WoodWeek – 21 March 2018

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Greetings from your WoodWeek news team. With the New Zealand economic growth continuing to prove the doubters wrong, who sulked in post-election business confidence surveys, forestry and by definition, the rural regions of the country, continue to be the beneficiaries of funding and potential corresponding job growth. Last week’s private investment announcement by Red Stag is followed this week by a nursery investment boost, this time with the government boosting an investment already made by a local trust in Minginui.

The most recent market outlook from the Ministry for Primary Industries continues to be upbeat as they forecast forestry exports to grow by more than 11 percent in 2018, supported by record harvest levels and ongoing demand for New Zealand logs from China. The Government’s One Billion Trees programme is another catalyst for investment and changing land use, primarily through increased replanting rates and new production forest area.

Forestry registration rights are to be brought under the control of the Overseas Investment Office. However, Cabinet has also agreed to streamline the way applications are considered by the office. Forest owners had complained that tortuous proceedings by the Overseas Investment Office make it hard for overseas forestry companies to invest in New Zealand and put in jeopardy the government's one billion tree programme.

A two-year-old nursery in Minginui will receive $5.8 million over the next three years to scale up its seedling production. The funding will help expand its workforce tenfold to 90 and grow up to 1 million trees a year. The nursery focuses on native trees and is the first in the country to use a Scion-developed technique to propagate indigenous podocarps.

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Primary exports forecast to rise says MPI

Primary sector exports forecast to rise to over $42 billion in 2018 - New Zealand's primary industry exports are forecast to rise nearly 11 percent in the year ending June 2018 to $42.2 billion.

This would be the largest annual increase since 2014, according to the Ministry for Primary Industries’ latest quarterly update.

"Our Situation and Outlook for Primary Industries report shows export revenue across all of the sectors has been incredibly strong over the past year, particularly for dairy, meat and forestry," says Jarred Mair, MPI Policy and Trade Acting Deputy Director General.

“Dairy export revenue is expected to increase by more than14 percent in 2018 due to a recovery in prices over the past 12 to 18 months. It is also result of more milk being processed into higher value products such as infant formula.

“At the same time, the latest numbers show that dairy cow numbers have fallen since 2016. In addition, global red meat prices are expected to increase export revenue in the meat and wool sector by nearly 10 percent in 2018."

“Forestry exports are also forecast to grow by more than 11 percent in 2018, supported by record harvest levels and ongoing demand for New Zealand logs from China.”

High returns and new policies are likely to create investment opportunities across the primary industries, says Mr Mair.

“For example, high horticulture returns are driving investments in productivity and competition for suitable land. The Government’s One Billion Trees Programme is another catalyst for investment and changing land use, primarily through increased replanting rates and new production forest area.”

MPI’s Situation and Outlook for Primary Industries report provides a snapshot and forecast for New Zealand’s major primary sectors.

Download the full report

Source: Scoop

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Funding boost for Minginui tree nursery

Ngati Whare-owned Minginui Nursery to get $5.8M from provincial growth fund - Ngati Whare Holdings' Minginui Nursery is the latest beneficiary of Regional Economic Development Minister Shane Jones's provincial growth fund, securing $5.8 million over the next three years to scale up its seedling production.

The funding will help the nursery, based in Bay of Plenty's Whirinaki Forest Park, expand its workforce tenfold to 90 and grow up to 1 million trees a year, Jones said in a statement. The two-year-old nursery focuses on native trees and is the first in the country to use a Scion-developed technique to propagate indigenous podocarps, the tree family including totara, rimu, kahikatea, matai and miro.

"With the government committed to seeing one billion trees planted over the next 10 years, we need to work with nurseries and help them increase production to ensure enough seedlings – both exotics and indigenous – are available to be planted," Jones said. "Ngati Whare Holdings has already proven it can operate a nursery on commercial terms, employ and train local people and the government is happy to partner with such businesses."

The $1 billion a year provincial growth fund to fund regional economic initiatives has formed a key component of the coalition agreement between the Labour and New Zealand First parties to help reinvigorate the provinces, which both parties claimed had been left behind under the previous administration. Last month Jones announced $61.7 million for regional programmes when he officially launched the fund.

Jones today said Minginui was planned as a forestry town and built in the late 1940s, but its population had dwindled since a sawmill was closed in the late 1980s and just 1,300 people now live in the wider area with fewer than 300 in the town proper.

"Community development is the key driver for the nursery’s move to increase its production of forestry grade native seedlings to an industrial scale," Jones said. "With the PGF’s help, Minginui Nursery can play its part in rejuvenating the region, contributing to employment and skills development and better social outcomes for the community."

Ngati Whare Holdings set up the nursery to establish an operation capable of scaling up native plant forestry, providing local employment and ultimately earn a commercial return for Ngati Whare, which is one of the eight Central North Island iwi which signed the $400 million Treaty of Waitangi settlement over Crown forest licence lands, known as Treelords. The iwi's settlement, including the Central North Island forest component, was valued at $15.7 million.

Source: BusinessDesk via Scoop

Additional coverage:

Regional economic development minister Shane Jones annouced the funding this late last week at Minginui, deep in the Whirinaki Forest Park.

Mr Jones said Minginui nursery would receive $5.8m over the next three years to grow up to one million native seedlings every year and would support the government's plan to plant one billion trees in the next ten years.

Mr Jones said the funding would help expand the business and provide 90 jobs for the community.

"What will flow is an output of at least a million native trees [annually], the absoption of scores and scores of young people into an enterprise that's scientifically proven."

Minginui is a forestry village, but when the local sawmill closed in the late 1980s the population fell and only 300 people live there now.

The plant nursery, owned by local iwi Ngati Whare, has been open for 18 months employing nine people.

The funding will allow it to expand and provide up to 90 jobs for the community.

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Carbon Market: NZU update from Carbon Match

As of last week, spot NZUs are still not quite getting their heads to the $21 mark, with the volume that has moved through Carbon Match so far this week trading at between $20.90 and $20.95, and a best bid of $20.85 right now.

Might we see more colour to this market in due course? Minister for Climate Change James Shaw today promised to "put some meat on the bones of the in-principle decisions the previous Government made around things like the current $25 fixed price option, and aligning ETS unit supply with our emissions reduction targets."

In his speech to the Downstream conference he said that the Zero Carbon Act should pass in mid-2019, with consultation on design of the Bill expected in June, and he also noted that in parallel work was underway on ETS improvements. Check out his thoughts here.

Carbon Match - best bid $20.85, best offer $21.00, why not jump on, take a view and add to the mix.

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Source: Carbon Match

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SCION green fuels report: Experts respond

Green transport with biofuels - A new report recently released from Scion suggests that New Zealand could build a renewable low-carbon transport fuels industry, but only if there is the will to act.

In 2015, nearly a quarter of the country's greenhouse gas emissions were from combustible fuels, so the report suggested biofuels could have a major impact on overall reduction of New Zealand's carbon emissions.

University of Waikato senior research fellow Dr Martin Atkins welcomed the study, which he said "should reignite the conversation around the future of low-carbon transportation in New Zealand".

"While there is lots of interest in electric cars, this study clearly shows that liquid biofuels have an important role to play and simply cannot be ignored and put in the too-hard basket."

Massey University's Professor Ralph Sims, director of the Centre for Energy Research, said biofuels would play a role in moving toward net zero greenhouse gas emissions, but cautioned that there was a distinction between 'good' and 'bad' biofuels.

Good biofuels, as identified by Scion, included those produced from crop and forest residues and purpose-grown forests on marginal land, he said.

"Most biofuels cannot compete with an oil price below around US$100 per barrel ... although a high carbon price would help them become more viable. However, the current price of around NZ$ 21/t CO2 under the NZ emissions trading scheme adds only around 5 cents per litre to the retail price of petrol or diesel, so would need to rise significantly to have any major effect."

The SMC gathered expert reaction to the Scion report.

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Statistics obscure risks in primary industries

Australia - Agriculture, forestry and fishing has been named the most dangerous industry in Australia, according to a independent analysis of Safe Work Australia data released in January.

Statistics show 44 workers died in agriculture, forestry or fishing in 2016 and over 3,500 people suffered serious injuries in the same time period. The analysis found transport, postal and warehousing was the second most dangerous industry, followed by construction and manufacturing.

Australian Forest Products Association chief executive Ross Hampton said it frustrated industry leaders data on forestry was bundled into an overall group, as forestry only accounted for a small percentage of injuries and fatalities.

“The issue of safety in our industry is a challenge for us in terms of the impression it can create,” he said.

“Despite our efforts to have authorities to disaggregate the data to deal with forestry industry separately from the rest of agriculture, we are always bundled in overall group.

Mr Hampton said there had been a push in the last decade to move people off their feet in forests to inside safe machines.

“It has been quite a deliberate move to move away from individuals in the bush with a chainsaw and much more toward machines with safety cages and all the extra protections that go with that,” he said.

“It would be helpful if the work safe authorities would separate the forestry statistics because combining the industries can lead to a skewed impression of how safe or otherwise it is working in forestry.

“It would provide a more valid and real picture for young people who may be interested in forestry for example that if they could see the real statistics.”

“But we only make up around 10 percent of that overall workforce (agriculture, forestry and fishing) and around four per cent of workplace industry or death. There is no disaggregation from Safe Work authorities at where dangers are in that sector.”

Source: www.thecourier.com.au

Editor - Due to misinformation by third parties as outlined above, people can misunderstand how safe work is organised and planned in forest industry companies.

One example of how much care and attention goes into ensuring workers and their workplaces have minimised exposure to undue risk is the popularity of FIEA's forest safety conferences in both Australia and New Zealand.

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Streamlining investments clarifies signals

Streamlining applications for overseas ownership in New Zealand forests clarifies investment signals - The Forest Owners Association says streamlining the application process for overseas investment in New Zealand forests is a major step forward and will make clear to potential investors that New Zealand has a positive forest future.

The Associate Minister of Finance David Parker has announced that cutting rights will be brought under the scope of the Overseas Investment Office, but the application process will be streamlined and cutting rights for forest land under 1,000 hectares, or for less than three years, will not need to go through the OIO.

Forest Owners Association President Peter Clark says he is reassured that the government intends to make the whole OIO process more straightforward, for both forest land ownership, and cutting rights.

“We have always acknowledged that overseas investment in New Zealand forests is a privilege and not a right. But our members have increasingly found that to make a successful application takes a huge amount of time and expense and then they would then have to seek new approvals for each individual transaction.”

“David Parker says these unnecessary impediments are to be removed, including the counterfactual test. Today’s statement may not be ideal from our point of view, but it is certainly an improvement on the current regime and clarifies the signal that the government is serious about achieving a planting target of a billion trees over ten years,” Peter Clark says.

David Parker says the government decision to include cutting rights in the scope of the OIO was necessary before the Comprehensive and Progressive Agreement for Trans Pacific Partnership came into force.

Peter Clark accepts this has caused a rush to develop policy, but he says the forest industry will be making full use of the brief period of public consultation and reference to a Select Committee.

“The forest industry in this country is massive. It represents a huge ongoing investment both by New Zealanders and from overseas. We have to make sure that legislation and other rules which are approved are realistic and practicable. That process can’t be rushed.”

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Climate change guidelines: Have your say

The Government is inviting input as it sets the priorities for New Zealand at international climate change negotiations.

At Paris in 2015, 174 countries, plus the European Union, committed to reduce greenhouse gas emissions and limit global temperature rise this Century to well below 2 degrees Celsius.

At the end of this year (2-14 December), international negotiators meet in Katowice, Poland, for the 24thsession of the Conference of the Parties (COP24) to the United Nations Framework Convention on Climate Change (UNFCCC).

The purpose of COP24 is to work out the guidelines for how countries work together to reduce global greenhouse gas emissions.

From today, New Zealanders are invited to have their say on what they think New Zealand’s stance on those guidelines should be.

“Tackling climate change is the greatest environmental challenge of our time,” says the Minister for Climate Change James Shaw.

“I’ve been clear that New Zealand will show leadership on climate change on the world stage, which is why we want to refresh our approach to international climate negotiations, and to hear from you about what you think is important in those negotiations.

“We need to lead by example at home and we also need to be clear about what we’re working towards at the international negotiating table.

“Having signed up to the Paris Agreement, the next step is to agree on guidance for countries as they go about implementing their national contributions to reducing greenhouse gases and limiting temperature rise, and that is what will happen in Katowice in December,” Mr Shaw says.

“There are a number of areas New Zealand has focused on already, including transparency, effective mitigation, integrity of carbon markets, agriculture, as well as gender and indigenous people’s issues,” he says.

Public submissions can be made by clicking here for more details >>

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Forestry 30 years on from Cyclone Bola

Forestry dominates the inland Gisborne district that was the epicentre for Cyclone Bola's metre of rainfall. - But turning up Mata Rd from State Highway 35, south of Tokomaru Bay, the pine tree view is interspersed with farmland, although the farmland soon gets harder to spot.

"It's Class 6 land with a bit of Class 7 at the start but the reverse applies as we get up into the forests with lots of steep and erosion-prone Class 7 with some Class 6," says Kerry Hudson from the Gisborne District Council's soil conservation team.

"Gisborne has a lot of pastoral farming on better examples of Class 7 – that's okay in the long run as long as the farmers are doing enough conservation work and keeping up planting. Steeper and erosion-prone Class 7 gives us problems and needs intensive erosion control: afforestation, reversion and intense pole planting in places.

"We get a lot of shallow slips on the steeper stuff in intense rainfalls, as well as the big slumps where the whole hillside drops out. There have been some beauties out here, no doubt about that."

He says there's often rapid growth of native bush among the radiata.

"I wonder sometimes whether some of the steep places should ever have been planted in trees. Reversion is a much better option for so much of this land. To me, some of it is Class 8. Our worst eroding land was planted initially in pinus radiata to provide stability. Post-harvest, we need to assess if longer term or more permanent trees in places would ensure long-term stability."

After Bola hit the region in March 1988, the Gisborne District Council identified the "worst of the worst" eroding land as Land Overlay 3a. It must be planted with effective tree cover by 2021. Funding is available though the Ministry for Primary Industries' Erosion Control Funding Programme.

Names like Pauariki, Mangaiti, Matanui, Tironui, Waiau and Makomako Forests roll off Hudson's tongue. He says the latter was going to be divided into eight farms by the former Lands and Survey Department, but it was planted in 1981 and most of it has been harvested in the past decade (and replanted).

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Source: Stuff News

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Anglers body shun pine proposals

Government’s “100 Million Trees” Dream Must Avoid Pine Monoculture - A national rivers and trout fishing advocacy group wants caution and foresight in the new government’s ambitious “one million trees” policy so as to avoid monocultures of pines.

The new government aims to plant 100 million trees a year - with the goal of planting a billion over 10 years.

New Zealand Federation of Freshwater Anglers’ president Graham Carter of Hamilton said monocultures of pine trees in many parts of New Zealand had been an environmental disaster with depleted stream flows and heavy siltation of rivers and estuaries following clear felling logging. “The emphasis seems to be on planting commercial areas of pine trees although it has been stated planting will include both exotics and natives. The Federation believes the emphasis should be strongly on native trees, and not pines,” he said.

Government statements indicated an environmental element to the plan, as forests planted on Department of Conservation land would be native trees acting as permanent "carbon sinks" to counter climate change.

Past attention about water and river quality had almost exclusively focused on so- called “dirty dairying” but there were other land-use questions to be answered.

“For instance have monocultures of large scale forestry had detrimental effects ecologically and environmentally to rivers?” asked Graham Carter.

The practice in NZ of clear felling pines exposed steep hill country to heavy runoff of silt and debris, when rains occurred. But run-off could be reduced by two-stage harvesting of forests, as apparently practised in Europe where felling is in done in two cuts perhaps 12 months apart, along contours thus reducing runoff.

Another aspect of forestry monoculture that should be investigated was lowered pH levels i.e. acidification of the soils and therefore increased acidic runoff into waterways.

“The pH level (degree of acidity) is important to both bottom fauna and subsequently aquatic life such as indigenous fish and trout. If the pH drops below 5.5 (increased acidity) then long term damage to the fishery, both native and trout, occurs.”

Pine trees take much more water from the environment than native vegetation and reports were where pines have been planted, stream flows were noticeably less and even disappeared.

Establishment of pine forests often resulted in clearance by burning of early regenerating of native vegetation ranging from fern to native shrubbery and bush so that hillsides could be roaded and pines planted for the dubious purpose of carbon trading said Graham Carter. One Malaysian owned forestry corporate in Marlborough had roaded extremely steep hill country with extensive slipping resulting and burned native bush. The Marlborough Sounds inner inlets had been badly silted up smothering the ecosystem and causing fishery declines.

“It is easy in this case of exotic monocultures to ‘not see the wood for the trees", he said. “While a superficial glance at extensive forests might seem beneficial, in the case of monoculture of pines, there are various detrimental effects.”

Urgent study and policy should aim to implement better harvesting regimes as practised in Europe, zoning of land use to avoid extensive pine forest monocultures and making mandatory creation of 50 metre buffer zones along all rivers and streams said Graham Carter.

One encouraging aspect was Shane Jones’ pre-2017 election statement that foreign ownership of Northland forests was "out of control".

“We hope post-election that Shane Jones will be assertive on the foreign ownership aspect,” he said.

Source: Scoop News

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Court finds Sino Forest founder guilty of fraud

In Canada, an Ontario Superior Court judge has found Sino-Forest Corp’s co-founder and former CEO Allen Chan guilty of fraud, breach of fiduciary duty and negligence and ordered him to pay more than $2.6 billion.

Justice Michael Penny found that Allen Chan “abused his unique position as a fiduciary to orchestrate an extremely large and complex fraud” that caused the timber company to lose billions.

Penny’s decision last week is the latest development in one of the country’s largest corporate fraud sagas, which has landed the troubled company’s executives tussling with the Ontario Securities Commission (OSC) and auditors for years.

The civil case that Penny presided over was filed in 2014 by SFC Litigation Trust, which was acting on behalf of Sino-Forest’s creditors.

In his decision, Penny said, “Mr. Chan, rather than directing Sino-Forest’s spending on legitimate business operations, poured hundreds of millions of dollars into fictitious or over-valued lines of business where he engaged in undisclosed related-party transactions and funnelled funds to entities that he secretly controlled.”

In an effort “to deter the defendant and others from similar misconduct in the future, and to mark the community’s collective condemnation of what has happened,” Penny ordered Chan to pay $2.63 billion in damages and $5 million in punitive damages.

Sino-Forest first became embroiled in lawsuits and an Ontario Securities Commission investigation after Muddy Waters LLC released a 2011 report suggesting it was a Ponzi scheme that exaggerates its assets.

A year later it filed for bankruptcy protection, put itself up for sale and delisted from the Toronto Stock Exchange.

In 2017, the OSC found Chan and other Sino-Forest executives defrauded investors, misled investigators and engaged in deceitful and dishonest conduct.

That same year the OSC reached a $8-million settlement with accounting firm Ernst & Young, who it had accused of preparing a negligent audit of Sino-Forest and shoe manufacturer Zungui Haixi Corp., which both faced criticism for their financial practices.

Source: www.canadianbusiness.com

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Wooden shoes, but not what you're thinking

When Your Shoes are Made of Wood Pulp - Allbirds, which has sold more than a million pairs of woolly sneakers, embraces eucalyptus.

Tim Brown, a World Cup soccer player from Wellington, New Zealand, and Joey Zwillinger, the head of an eco-friendly algae-chemical company, met through their wives a while back, and, observing a trend toward workplace informality, went into business with a loose idea: knitted woolen sneakers. “This was the very first shoe we made,” Brown said the other day, in San Francisco, gesturing toward a photograph of footwear that bulged and puckered like a tea cozy. “It looks like something you might wear if you have some sort of medical problem.”

That was then. Since releasing its first non-hideous model, in 2016, their company, Allbirds, has sold more than a million pairs of sustainably sourced woolly sneakers. “Wool is this miracle fibre that regulates temperature and wicks away moisture,” Brown said. Lately, Allbirds has become the It shoe among woke millennials and techies, who admire its boundless workplace chic. “We went through multiple iterations to arrive at the simplest sneaker we could imagine,” Brown explained. “It’s what we call the right amount of nothing.”

By that measure, there’s more nothing than ever in Allbirds’ latest shoe, which is light and made from plants. As morning light struck some big philodendrons in their office windows, Brown and Zwillinger convened in a conference room to admire the new product: a sneaker called Tree, which is woven largely out of fibre made from eucalyptus pulp.

“This fibre is one of the most sustainable materials on the planet,” Zwillinger said, caressing the fabric, which is cool, silky, and woven into mesh. He was wearing work- casual (a striped button-down, jeans, blue Allbirds with white soles), in contrast to Brown’s cool minimalism (charcoal T-shirt, navy cardigan, cream Allbirds with matching soles). The new Tree shoe comes in two versions: a “runner,” which laces up like a track shoe, and a “skipper,” a low-riding model reminiscent of a boat shoe. The eucalyptus in the uppers is farmed, using no irrigation, in South Africa (the shoes are manufactured in Shenzhen, China), and produces fabric ideal for summer, when thick wool footwear might feel wrong.

“Our best-performing market in the country is Atlanta—no idea why,” Zwillinger said. “But give the wool a hot, humid day in Atlanta, and, if you’re not wearing socks, it gets swampy.”

Allbirds’ headquarters is in a historic neighborhood of San Francisco south of Telegraph Hill. “Mark Twain used to do writing in this building,” Zwillinger chirped, and he and Brown slipped out a door to a commercial alley. In a new annex, across the way, designers were peering at Tree prototypes arrayed on tables.

“This looks like a shoe that’s been dug up from a village in the Arctic,” the company’s head of design, Jamie McLellan (black Allbirds, black soles), said, picking up a stained and crumpled Tree prototype in off-white. “But it was the first one where we realized we could knit the fibre.”

“There’s probably another fifty prototypes after that,” Brown said.

The final version of the Tree shoe has laces made from recycled plastic bottles, an insole derived from castor beans, and eyelets based on plant starch. To create the eucalyptus fabric, wood pulp is dissolved in a nontoxic bath that turns it into tufts of downy fibre, called Tencel.

“The process takes five per cent of the water used for cotton and about half the carbon footprint,” Jad Finck (blue Allbirds, white soles), the vice-president of innovation and sustainability, said, rubbing Tencel between his fingers. The fibre is woven into a cloth that is airier than the merino-wool fabric in original Allbirds. “We want people who don’t know anything about materials to be able to say, ‘Oh, yeah, that one kind of looks like a sweater! And that one sort of looks like a screen door for your feet.’ ”

Finck wandered over to a table laden with bits of other materials used for research. “This is yak hair,” he said, examining a swatch. “This is a sugar-cane-based microfibre—it kind of looks like suède.” He picked up a square of bright-red fabric. “This is made from pineapples.”

Traditionally, the hard part of selling shoes—even those not made from wood—is getting a good fit. Allbirds does most of its business online, and it offers no half sizes, so its products must suit more feet than normal.

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Buy and Sell

... and finally ... remember your English teacher?

... well he or she would love these jokes:

As for the rest of us --> this will test your knowledge of English grammar:

A dangling participle walks into a bar. Enjoying a cocktail and chatting with the bartender, the evening passes pleasantly.

A bar was walked into by the passive voice.

An oxymoron walked into a bar, and the silence was deafening.

Two quotation marks walk into a “bar.”

A malapropism walks into a bar, looking for all intensive purposes like a wolf in cheap clothing, muttering epitaphs and casting dispersions on his magnificent other, who takes him for granite.

Hyperbole totally rips into this insane bar and absolutely destroys everything.

A question mark walks into a bar?

A non sequitur walks into a bar. In a strong wind, even turkeys can fly.

Papyrus and Comic Sans walk into a bar. The bartender says, "Get out -- we don't serve your type."

A mixed metaphor walks into a bar, seeing the handwriting on the wall but hoping to nip it in the bud.

That's all for this week's wood news.

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John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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