
With an estimated 80 million trees to be planted this season, Ministers asked Te Uru Rakau (Forestry New Zealand) and the Ministry for Social Development to ensure they were working together with industry to help meet the labour needs for the 2019 planting season.
The campaign includes promoting the silviculture industry to job seekers and promoting MSD services for employers to fill vacancies.
Minister for Social Development Carmel Sepuloni says, this Government is committed to upskilling and training people on benefit for industries where there are labour shortages.
“Over 300 MSD clients have been placed into forestry roles across the industry in the last year and we are committed to ensuring that more clients have access to opportunities in the industry through this targeted tree planting initiative ,” Carmel Sepuloni said.
“With 125 people placed in planting jobs as a result of this campaign, we are well on the way to meet the growing labour needs,” Shane Jones said.
“On top of this, six people in Hawkes Bay who are unemployed and serving community service sentences have been connected with employers in the region.
“It’s not just about numbers though, it’s also about upskilling our rangatahi and supporting them to contribute to a trained, safe workforce in planting, thinning, pruning and harvesting.
“Through the One Billion Trees Programme we are supporting training initiatives across the country that will help build a sustainable, domestic workforce in the coming years.
“The success of a forestry training pilot to upskill young workers in Te Tairawhiti – Gisborne is a great example of this work – with 8 rangatahi now in full-time employment.
“On top of this, a workplace pilot jointly developed by Te Uru Rakau and the Department of Corrections, is underway and providing forestry training and work experience for up to 15 prisoners in Northland who will support them to be work ready on release.
“These initiatives are key to supporting a vibrant forestry sector and creating real training and job opportunities in the regions.
“With the additional funding being delivered through the Wellbeing Budget, Te Uru Rakau will now be able to place an even greater focus on workforce development,” Shane Jones said.
When forestry was fun: Pre-order nowJim Spier's memoir "When Forestry was Fun" published - Rotorua’s 95-year-old Jim Spiers has recently published his book, When Forestry was Fun.
It combines a good yarn with Jim’s wealth of knowledge and experience to record developments in forestry and logging, from the early 1940s to the mid-1980s.
His personal story traces developments from horse logging in the Tapanui District of West Otago in 1941, to the post-WWII focus on measurement and management of indigenous forestry.
Then, with three university degrees related to forestry management behind him, he ran Whirinaki Forest in the Urewera before taking over management of New Zealand’s largest exotic forest at Kaingaroa. He held this position for nine years.
Appointed as inaugural director of the newly formed Logging Industry Research Association (LIRA) Jim remained in this role for a further nine years before retiring in 1984.
LIMITED COPIES AVAILABLE - Jim's memoir, When Forestry was Fun will be available for purchase at our FIEA HarvestTECH Conference next week at the registration desk.
Australia: Where do your logs go?The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released the ABARES National Wood Processing Survey: 2016–17 report last week. Here are the key findings:
> ABARES estimates that a total of 299 mills (excluding value-add only) operated in 2016–17, comprising 182 hardwood sawmills, 58 softwood sawmills, 23 wood-based panel mills, 19 post and pole mills and 17 cypress pine sawmills.
> The number of sawmills in Australia has decreased significantly since 2006–07, with hardwood sawmills decreasing by 64 per cent and softwood and cypress pine sawmills by 31 per cent. The volume of hardwood and softwood sawlogs harvested for domestic processing has also decreased by 38 per cent and 2 per cent, respectively, over the same period. However, the decline in mill numbers has slowed since 2012–13 and total sawlog processing volumes have increased.
> In 2016–17, a total of 10.63 million cubic metres of sawlogs was processed in Australian sawmills, which comprised 1.91 million cubic metres of hardwood sawlogs, 8.58 million cubic metres of softwood sawlogs and 147,000 cubic metres of cypress pine sawlogs.
> A total of 4.71 million cubic metres of sawnwood was produced in 2016–17, comprising 742,000 cubic metres of hardwood sawnwood, 3.91 million cubic metres of softwood sawnwood and 57,000 cubic metres of cypress pine sawnwood. In 2016–17 an estimated 280,000 cubic metres of posts and poles and 1.79 million cubic metres of wood- based panels was produced.
> An estimated $2.48 billion of revenue was generated in 2016–17 from the sale of sawnwood processed in Australia, comprising $930 million from hardwood sawnwood sales and $1.55 billion from softwood sawnwood sales.
> ABARES estimates that Australia’s sawmills and post and pole mills employed 8,029 people in 2016–17, of which around 89 per cent were full-time workers (including managers and owners). Males accounted for around 90 per cent of the workforce. Wood-based panel mills employed a total of 2,390 people in 2016–17.
Sage weighs in on forests and farms debateSage: Forestry encroachment an issue for councils - Forestry encroachment onto higher-value farm land is an issue for councils to manage, Lands Minister Eugenie Sage says. The national environmental standard for plantation forestry doesn’t set out to encourage forestry on good farm land and should be steering planting into steeper or more erosion-prone areas, she told lawmakers recently.
Sage told Parliament’s primary production committee that she is aware of concerns of some mayors about the level of new planting being proposed in their districts.
The Overseas Investment Office is trying to get “a good handle” on what is happening, she said, but the Resource Management Act and the national environmental standard for plantation forestry are the key tools for managing where planting takes place.
“It’s up to councils to determine what rules they put in their plan, that may make it easier for forestry to occur there - consistent with the NES - or harder.”
The government has launched a 10-year programme to plant a billion trees to help soak up carbon emissions and enlarge the country’s forestry and wood processing industry.
But the potential land that may ultimately be required – estimated at up to 2.8 million hectares by the Productivity Commission – has alarmed farming groups and been dismissed as un-doable by some foresters.
Last month, Wairoa mayor Craig Little said the government’s subsidies for forestry had seen 8,000 ha of the district’s farmland sold in four months for planting with trees. Each time a farm is taken out of production, about five jobs were lost, he said. The Overseas Investment Act was amended last year to make it easier for overseas buyers of land wanting to convert it to forestry.
The committee heard that eight sales have been approved under the special pathway for forestry, with another 19 in the pipeline. Sage acknowledged that the Overseas Investment Office does not consider the potential for job losses, or rural depopulation, when considering purchases of farm land for conversion to forestry.
But she disputed a claim by National MP Alastair Scott that the act was encouraging mass planting of farm land.
In Wairoa, of the seven applications the OIO handled, only three had been for land conversions, with the others being sales of existing forests, she said.
“I don’t think we’ve seen any evidence that suggests there is going to be mass afforestation across all of New Zealand,” Sage said.
“There is more work being done by OIO to actually get a good handle on what is actually happening.”
Scott said the new pathway had lowered the bar for foreign ownership of land, relative to purchases for things like kiwifruit or vineyard development.
“Not only is there no positive benefit needed to be demonstrated, but we know there are negative consequences that your office does not consider.”
Sage indicated the performance of the new forestry pathway was likely to be considered in the next phase of a review of the Overseas Investment Act being undertaken by Treasury. But she disputed that there were no benefits from accelerating planting.
“New Zealand has a strong wood processing industry that can be strengthened. We are good at growing trees. That does provide jobs in manufacturing and it’s a critical part of meeting our Paris commitments.”
New Zealand already has about 1.7 million hectares of plantation forest. So far, the government has contracted the planting of a further 13,400 ha – about 11.6 million trees.
The government’s billion-tree target provides for two-thirds of that to be met through more expensive planting of slower-growing native trees.
Sage emphasised that planting natives as a permanent carbon sink would be ideal on erosion- prone land.
National MP Ian McKelvie said the national environmental standard for forestry is actually encouraging planting on good land.
“If you have to get consent on highly erosion-prone land, it’s not going to get planted,” he said.
“If there’s a disincentive to plant our most erosion-prone land, then surely we’ve got to do something about it?
“I’m on your side here, but what do we do with it?”
Sage said the higher grant sums available from the government for native planting may help overcome that.
Asked if that should be included in the review of the OIA’s forestry provisions, she said the issue would be better addressed in a review of the plantation forestry standard that is currently underway.
Source: BusinessDesk via Scoop
Carbon market updateCarbon Match Market Update - Life is what happens to you when you’re busy making other plans.
This has been the experience of some last week as push came to shove and the market traded down to $23 flat on reasonable volume late last week - something that might have seemed inconceivable to most mere days before.
Bids had already been falling away on the back of negative market commentary following the apparent failure of government to raise the FPO in the most recent Budget, and concern that this could see a fixed price of $25 persist until potentially as late as 2022. The key question the market is grappling with is the likelihood of that being the case.
Yesterday, we asked many buyers to take a view where they’d be comfortable on Carbon Match in an attempt to rebuild confidence. We had a reasonable show of confidence in the low $23s. However late in the afternoon all bids were sold into decisively.
It's fair to say that thanks to the availability and recent uptake of that fixed price option, that appetite among some emitters is likely to be dull for some time.
And with surrenders due late May for many emitters, June is in any event often a month of low activity in the carbon market.
Is this cause for further panic? It doesn't seem rational on the basis of the facts as we understand them. Back to those:
1. Yes the government has provided assurance that for surrenders due in 2019, the FPO stays at $25. For most emitters May 2019 was the key date. Foresters may still have liabilities they intend to address this year, potentially using the fixed price option of $25 if that makes sense at the time.
2. After December this year, it is not at all clear that $25 will be the relevant number for May 2020 surrenders. It might, or it might not be, but no specific statement has been made in relation to what the fixed price option will be for surrenders due in May 2020 and emitters may want to bear that in mind as they survey the spot buying opportunities they see in coming weeks.
3. The auctions are targeted to be operational in late 2020. The replacement for the FPO is intended to be a cost containment reserve attached to the auctions, but with parameters yet to be specified. Again, this unknown and somewhat nebulous concept today is unlikely to give emitters much security in their planning.
4. In the event that there are delays the Government has committed in any event to get rid of the fixed price option by the end of 2022, also a risk that buyers may want to bear in mind.
5. Climate Change Minister James Shaw’s announcement on these matters last month also referred to a possible price floor in future.
Added to the above, just two weeks ago millions of tonnes were paid at the fixed price option of $25 - clear evidence that many in the market saw that as a prudent approach.
And while the Budget may have disappointed some, buried in the details of Vote Environment there is evidence of the Government's own need to be conscious of price risks to the upside, with some NZU-related estimates for the 2018/19 year increased "due to an increase in the upper limit of the appropriation from $25 per unit to $30 per unit to accommodate the uncertainty in the market price of New Zealand units".
So, we ask once again, buyers with appetite might want to run the numbers and see where they'd be happy to show interest today.
Carbon Match - every weekday from 1-5pm.
Fieldays: Plywood was the new black this yearOur Innovatek team put on our networking gumboots and joined the tens of thousands of people who enjoyed great weather at the Fieldays last week. As ever we were keen to find out who this year's innovators were. Here's the list of winners.
Before we get to this year's innovation highlights, just a note about how much wood was on display this year - heaps of it - and plenty in plywood form but also LVL and a good number of wood beams among the thousands of posts (but they were not new - been there since forever)! To put a bit finer point on it ... see our gallery of photos of stands using wood to great effect this time out.
Judges commented that the quality of entrants this year was very high which made it difficult for them to make their decisions. They were impressed by the breadth of talent and the number of young innovators involved saying the future of ag innovation looks stronger than ever.
The Fieldays Innovation Awards are supported by a team of knowledgeable, passionate and well-connected organisations with three new partners being added to the already impressive group.
Amazon Web Services (AWS), Gait International and James & Wells join Vodafone NZ, Callaghan Innovation and Massey University to form the strong team of sponsors fostering New Zealand agricultural innovations in the Fieldays Innovation Awards.
Fieldays 2019 Innovation Award winners: Fieldays Grassroots Prototype Award – PICMI PICMI removes the need for paperwork when hiring staff. The platform enables employers to personalise & manage their on-boarding process saving time and money whilst acting as an intermediary between employee and employer. PICMI was the star of the show receiving three awards for their innovation. Inspired by problems faced personally, she fought to find a solution to the problem of finding seasonal workers, funding the innovation from their house deposit she developed her inspired idea.
Fieldays Grassroots Established Award – Imaginus Ltd Imaginus Ltd’s animal health innovation involves a unique prototype design for a packaging and delivery system for intramammary dry cow treatments and teat sealants. They focused on environmental sustainability and the reduction of plastic packaging (compared to traditional alternatives) and reduction of labour and costs the key benefits.
Imaginus utilised their knowledge in a variety of industries to develop a faster, safer and more environmentally friendly solution to an important dairy task.
Fieldays Launch NZ Award – Future Post
Future Post have invented an environmentally friendly fence post made from 100% recycled plastics; their innovation boasts a stronger build with more durability than traditional fence post designs.
Judges said this product provides a way for farmers to participate in addressing what is a massive environmental problem for New Zealand. This is a positive and potential game changing step towards dealing with New Zealand’s plastic recycling challenge.
Fieldays Innovations Partners Awards:
Young Innovator of the Year – St Paul’s Collegiate School with ‘Bobble Trough’. Judges said they were impressed with their development process, their use of external expertise, their understanding of IP and of course their solution.
Vodafone Innovation Technology Award – PICMI
AWS Innovation in Data – Riverwatch
Sprout Global Growth Award – Matrex® Blockchain
James & Wells Innovation Award – PICMI
Gait International Award for Product Design and Scalability – Modusense Ltd
Callaghan Innovation Partnership and Collaboration Award – Aepea
Buy and Sell
... and finally ... just for fun ...
I recently entered a competition to see who had gained the most weight and lost the most hair.
The doctor looked at my test results and said, "Sir, you've got a very rare disease."
I said, "How rare?"
He said, "You get to pick the name."
My dog sleeps about 20 hours a day.
He has his food prepared for him.
He can eat whenever he wants.
His meals are provided at no cost to him.
He visits the doctor once a year for his checkup, and again during the year if any medical needs arise.
For this he pays nothing and nothing is required of him.
He lives in a nice neighborhood in a house that is much larger than he needs and he is not required to do any upkeep.
If he makes a mess, someone else cleans it up.
He has his choice of luxurious places to sleep.
He receives these accommodations absolutely free.
He is living like a king, and has absolutely no expenses whatsoever.
His costs are all picked up by others who go out and earn a living every day.
Then it hit me! --> I think my dog is a member of Parliament!
That's all for this week's wood news.
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