WoodWeek – 19 October 2016

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Greetings from your WoodWeek news team. Today we join people throughout New Zealand in acknowledging the untimely passing of Helen Kelly earlier this week. Clearly she was one of the most passionate advocates for health and safety this country have ever seen. Leaders from many industries recognised her absolute dedication to the cause. The Pike River mine disaster galvanized her to take an uncompromising approach to what she saw as indifference from management. Her efforts brought about legislative change because of that. In forestry she made us realise that our pan-industry efforts were not being effective in 2013. Forestry is safer and more sustainable as a result of her steadfast approach. Perhaps Robert Reid said it best – “We are a better country for her achievements.”

One output of the FFR Steep Land Harvesting programme, a robotic tree-to-tree machine, dubbed the “stick insect”, was demonstrated in September to a small group of forest industry representatives at Bottle Lake Forest Park near Christchurch. Project leader and tireless innovator, Richard Parker, will be a speaker at FIEA’s Forest Industry Safety Summit in March 2017. Registrations will open in early November.

Statistics NZ report that diesel use in the primary sector has increased in the last five years, and now accounts for over half of the sector’s energy use. The fishing and forestry industries were the main drivers of the increase. The main increases were the fishing industry (up 76 percent from 2011) and forestry (up 42 percent from 2011).

In today's issue, we also have results of a study indicating that more than 91% of our small forests will be harvested. Things like terrain, roading access and distance to a port or mill strongly dictate forest profitability. So many will be pleased to hear the Napier-Wairoa rail line is set to reopen, after KiwiRail and Napier Port reached an agreement last week. Napier Port will be offering a freight service to log exporters subject to a final go-ahead to make the track fully operational. Forest Management NZ manages more than 11,000 ha in the Wairoa District. CEO Steve Bell said he was "delighted at the news" which presented "greater options".

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FISC honours Helen Kelly

Forest Industry Safety Council honours contribution of Helen Kelly - The Forest Industry Safety Council (FISC) is saddened to hear of the passing of Helen Kelly, former NZCTU President and passionate advocate for health and safety at work.

"Helen was instrumental in driving reforms of health and safety in the forest industry over the past 3-4 years," says FISC National Safety Director Fiona Ewing.

"Through our Council we will continue to work with forest owners, contractors, unions and forest workers to strongly support her goal of improving health and safety in forestry – particularly worker engagement and participation."

"Helen was a catalyst for change who motivated the forestry industry to work together to make our industry safer and more professional," says OFM Managing Director Paul Olsen, who represents forestry contractors on the Council.

"She worked alongside forest owners to implement an independent review of health and safety in forestry, and FISC is one of the positives to come out of that, says Paul Burridge from Summit Forests NZ, who represents forest owners on the Council.

"Helen’s hard work, and her commitment to fairness and justice, had a significant impact on the lives of people working in forestry. We are a better country for her achievements,” says Robert Reid, First Union General Secretary, who represent unions on the Council.

Moe mai ra e te tuahine moe mai ra, moe mai ra. Ma te atua hei tiaki hei manaaki i to haerenga ki to kainga to whare okioki. (To our sister may you rest in peace and may God take care of you on your journey home to your resting place.)

The Forest Industry Safety Council (FISC) was set up in 2015 and was a recommendation of the Independent Forestry Safety Review. The Council includes representatives of forest owners, contractors, workers and unions. It has a mandate to lead and coordinate efforts to improve health and safety across the plantation forestry sector. It runs the safetree.nz website.

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Stick insect concept development continues

One output of the FFR Steep Land Harvesting programme, a robotic tree-to-tree machine, dubbed the “stick insect”, was demonstrated in September to a small group of forest industry representatives at Bottle Lake Forest Park near Christchurch.

The concept of the Robotic Tree-to-Tree Felling Machine, where the machine uses standing trees as a means of locomotion, has been developed as an alternative to tracked feller bunchers to overcome the issues of operator safety, steep terrain, and soil damage by remaining above the ground, and being teleoperated, therefore overcoming the difficulties of ground surface travel.

Through the Primary Growth Partnership with the Ministry for Primary Industries the concept of the “stick insect”, originally generated by Dr Richard Parker at Scion in 2002, has been developed to a proof of concept prototype. When the FFR Steep Land Harvesting programme started in in 2010 with the vision of “No worker on the slope, no hand on the chainsaw”, one of the programme goals was to develop alternative tree felling systems with the aim of eliminating manual chainsaw felling.

Scion, in collaboration with University of Canterbury mechatronics programme final year engineering students and post graduates, developed the mobility system and the control system. A recent development has been the addition of an on-board battery power and a hand held remote controller to enable teleoperation of the machine.

While this is an early prototype, the industry stakeholders who attended the field day agreed that the prototype model demonstrated the potential of the concept and that the original vision should be pursued with the aim of scaling up the tree felling system to a machine that is capable of felling small trees in a production thinning environment. Further development of the prototype is part of a wider automation and robotics technology proposal to be submitted to the Primary Growth Partnership in the New Year.

Richard Parker is one of the speakers at FIEA's Forest Industry Safety Summit in Rotorua on 1-2 March 2017. For more information on this popular event click here: www.forestsafety.events

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Local sawmillers cautiously upbeat

“Challenges facing the NZ timber industry are real and significant but the industry is generally in a good demand cycle and sentiment is positive” says New Zealand Timber Industry Federation (NZTIF) president, John McVicar.

“Domestic demand for timber is very strong at the moment” he said, “however the upside was tempered with a number of very real challenges facing the industry.”

“Log supply shortages are chronic in some regions, such as Canterbury and Northland, and there doesn’t appear to be any change to this in the immediate future. The log shortages due to export demand in China, dairy conversions, and wind storms has reduced the forest resource available to local mills and pushed log prices up significantly. These cost increases are yet to be fully passed on and recovered in the market.”

“Timber exporters are struggling with the strong NZ dollar and exports to most markets are hard to make work. It is only the strong local market, driven by record high immigration that is providing some stability, at a time when many export markets for sawn timber are marginal” John McVicar says.

Despite these challenges and others, there is still new investment going into the industry, more so in areas where log supply was not constrained, and the overall annual sawn timber production for the country had actually increased.

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Forestry and fishing slurping up the diesel

Fishing and forestry drive diesel demand - Diesel use in the primary sector has increased in the last five years, and now accounts for over half of the sector’s energy use, Statistics New Zealand said today. The fishing and forestry industries were the main drivers of the increase.

In the year ended March 2016, New Zealand’s primary industries used about 630 million litres of diesel – enough fuel for a typical light vehicle to drive around Earth's circumference 193,000 times.

“Increases in diesel use in the primary industries reflect higher levels of production, with economic activity in the agriculture, forestry, and fishing industries rising 34 percent from 2011 to 2016,” business performance senior manager Jason Attewell said. “More than half of primary sector diesel use is in offroad vehicles and mobile plant, such as harvesters, bulldozers and tractors.”

Overall, the primary industries sector is using 26 percent more diesel than five years ago. This sector includes farming, fishing, forestry, and mining, but excludes dairy and meat processing.

The main drivers of the increase in diesel use were the fishing industry (up 76 percent from 2011), which uses diesel for marine vessel fuel, and forestry (up 42 percent from 2011), which uses diesel mainly for off-road vehicles used in log production.

Diesel use in the forestry and fishing industries reflects increased production, with steady rises in roundwood log exports and volumes of fish caught since 2011. Over the same period, energy use was up sharply in the agriculture industry, as irrigation increased. The primary industries used 37 percent more electricity in 2016 than in 2011. The rise was driven largely by the agriculture industry, which accounted for 73 percent of the total electricity used.

“A 19 percent increase in irrigated land in Canterbury over the last five years reflects the expansion of dairy farming into drier areas,” Mr Attewell said. “Irrigation needs electricity as well as water, and this seems to be what’s behind the large jump in electricity use.”

Energy use figures are derived from the annual New Zealand Energy Use Survey. This year the survey focused on energy use by the primary sector.

For more information about these statistics, visit New Zealand Energy Use 2016 at www.stats.govt.nz

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Napier Wairoa rail line re-opening for logs

The Napier-Wairoa rail line is set to reopen, with an agreement between KiwiRail and Napier Port being signed last week.

Napier Port is offering a freight service to log exporters starting in the final quarter of next year, with the final go-ahead subject to KiwiRail's charge for making the track fully operational.

The Napier-Gisborne line was mothballed in 2012 after damage to the track north of Wairoa and declining revenues.

KiwiRail chief executive Peter Reidy (photo) said reopening the track would boost business growth in the region.

"We had always signalled that the line could reopen in the future, as long as there was sufficient freight volume available to support rail operations and the necessary investment in infrastructure was made."

Sufficient freight volume is thanks to what many describe as a "wall of wood" on the East Coast, thanks to a planting frenzy in the 1990s when log prices spiked. Harvest volumes have been estimated to nearly double for a decade.

Hawke's Bay regional councillor and chair of the Hawke's Bay Regional Transport Committee, Alan Dick, said the annoucement was "the best Hawke's Bay good news story for a very long time." He said financial support from regional council and was "essential" to the commercial arrangement.

"Whatever the cost, the justification is clear and two fold - safety from avoidance of heavy traffic congestion on SH 2, as the massive new log harvests start from next year and, economic development opportunities and options for Wairoa and the northern part of our region," Mr Dick said.

Forest Management NZ manages more than 11,000 ha in the Wairoa District. Forest Manager and joint CEO Steve Bell said he was "delighted at the news" which presented "greater options".

Napier Port is one of the largest international ports in central New Zealand. It handled more than 4 million tonnes of cargo in 2015. Growing volumes underpin plans for new wharf to accommodate larger ships.

More >>

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90% of woodlots to be harvested

Most of New Zealand’s small forests were planted in the 1990s, and now that they are coming to maturity they have the potential to supply most of the large increase in wood availability over the next decade.

However, some small forests have been poorly managed and, when this is combined with a poor location, it can be uneconomic to harvest the trees. Financial losses and factors such as road damage and concerns about road safety due to logging trucks has contributed to an anti- forestry sentiment in some districts.

This needs to be rectified because small forest growers have a strong influence on the public perception of forestry as an investment and thus on whether reforestation and new forest planting occurs.

Enlarging New Zealand’s planted forest area to secure long-term log supply, support regional economies and help New Zealand achieve its goals for climate change and fresh water quality is therefore dependent to a good degree on how small forest owners fare over the next decade.

A report on future wood availability compiled recently for the Ministry for Primary Industries has shed light on the number of small forest blocks (in this study those up to 40 hectares) expected to be harvested, and the probability these blocks will be replanted.

The study indicated that more than 91% of these small forests will be harvested. As expected, the terrain of the forest block, access to roading and distance to a port or mill had a strong influence on forest profitability.

The report’s authors, Barbara Hock, Duncan Harrison and Richard Yao, used large national datasets that map existing forests, and their location, size and age, to determine the forests that are most likely going to be harvested and estimate the probably that they will be replanted. By applying these data to Scion’s Forest Investment Finder (FIF) economic model, the research team was able to establish the costs associated with planting, silviculture, roading, felling and terrain, transport and log yields, and a log price for individual small forest blocks.

Small forests do not have the economies of scale available to them that large forests have so it was encouraging that the modelling indicated only about 6-9% of small forest blocks would be uneconomic to harvest. These blocks are spread around the country and, mostly due to remoteness, may not be harvested at all. Pruning regime had little effect on intention to harvest. A 5% or 10% increase in log price increased the percentage of forests that becomes economic to harvest by 2.1% and 3.4% respectively.

Working with nearby forest owners to coordinate harvesting and share some costs can help too. The effect of improved carbon prices is complex and forest specific. While a higher carbon price can improve cashflow for an ETS-qualifying forest during the growing phase, the carbon liability associated with harvesting needs to be repaid. In some circumstances, a high carbon price could make retaining the forest more economical than harvesting it.

Based on trends over the past 20 years, and taking into consideration data such as location, slope, catchment, proximity to other land uses and industry, and people density, lead author Barbara Hock says there are no real surprises. “The small blocks of forest least likely to be replanted are those near larger urban areas, situated on lower slopes and where there is strong competition with other land uses such as in the Waikato and Canterbury”.

For further information on Scion’s work with small forest growers contact Professor Alison Stewart at alison.stewart@scionresearch.com

Source: Scion

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Tasmania government seeking harvest

Surging plantation timber industry used to build case for logging Tasmanian reserves - The State Government appears to be building a case for opening up protected logging reserves, pointing to new figures showing an increase in private forest harvests.

Forestry Tasmania has suggested lifting a moratorium on logging for 400,000 hectares reserved until 2020 so the ailing business can meet contractual obligations.

An annual report from Private Forests Tasmania — yet to be publicly released — showed a 48.5 per cent rise in harvests in private forests over the 2015-16 year.

Resources Minister Guy Barnett said it was a sign the industry was strengthening. But he conceded the growth was mostly in plantations, while Forestry Tasmania's request was related to native forests.

"Most of those figures relate to turnover in the plantation sector, but also there's a 90 per cent increase in the native forest sector," he said.

More >>

Source: ABC News

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Ocean Freight Index

The Baltic Supramax Index (BSI) closed on Monday at 676 points, an increase of 16 points (or 2.4%) since September.

The BSI (Baltic Supramax Index), published by the Baltic Exchange, is the weighted average on 5 major time-charter routes. It is based on a 52,454 mt bulk carrier carrying commodities such as timber.

Source: Capital Link Shipping

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US-Canada trade deal expires

An extension to the Canada-US softwood lumber agreement expired on Wednesday.

So, in effect, the legal safety net was removed from the trade agreement, but it is mostly business as usual so far for area lumber production. The deal actually expired more than a year ago, but there was a one- year provisional carry-on clause. Once that passed there was an additional standstill period during which no legal action could be taken by either side. Although BC’s lumber exports are not as dependent on the US market as they were when the trade accord was signed, the U.S. remains the destination for more than 40 per cent (by value) of provincial lumber exports. It is worth noting, too, that BC accounts for 50 per cent of Canada’s softwood lumber production. BC sawmill sales last year, mainly lumber, amounted to $4.9 billion, by far the largest component of BC’s forest products industry.

Should the US Lumber Coalition, which represents producers and woodland owners, succeed in legal action against Canada, exporters will have to start paying a penalty next March, with a final US government decision on the amount of countervailing and anti-dumping duties expected at the end of 2017.


Source: Vancouver Sun

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Minister backs forest industry growth

Tasmania Government Committed to Supporting Strong Growth in Forestry - The resurgent Tasmanian forest industry is experiencing strong growth, with new figures showing a massive 48.5 per cent rise in the private forest harvest last year.

This dramatic turnaround has occurred under a majority Hodgman Liberal Government that backs the sector, as opposed to the previous Labor-Green government that brought it to its knees.

The Liberal Government remains absolutely committed to securing a sustainable future for the industry because we know how important it is in regional communities, such as Triabunna.

That’s why we are acting on the advice of Forestry Tasmania (FT) that we need greater resource security to sustain ongoing growth and put the Government Business Enterprise on a proper commercial footing. We will deliver on our contractual wood supply obligations; what we are considering is how we achieve that and how we end the public subsidies to FT. Businesses like Elphinstone Engineering here in Triabunna, which makes trailers, rely on a strong forest industry, and felt the impact of the disastrous Labor-Green forest deal. To allow businesses in this sector to continue to grow and to create more jobs – our number one priority – we need to ensure commercial resource security.

All the figures show it is not only confidence that is growing in forestry, but also exports, production and job-creating investment. Private Forestry Tasmania says the total private forest harvest – including hardwood plantations and native forests – increased by 950,000 tonnes in 2015-16 to just less than three millions tonnes; numbers not seen in eight years.

Export statistics from TasPorts, meanwhile, showed wood products rose to more than three million tonnes in the year to June – the highest level in five years.

In another positive sign for the industry, there has also been great interest in the Government’s $1.25 million Wood and Fibre Processing Innovation Program from companies confident and keen to invest.

Tasmania's largest native forest saw miller, Neville Smith Forest Products, is spending $1.3 million to expand and create new jobs in regional communities. The Liberal Government is committed to continuing to work with our forest industry to encourage and maintain this ongoing growth.

Source: Tasmanian Government

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Science study on forest productivity

Christchurch-based scientist Susan Wiser is part of a team of scholars from 90 institutions around the world to have had a paper published in the influential Science journal today that reveals a continued loss in tree biodiversity would result in an accelerating decline in forest productivity worldwide.

The team consolidated field-based forest inventory data from 777,126 permanent sample plots in 44 countries containing more than 30 million trees and discovered that conserving diverse forests, not only retains a species-rich environment, but also maintains the forests’ output and services for future generations. They found that when the number of tree species increases, so does the amount of timber that the forest produces. They also found the opposite to be true – a decline in tree diversity would result in an accelerating decline in wood production.

Dr Wiser is a plant ecologist for Landcare Research, a Crown Research Institute that specialises in land-based environmental science. Dr Wiser, who manages Landcare Research’s National Vegetation Survey (NVS) Databank, provided data from over 300,000 trees from more than 4000 permanent sample plots spanning the variety of New Zealand forest types. These plots were established from 1969-2007 and had measurement spans ranging from five to 43 years.

The global study calculated that the amount of loss in productivity that is associated with the loss of tree species richness would have an economic value of up to a $500 billion per year across the world. That amounts to more than double what it would cost to implement effective protection and management of the Earth’s terrestrial sites of global conservation importance.

This finding highlights the need for a worldwide re-assessment of forest management strategies and conservation priorities and the need to explore the influence of tree species diversity on other values, such as food production and other persistence of native biota.

The research also marks the first major accomplishment of the team, formally known as the Global Forest Biodiversity Initiative (GFBI). Established in 2016, GFBI is an international, interdisciplinary, and multi-stakeholder research collaborative that aims at better understanding broad-scale patterns and processes associated with the planet's four billion hectares of forested ecosystems. For details, visit http://www.GFBinitiative.org/.

The study was led by Jingjing Liang of West Virginia University, Peter B. Reich at the University of Minnesota and Thomas W. Crowther at the Netherlands Institute of Ecology. The trio also coordinates the initiative, which supports data sharing, policy making and cutting-edge research in forest sciences.

Dr Wiser said: “For New Zealand, the study also highlights the importance of our collections and databases, not just in underpinning New Zealand policy but in helping understand global patterns of tree diversity and productivity and how New Zealand fits in this global context. As such, it capitilises on the investment the New Zealand government has made over the years in long-term ecological measurements and ensuring that these data are securely archived and available.”

Source: Scoop

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Thanks to FICA Sponsors

We would like to thank all of the organisations who support FICA, which in turn works to promote business growth and improved safety and efficiency amongst forestry contractors for the benefit of New Zealand's Forestry Industry.


Blackburne Group (Accountancy & Management Services)
UDC Finance (Banking & Asset Finance)
Sweeney Townsend Insurance Brokers (Insurance Services)
TLC Insurance (Insurance Services)

Gough CAT
Cableprice NZ Ltd
Mini-Tankers (Z Energy)
Komatsu Forest NZ
Shaw's Wire Ropes
Woodsman Pro
Beker Findlay Allan
Minter Ellison Rudd Watts
Bridon Cookes

Blackwoods Protector
Timbersaws (Levin Sawmakers)
Total Lubricants
Active Equipment
Manage Company
Aegis Oil

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Tenon plans capital return

Tenon Confirms Intention to Make Capital Return to Shareholders - Tenon announced this week that it had applied to the High Court for initial orders directing it to seek shareholder approval for a return of capital, as had been previously discussed in Tenon’s FY’16 Annual Report distributed to shareholders in September.

Tenon’s Chairman, Luke Moriarty, said that “The capital return is a consequence of the sale of the Company’s North American business (which is pending Tenon shareholder approval) to Blue Wolf Capital. Given the change in the scale of Tenon’s ongoing business and our lesser ongoing capital requirements post the sale, the net sale proceeds (after repayment of all Tenon debt) is surplus capital, and the Board is seeking to return that to Tenon shareholders.

Accordingly, the Company proposes to undertake a pro rata return of capital to Tenon shareholders equating to US$1.10 per existing Tenon share (approx. NZ$1.55 per share at a 71 cent FX rate), which amounts to US$71.3 million (approx. NZ$100 million). This return of capital will be undertaken by way of a cancellation of Tenon shares under a High Court approved scheme of arrangement under the Companies Act 1993, by which Tenon will cancel one out of every two ordinary shares held by each shareholder and pay the NZ$ equivalent of US$2.20 for every ordinary share cancelled, which is equivalent to US$1.10 for every share held prior to cancellation. The capital return is expected to be made in one payment in late December 2016, following receipt of final orders from the High Court.”

The capital return and the sale to Blue Wolf Capital are each subject to approval by shareholders at Tenon’s Annual Shareholders’ Meeting to be held on 18 November 2016, and the capital return is also subject to completion of the sale to Blue Wolf Capital, expected to be on 30 November (New York time). Tenon will apply to the High Court for final orders sanctioning the capital return if, at the Company’s Annual Shareholders’ Meeting, shareholders approve the Blue Wolf sale and the capital return.

Full details of the proposed sale to Blue Wolf (including an independent report from Grant Samuel) and capital return will be provided in the documentation for the Annual Shareholders’ Meeting which will be distributed to shareholders in early November.

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Buy and Sell

... and finally ... Peppermint ... and more

I recently spent $6,500 on a young registered Black Angus bull. I put him out with the herd but he just ate grass and wouldn't even look at a cow. I was beginning to think I had paid more for that bull than he was worth. Anyhow, I had the Vet come and have a look at him. He said the bull was very healthy, but possibly just a little young, so he gave me some pills to feed him once per day.

The bull started to service the cows within two days, all my cows! He even broke through the fence and bred with all of my neighbour’s cows! He's like a machine! I don't know what was in the pills the Vet gave him ...

... but they kind of taste like peppermint.


Finally, with news reports this week of an offensive to seize back the Iraq city of Mosul after two years of terrorist control, we couldn't help think of an decade-old interview to shed light on their problems.

Here it is once again, to help you see what's behind the conflict:

That's all for our mid-week wood news roundup.

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John Stulen
PO Box 1230
Building X91, Scion Campus, 99 Sala Street
Rotorua, New Zealand
Tel: +64 27 275 8011
Web: www.woodweek.com

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