WoodWeek – 11 August 2021

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Greetings from your good wood news team. The first words this week come from the ANZ Research Agri Focus team. “The premium for exporting logs rather than selling them locally is rapidly eroding. Domestic demand for timber is strong and mills are finding they are able to pass on their higher costs. Meanwhile, after a long run of elevated prices Chinese demand for logs has waned. This is not unusual at this time of the year, but the closure of some of China’s mills has further eroded short-term demand for logs. The strength of the domestic market, combined with the challenges and cost of getting product to export markets, may mean more of our home-grown timber stays on our shores.”

Meanwhile, down on the farm, foresters are confused by the recently commissioned Beef+Lamb survey on forest planting rates, saying it is nowhere near robust enough to draw a conclusion that the government should impose controls over the rate of forest planting. FOA President Phil Taylor says the Beef+Lamb report is a worthy contribution to the land use debate, but it raises more questions than it answers.

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With weather events and the recently released IPCC report combining to bring a climate change nightmare scenario on the tail end of our winter cold, that must mean it’s time for us to bring you the latest carbon market update from our local experts. NZUs still appear to be modestly priced compared to that scheme. They continue their strong rise and over the last week have continued to creep north, last trade $48.75 this afternoon on Carbon Match.

As another Government auction is just around the corner (1 September) we're interested to see whether NZUs test the $50 mark ahead of the auction, or on the day, bringing the cost containment reserve into play. With changes to regulations expected to raise the trigger price of this pot from $50 to $70 for 2022, there will be a strong temptation not to forgo the opportunity.

This week's SnapSTAT graphic shows our harvest volumes, log exports and domestic processing volumes for the past 5 years. Thanks to the great team at Chainsaw & Outdoor Power (COP) and Oregon - our feature sponsors.

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ANZ: Local Prices Lift as Export Prices Fall

(ANZ) The premium for exporting logs rather than selling them locally is rapidly eroding. Domestic demand for timber is strong and mills are finding they are able to pass on their higher costs. Meanwhile, after a long run of elevated prices Chinese demand for logs has waned. This is not unusual at this time of the year, but the closure of some of China’s mills has further eroded short-term demand for logs. The strength of the domestic market, combined with the challenges and cost of getting product to export markets, may mean more of our home-grown timber stays on our shores.

Export prices under pressure – In-market prices have eased after peaking at about USD194 per JASm3 last month. The value of a log delivered to China is now about USD10 lower than this, and further downwards price pressure is expected.

This follows nine months of elevated prices that have favoured our growers and exporters. Chinese buyers are finally pushing back on the prices being asked for by NZ exporters.

A number of factors have reduced the immediate demand for logs in China. Firstly, the quantity of logs being utilised in China tends to fall away at this time of the year as construction activity slows during the very hot summer months. This typically results in stocks of logs building on the wharves of Chinese ports. This season the quantity of logs being utilised is even lower than normal.

More>>

Source: ANZ Research Agri Focus


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Beef+Lamb forestry report confuses

The Forest Owners Association (FOA) says the Beef+Lamb commissioned survey on forest planting rates is nowhere near robust nor detailed enough to draw a conclusion that the government should impose controls over the rate of forest planting.

FOA President Phil Taylor says the Beef+Lamb report is a worthy contribution to the land use debate, but it raises more questions than it answers.

"Government data is contradicting the report. Official figures clearly point to a decline in the area of the exotic plantation forest estate, and so new planting is not keeping pace with the land area going out of forestry. The plantation forest estate has shrunk by 162,000 hectares in the past 18 years, mostly to dairy farms. There has always been changing land use."

"Our concern on current figures, would be that the Climate Change Commission’s reliance on an expansion of the exotic forest area by another 380,000 hectares by 2035, to meet the 2050 greenhouse gas target, is going to fall well short. On top of that, the Climate Change Commission anticipates there will need to be more use made of wood in construction, and its extensive utilisation in biofuels to replace fossil fuel."

"That means any government restrictions on afforestation will risk New Zealand not meeting its carbon targets. By the time that shortfall becomes clear it will be too late to fix it."

The National Exotic Forest Description, which is published by the Ministry for Primary Industries, recorded a reduction in the net stocked area in the year to April 2020 of 31,347 hectares, after allowing for 19,000 hectares of new afforestation.

The President of the Farm Forestry Association (FFA), Graham West, says farmers should be free to continue to make economic decisions on whether they want to use their own land to plant trees and on what land classes."

A recent Ministry for the Environment study has shown that there is currently 313,000 hectares of plantation forests on farmland.

"And that makes sense for farmers. The recent PwC report was clear that forestry stacked up very well as a land use and so forestry benefits the economies of local communities. There is between 7.5 and 10.4 million hectares of hill country farm land, and if a conversion of a mere 380,000 hectares is a threat, then the meat and wool industries has more serious issues to deal with than just a few profitable trees to worry about," Graham West says.

Graham West says the report is actually positive about the integrated use of trees on farms and that land sales to forestry are giving better capital gain, which allows movement up the farming ladder or retirement.

BakerAg, the report’s author states; ‘If farmers already have experience with trees and forestry, or are confident of the support available in what may not be core business to date, then indicators are this will provide further confidence to consider investing in forestry as part of the land-use mix."

Phil Taylor says Beef+Lamb automatically assume that farming will always be a better and more productive land use than forestry, "On the tougher hill country, Beef+Lamb are now demanding that even if livestock can barely survive on that land, then tree planting should still be restricted."

More>>

Source: FFA & FOA



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How Stress affects Forestry Workers

Impact of stress on wellbeing and productivity in forestry - Forestry researcher Trevor Best has written a summary of research he was involved in at Canterbury University on the impact of stress on the wellbeing of forestry workers, and how it affects productivity and business profitability.

For the past 18 months, I have been asking machine operators in harvesting crews to tell me about the conditions or situations that result in them feeling some form of stress (positive or negative) at work. The objective has been to build a picture of the ways stress impacts the health of operators to identify what could be done to make their work healthier.

The sorts of questions I asked have been about what was liked about their work, what was disliked and what situations generated whatever they identified as stress. I took that approach because I wanted to build the picture from the perspective of the operators. Nothing about them without them.

Responses have been quite consistent. By and large, the operators I talked to love their work. If there was a good fit between them and the specific work they were doing (harvesting, shovelling / skidding / hauling, processing, sorting / fleeting / loading), the work itself added to their sense of self and wellbeing. It enhanced their life. They felt better about themselves through the mahi.

The same could not be said, necessarily, of the way the work was organised. When questioned about situations that left them feeling “stressed”, the operators pointed to long work hours, the pressure to produce (particularly if the crew did not work well together), uncertainty over work and income continuity and not having a say over aspects of the work that were important to them. Most significantly, apart from the crew culture and its impact on who has a say on the job, these outcomes were the result of decisions made outside the crew environment before anyone turned a key.

Let me give you an example. The key resources impacting on the number of hours worked appear to be the length of the trucking day, the size of the skid and the number of log sorts expected to be stored, the targeted daily production and the length of the contract term.

Those factors dictate when the logging service is required to start and finish in the workday and the number of machines available to provide that service versus the targeted production.

Anything constraining flexible machine capacity meant that the inevitable bottlenecks could only be solved by working longer hours and limited the crew’s capacity to use even the most basic forms of job rotation like covering breaks or sharing early load outs. Those key resources are all part of the harvest planning and management process.

What is tricky about working long hours is that most of the operators spoke about the benefits they had received from working those hours. It improved their ability to provide for their family. It helped to establish their place as a hard worker within the logging fraternity, able to be relied upon by their crew mates. Working long hours enabled them to fit in and move up the ladder.

The issue then, was not just the problems they faced as result of working long days, it was also the lack of control they had over those hours. They had little ability to actively balance their recovery requirements or the time they spent with their whanau against the production needs of the contract. It points to a need to consider health in the design of our logging work places and to broaden who we involve in the process.

More>>

Source: SafeTREE


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Carbon Match Market Update

The Fear – The last month has seen extreme weather events around the globe. Severe floods have hit western Germany and Belgium, China's city of Zhengzhou and of course created major havoc on the west coast of our own South Island as well.

Meanwhile wildfires raged elsewhere in the world. California, Oregon. Siberia - indeed Russia has resorted to seeding artificial rain to combat numerous uncontrolled fires in that country.

Turn off Netflix, switch on the news and watch the next apocalyptic event from the comfort of that armchair. These events, however far removed they may feel to us right now, should add to a growing sense of urgency.

With COP26 just around the corner there is an expectation that every country must lift its game. Keeping the 1.5 degree threshold within reach is a key focus of the next COP. Over the weekend UN climate chief Patricia Espinosa reiterated that "collective efforts fall far short of what is required by science to limit a global temperature rise by the end of the century of 2C, let alone the desired objective of less than 1.5C."

That means a ramping up of NDCs (Nationally Determined Contributions) all round. Revised NDCs were due last week in order to be included in a new synthesis report ahead of COP26. But just 58% of countries submitted them. New Zealand was not yet among that group and is still working on it.

Balancing Act – The final report of the Climate Change Commission has already found that our current NDC is not compatible with contributing to global efforts to limit global warming to 1.5C. We're going to have to step it up.

On the one hand, as NDCs get tougher, so comes increasing pressure on all Governments to intervene. Indeed combating climate change is the dream of regulators and indeed any politician bent on intervention and/or grand plans. It doesn't have to be, but probably will be, the perfect catalyst for bigger government. Right when we need all the help we can get from private sector investors to decarbonise our economy and pursue far greater low-carbon and renewable electrification. It's going to be the finest balancing act.

On the other hand, we just can't move fast enough. A New Zealand group of lawyers, Lawyers for Climate Action NZ, have already called the Commission out, filing for judicial review of the Commission's plan. The Commission's proposed budgets were more generous in their final report than in the draft on which they originally consulted.

We are still yet to see the Government's own emission reduction plan - a whole of Government multi- agency effort, which must be released by year end. It's bound to be confronting.

The ETS is Not Enough – Back when NZ created its ETS, the idea was very much that the carbon pricing would be the key lever for delivering a lower carbon economy. A carbon price had the advantage of simplicity. Now the carbon price is just one part of the tool kit with some policy makers viewing the ETS as a very blunt tool.

Global carbon prices still vary widely, the global carbon market very much a patchwork quilt, a work in progress.

Mid-July finally saw the launch of China's National carbon market, initially covering the Chinese power sector, which accounts for about 40% of the country's emissions. Chinese Carbon Emissions Allowances, known as CCEAs, are reported to be around USD$8 mark.

That's a fair way off the recent prices seen out of the 15 year old EU ETS, where European Allowance front year contracts finished up last week round €53.

NZU Prices – NZUs still appear to be modestly priced compared to that scheme. They continue their strong rise and over the last week have continued to creep north, last trade $48.75 this afternoon on Carbon Match.

With another Government auction just around the corner (1 September) we're interested to see whether NZUs test the $50 mark ahead of the auction, or on the day, bringing the cost containment reserve into play. With changes to regulations expected to raise the trigger price of this pot from $50 to $70 for 2022, there will be a strong temptation not to forgo the opportunity.

Not the Time for Backroom Deals – To this end, a note to foresters and all NZU holders. If you are a seller, we do not believe this is the time for quiet one to one deals. If you are looking to monetise carbon, please test the market, not just the phone. Get set up if you aren't already, log in, name your asking price and see what happens.

Your sale can contribute to price discovery in the wider market. Unless of course nobody knows about it except you and your buyer.

If you don't want to be a seller south of $50, fine. If it doesn't get there you won't sell and nobody from Carbon Match will beat you down. But if you do want to turn NZUs into cash imminently, why not figure out where you are comfortable and consider putting up your asking price where our buyers can see it loud and clear. See what happens.





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Bigfoot teams up with Kennedy Trailers

Two iconic logging brands on either side of the Tasman are teaming up to offer Australian operators of heavy vehicles optimal traction, efficiency, safety and performance. New Zealand’s Bigfoot Equipment have exported their globally renowned Central Tyre Inflation (CTI) system to Australia for 25 years and has just signed an official distribution deal with Kennedy Trailers – one of Australia’s leading manufacturers of semi- trailers.

The agreement presents “a massive opportunity” for both companies and Australia’s forestry, mining, heavy haulage, agriculture and bulk tipping industries will now have local access and support to the best CTI technology on the market.

Bigfoot’s CTI system gives truck drivers the ability to adjust tyre pressures from their cab to suit the speed and weight of their vehicle. Lowering the air pressure creates a larger area of contact between the tyre and the ground and significantly improves traction on loose or soft surfaces. It also saves fuel, improves tyre wear, reduces repairs and maintenance costs, and ensures heavy vehicles can safely handle steep inclines or rough terrain.

“Kennedy Trailers set the standard in Australia in terms of log trailers and truck fit outs,” explains Bigfoot co- owner Graham Wylie. “So their high standards complement our own product and company ethos.”

Pre-COVID, Bigfoot staff would frequently travel to Australia to install their CTI system for customers – often at Kennedy's workshop in Bairnsdale, Victoria.

“Obviously, we haven’t been able to travel over to Australia and do those installations in the past 12 months so it just made sense for Kennedy to install our systems on our behalf. They were eager to help and once they realised how easy it was, and how quickly we could send them parts, it was a natural next step to formalise a distribution agreement.”

Australian customers can now order Bigfoot’s CTI system and arrange installation directly with Kennedy Trailers. Graham says Bigfoot has a strong and loyal customer base in Australia and the company has a very strong one-on-one relationship with all our customers who operate forestry, heavy haulage and bulk tipping vehicles.

“We’re really excited to formalise this relationship with Kennedy Trailers and we’re looking forward to seeing how they can help expand our business. Our goal is to utilise their existing networks to reach further into the various sectors our CTI system caters for.”

Both companies have a family background and share values of honesty, integrity and a strong desire to put customers’ needs first. Kennedy Trailers have been working alongside Bigfoot since the company was first started by Garry Kennedy. His two sons, Cory and Lynden, have now joined him and substantially grown the business.

Cory Kennedy says Bigfoot have proved over and over again that their product is built to perform.

“Kennedy Trailers are the best trailers built in Australia, and we need the best CTI system supporting each and every one. We carefully select suppliers for various components on our trailers, but never before have we been so committed that we’ve become a distributor of another product. This goes to show how much confidence we have with Bigfoot.”

Kennedy Trailers currently employs over 50 staff and build around 150 trailers each year including logging trailers for forestry, side tippers for mines, and custom-made transport solutions for heavy haulage and other industries.



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SnapSTAT - MPI Harvest Graphs







See the whole document Here>>

Source: MPI
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Rayonier NZ Quarterly Performance Impresses

(BMO Capital Markets) - RYN's Q2 in 100 Words: Solid Quarter, Boosting Guidance - Solid quarter. 2Q EPS of $0.22. BMO at $0.11, consensus at $0.10. Adj. EBITDA of $95.3mm. BMO = $78.2mm, consensus = $75.7mm. Real Estate and NZ drove upside. FY2021 EBITDA guide increased 3% to $300-320mm. Upside in Southern Timber, NZ, and R/E. Constructive tone as underlying demand remains strong, even with lumber price correction. Maintain Market Perform rating as the stock is near BMO’s NAV.

New Zealand (NZ). Nice beat. Adj. EBITDA $27.7mm; BMO at $21.9mm, 1Q21 $21.2mm, 2Q20 $9.9mm. 2Q harvest volumes +30.8% y/y (export +41.6%, domestic +17.8%), driven by normalized harvests and strong export/domestic demand. Big price gains. Weighted average pricing = $115.92. 1Q21 = $95.70, 2Q20 = $76.92. Strong Chinese demand, partly driven by import restrictions on Aussie logs. Chinese inventories have risen with slower seasonal demand. Q3 prices will be lower.

Source: BMO Capital Markets


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MPI: Resourcing the War on Weeds

Nationwide project offers hope in war against weeds - A coordinated national research project aimed at tackling 6 of New Zealand's most invasive weeds through biocontrol is expected to have far-reaching benefits for landowners and councils across the country.

The 3-year, $3.2 million project is backed by the Ministry for Primary Industries' (MPI's) Sustainable Food and Fibre Futures fund; Manaaki Whenua – Landcare Research; and the National Biocontrol Collective (the Collective) – a consortium of regional councils, unitary authorities and the Department of Conservation.

"There's no doubt about it – weeds are a constant source of stress for landowners," says Phil McKenzie, Chair of the project's governance group. "Biocontrol has the potential to provide a longer-term solution at a time when more registered herbicides are being restricted by our export trading countries, weeds are becoming resistant to herbicides, and New Zealand society is demanding more environmentally friendly farming practices."

The project has 3 workstreams. These are to: advance biocontrol programmes for several high- priority weeds; monitor weed reduction in matured biocontrol programmes on productive land; and develop a partnership for sustaining investment in weed biocontrol.

The project will focus on Sydney golden wattle (Acacia longifolia), Chilean needle grass (Nassella neesiana), old man's beard (Clematis vitalba), woolly nightshade (Solanum mauritianum), Chilean flame creeper (Tropaeolum speciosum), and yellow flag iris (Iris pseudacorus).

By completion, the project aims to secure Environmental Protection Authority approval for the release of new biocontrol agents for at least 3 of these 6 weed species.

"Weeds are a major threat to New Zealand's natural and productive ecosystems, and they're costly to control," says Mr McKenzie. "Through this project we aim to safeguard our environment and save landowners and councils money by finding smarter ways to reduce herbicides and the labour needed for weed control."

"Although biocontrol is expensive upfront to develop, collaborative cost-sharing models will make the development stage affordable – and the long-term benefits make it well worthwhile." "We've got 15 regional councils co-investing in the project too, which enables regional priorities to be accounted for in selecting weeds to work on. Biocontrol can be a long-term, cost-effective and sustainable weed management solution," says Steve Penno, MPI's director investment programmes.

"By pooling our research efforts across multiple development streams, including adopting what's worked in previous biocontrol programmes, we'll be able to accelerate progress considerably.

Source MPI


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NSW Government Delays Report Post-Bushfires

In NSW, the state government is refusing to release a report into how logging operations should change in the wake of the Black Summer bushfires even as felling begins in a sensitive South Coast region hit hard by the blazes.

Planning Minister Rob Stokes asked the Natural Resources Commission to examine forestry operations after the Environment Protection Authority and Forestry Corp, the state-owned logging body, clashed over so-called site-specific conditions that limited the amount of native trees that could be felled in state forests.

The Commission has completed its report and sent it to Mr Stokes and his colleagues, Deputy Premier John Barilaro, and Environment Minister Matt Kean. A spokeswoman for Mr Barilaro said the report was “being considered by the NSW government and remains Cabinet in Confidence”.

Pressure to release the report, though, is likely to mount as logging issues in the south and north heat up.

Harvesting work has begun at Shallow Crossing, not far from the Brooman State Forest where the EPA and Forestry Corp were at loggerheads over timber curbs earlier this year. Separate legal action has also commenced to challenge the North-East Regional Forest Agreement in the wake of the severe 2019-20 bushfire impacts in areas that rarely burn.

More>>

Source: Sydney Morning Herald


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Jobs



Buy and Sell



... and finally ... time for a chuckle or two ...


While watching a movie recently, I couldn't hear the dialogue over the chatter of the two women sitting in front of me. Unable to bear it any longer, I tapped one of them on the shoulder.

"Excuse me," I said, "I can't hear."

"I should hope not," she replied sharply. "This is a private conversation."

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It's got to be tough for our Australian mates. According to one of our readers, he asked his doctor last week how long he thought this Covid thing would last in their state and he answered, “How should I know, I’m a doctor not a politician!"

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Then he said while out recently doing some essential shopping, he was intrigued by two large signs in the window of a very colourful variety store, one of which read: ‘STAY POSITIVE’. He said, "I’m sure they meant ‘STAY WELL'".

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More from Australia: You know you’re in strict lockdown when you start talking about "the good ol' days ... back in 2019."

See you again next week.
John Stulen
Editor

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