WoodWeek – 4 May 2016

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This week it’s all on with positive news for our forestry sector. The Hawke's Bay Regional Council announced a proposal to KiwiRail to establish a log transport service from Wairoa to the Port of Napier. Komatsu Forest is launching a new harvester head, the Komatsu C283, a sturdy head designed for heavy trees.

We’ve got a new format for the log and lumber export reports from the team at Champion Freight.

In Northland, farmers and landowners are being encouraged to plant as little as five – or as much as 300 – hectares of new forestry to take full advantage of a government forestry grant scheme. The Afforestation Grant Scheme (AGS), administered by MPI, pays eligible applicants a subsidy of up to $1300 per hectare to plant forests. Landowners must also agree to maintain the forest for a decade. In return, the Crown – which has earmarked about $19.5M for the establishment of 15,000ha of new forests over five years to 2020 – gets carbon credits for the land involved.

Meanwhile on the carbon market front, there has been an account from the Morgan foundation on New Zealand's extreme reliance on "dodgy" ERUs to date. This was followed by a report that Minister Bennett might consider cancelling the Kyoto surplus we derived partly as a result of that reliance, with a hypothesis that this might drive tougher targets for ETS sectors. Clearly this is a space to watch.

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KiwiRail invited to look at log train

The Hawke's Bay Regional Council has amended its bid to reopen the railway between Napier and Wairoa by proposing that KiwiRail run the service as well as maintain the tracks under a proposal signed off in a closed-doors council meeting late last week.

HBRC's interim chief executive Liz Lambert confirmed to BusinessDesk that the proposal, for which commercial details are not being released, related only to establishing a log transport service from Wairoa to the Port of Napier, with no early prospect of the discussion turning to reopening the badly slip-damaged line between Wairoa and Gisborne.

A decision on the service has been much delayed and Lambert confirmed HBRC had originally proposed having a third party operate the service.

"This is an alternative proposal we are putting to KiwiRail," she said.

KiwiRail chief executive Peter Reidy said in an interview this week that he was expecting a proposal from HBRC, but that to be acceptable the council and any commercial partners would need to bear the whole commercial risk of the line being restored to operability and maintained.

"We want a take or pay arrangement, we won't take the commercial risk," he said. "If HBRC is the only customer, then we would expect full cost allocation."

Lambert declined to discuss the details of the proposal, which now requires both agreement with KiwiRail and the confirmation from forest owners in the Wairoa/Nuhaka region, where large-scale plantation forests are fast coming to maturity, that they will use the service.

"We need to sign sufficient customers to make it viable," said Lambert. "We're starting on that track now."

Wairoa export log harvests are forecast to treble to a million tonnes by 2020 and increase after that time. A key reason for the regional council's decision to underwrite a rail route reopening is its concern to prevent a massive surge in truck volumes on the main highway between Wairoa and Napier. Forest managers estimate half of the coming volume of logs can move by rail from a log hub at Wairoa.

Lambert held out little hope for the aspiration of Gisborne log-owners and fresh produce sellers to reopen the Wairoa to Gisborne part of the line.

"We are focusing on Wairoa to Napier, no further north, certainly in the medium term," she said.

Source: Pattrick Smellie at BusinessDesk via Scoop News

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Calling Northland landowners for forestry

Apply for Govt forestry planting grants urges Council - Northland farmers and landowners keen to plant as little as five – or as much as 300 – hectares of new forestry are being encouraged to take full advantage of a Government forestry grant scheme.

The Afforestation Grant Scheme (AGS) is administered by the Ministry for Primary Industries (MPI) and pays eligible applicants a subsidy of up to $1300 per hectare to plant forests, provided owners agree to maintain the forest for a decade.

In return, the Crown – which has earmarked about $19.5M for the establishment of 15,000ha of new forests over five years to 2020 – gets carbon credits for the land involved.

Joe Carr, chairman of the Northland Regional Council’s Environmental Management Committee, says new forests can offer a host of environmental benefits, including reducing soil erosion, storing carbon, and improving water quality.

The government reintroduced the AGS last year to improve land-use productivity and regional economic development after new forestry declined from 55,000ha annually in the 1990s to just 3000ha in 2014.

Councillor Carr says applications for this year’s funding can be made from today (SUBS; Wednesday 27 April) until Wednesday 08 June and anyone, or any organisation, that owns land or has a right to use land for forestry can apply.

“Grants will be allocated at the rate of $1300 per hectare, with planting to begin in winter next year.”

Councillor Carr, an Okaihau-based beef farmer and forest owner, says the scheme is a great incentive for those planning to plant their land, especially if it’s erosion-prone, and he encourages as many people as possible to take advantage of it.

He says the regional council can help people with applications to the AGS in two ways.

“Our land management advisers can help with the application process overall, including free mapping of proposed land use change, but we can also help prepare individual farm water quality improvement plans, again at no cost, to complement and support their applications.”

Councillor Carr says even if farmers and landowners can’t find the time to apply for the AGS before the 08 June cut off, they can still use it as an opportunity to plan projects for next year.

“People can apply to each annual funding round, as long as they’re applying for new planting on separate land blocks. If you do apply multiple times, the AGS allows for a maximum funding of up to 300 hectares over the life of the scheme.”

Councillor Carr says successful applicants will be notified by email in September, with planting expected to begin in winter 2017.

For more information on the Government’s Afforestation Grant Scheme, including qualifying criteria, go to:

www.mpi.govt.nz/funding-and-programmes/forestry/afforestation-grant-scheme

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Komatsu gets big head

Komatsu Forest is launching a new harvester head, the Komatsu C283, a sturdy head designed for heavy trees. This head is the largest in Komatsu's head line-up with a maximum opening of a full 800 mm.

The Komatsu C283 is a robust head suitable for final logging, as well as for selection cutting and processing pre felled trees. The head is intended primarily for the American and Australian markets and is designed for mounting on a forestry excavator, 27 tonnes or bigger, or a tracked forest machine.

The head features a three-wheel feed system, which means that the stem is both fed and lifted by the powerful feed rollers. The body of the head is fitted with an additional feed roller that helps reduce friction and contributes to even greater feed force and feed speed.

The head has a powerful saw and is equipped with cutting control, which ensures a well- controlled cutting process. The head can also be equipped with a top saw.

The number of delimbing knives on the standard model is three, with two moving and one fixed front delimbing knife. It's also possible to choose to fit two additional delimbing knives, mounted in the rear section of the head, one of which is hydraulically controlled while the other is fixed to the chassis.

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Champion Freight Export Report - March 2016

Champion Freight's new export reports for sawn timber and logs have launched! If you download and print our latest export reports for sawn timber and logs you'll notice a few changes. Prima facie, you'll discover a sleek modern design, simplifying presentation while eliminating needless clutter. This includes a revamped colour scheme to help you easily identify graphed statistics if printed in black and white.

In addition to the comprehensive statistics provided on our previous reports, we've incorporated some valuable extras, including an overview of FOB export value for all major markets (page 1). Further to this, we've expanded our reporting for NZ ports to now include sawn timber volume.

Commentary removed - To ensure the prompt publication of each report (immediately following the release of government statistics), we've removed commentary previously provided in our monthly Export Report Analysis. All referenced data is now included in each report.

Logs - HS4403



Sawn Timber - HS4407



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NZ Logger - The Blade Runner

Bulldozers often get taken for granted, until there’s a job that requires the grunt and power of a crawler tractor – like pulling big pines on wet and sloping terrain, or building tracks and skids. When CMH Contracting recently shifted from harvesting Eucalyptus to Radiata in Kinleith Forest the job required a tracked skidder with plenty of power, which led to the purchase of a Cat D6T and an Iron Test in the May issue of NZ Logger magazine.

Last month’s AUSTimber 2016 forestry show, held for the first time in the state of Victoria, drew plenty of New Zealanders, both on the stands displaying their wares and visiting contractors to view the latest products, covered in the May NZ Logger magazine.

The second installment of the two-part series on the coming Wall of Wood highlights challenges facing the industry, particularly with much of the increased harvest coming in the form of woodlots planted on steep and sometimes in accessible land. NZ Logger talks to contractors, forest managers and owners of small forests about ways to overcome those challenges and hears about the dark side of harvesting woodlots.

Plus much more, in the May 2016 issue of NZ Logger, now on sale at selected service stations, or to subscribe for either the printed version and/or the digital version, visit www.nzlogger.co.nz.
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Carbon Market Update - Will Bennett act?

Here is the latest carbon market update from our friends at Carbon Match:

There was a lull yesterday after a very busy week for carbon last week. Last week's high was $14.65 and NZUs are currently bid at $14.50.

However, significant selling interest doesn't appear until north of $15.00. One day's pause probably won't induce sellers to lower their expectations.

We're now in May and the general hope is that we might have an answer to the 2-for-1 question by Budget Night.

The last couple of weeks have seen the signing of the Paris agreement and an announcement from Genesis that its coal-fired Huntly units will now be extended till 2022.

There has been an account from the Morgan foundation on New Zealand's extreme reliance on "dodgy" ERUs to date, and then a report that Minister Bennett might consider cancelling the Kyoto surplus we derived partly as a result of that reliance, with a hypothesis that this might drive tougher targets for ETS sectors.

Positive comments from the Minister herself about the need for higher carbon prices have likewise assisted the strengthening of the NZU.

But, in our view, it's predominantly the expectation that the 2-for-1 will go, and soon, that has contributed to the strong gains we have seen in the NZU price since early December.

A minute though, in the Minister's shoes. She's aiming for an orderly transition to a lower carbon world via a higher carbon price, but has noted the need to balance this carefully with economic interests.

Seeing prices move up more than 70% - from the $8.50 to the $14.50 level since she assumed the portfolio - could possibly make her cautious. There might even be a temptation to think job done, the carbon price is fixed and a recovery is underway.

But this is just the beginning. This ball needs follow-through - it is our hope that the 2-for-1 is crisply dismissed for being the arbitrary distortion it is.

If instead we see a tepid roll-off, perhaps one more gradual than that currently expected by the market, we could easily see prices fall back.

This remains, after all, a market with fairly significant issuance in private accounts, relative to even double the current compliance demand.

And although the market is domestically constrained at the moment, it's likely to be very much open for international business once more post-2020. Such linkages need careful consideration and ongoing management.

The fact is that $15 might be the trigger for new interest in carbon forestry. But it will take much more than that, and on a sustained basis, for such interest to crystallise into actual investment.

So, let's hope this Minister seizes the day.

See live pricing on Carbon Match (https://carbonmatch.co.nz) from 3pm-5pm every weekday.

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FOA welcomes Pure Advantage plan

The NZ Forest Owners Association says a Pure Advantage report that proposes a near-doubling of the area of planted forest in New Zealand is very welcome.

“The independent report by Dr David John Hall raises many issues that forest owners have been emphasising with politicians for decades,” says Forest Owners Association (FOA) technical manager Glen Mackie.

“If this gets some cut-through, we'd be thrilled. Forests offer so many benefits to our society and with the right incentives, they could offer so much more.

“Our members are businesses which need to make a profit from growing trees, either from the sale of logs or through the storage of carbon. But there are many other reasons to plant trees, such as erosion control, reduced flooding, improved biodiversity and cleaner waterways, as we are currently promoting through the NZ Wood campaign."

Mr Mackie says it would be very helpful for the government, ideally with support from other political parties, to have a national forestry strategy.

“As Dr Hall points out, forestry is an intergenerational commitment, so land owners need to know that future governments will weigh the effect of any proposed new policies on forests and forest owners.

“The constant changes in the NZ emissions trading scheme which, to use Dr Hall’s words, have ‘dejected and disenfranchised land owners’ are a case study in how not to manage forest policy. They are also one of the main reasons why such a strategy is needed.”

Mr Mackie says the report presents a very good analysis of the benefits that arise from forests, not only for the forest owner but on “surrounding communities and future generations”.

“Dr Hall’s proposal to increase forest plantings by 1.3 million hectares would not only be hugely beneficial to New Zealand’s carbon position, but would position us to reap the other associated benefits of forestry – employment, economic advantage and environmental – while not adversely affecting other land uses.

“The report presents an ambitious, but very achievable proposal that would transform forestry in New Zealand.”

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New round of funding opens

The second funding round for the Afforestation Growth Scheme (AGS) opens today and comes at an important time for forestry, Associate Primary Industries Minister Jo Goodhew announced today.

“The goal of the AGS is to increase the planting of new forests and the rate of afforestation".

“Estimates suggest that 1.1 million hectares of land is at serious risk of erosion, and forest cover is the best form of erosion control. Through the AGS, we aim to plant 15,000 hectares of new forest by 2020, and we are on track to meet this goal,” Mrs Goodhew says.

The first year of the AGS resulted in contracts of $3.77 million to plant around 2,900 hectares of new forest.

“The AGS enables positive economic outcomes for farmers and landowners, while also reducing some of the high costs associated with marginal land, by increasing forest cover. The AGS will also boost regional economies by taking currently underutilised land and using it for economic and environmental gain.

“New forests enabled by the AGS will improve land-use productivity and regional economic development. It will also deliver environmental benefits such as reducing soil erosion, improving water quality, and absorbing around 1.9 million tonnes of carbon every year,” Mrs Goodhew says.

Applications for the Afforestation Grants Scheme open on 27 April 2016 and close on 8 June 2016 for planting in Winter 2017.

About the Afforestation Grants Scheme:
  • The AGS aims to enable planting of 15,000 hectares of new forest by 2020.
  • The new forests enabled through the AGS have productivity, regional economic and environmental benefits.
  • The Ministry for Primary Industries, through the AGS, provides grants of $1,300 a hectare (to a total of $19.5 million) to help with planting of new forests.
  • Any individual or any organisation that owns land or has a right to use land for forestry can apply. Applicants who are about to acquire land or a right to use land can also apply.
  • Applicants must be able to commit between 5 and 300 hectares of land to planting in new forest.
  • Every application is assessed against eligibility criteria, which includes consideration of a detailed technical forestry assessment.
For further information about the AGS, see: https://www.mpi.govt.nz/funding-and-programmes/forestry/afforestation-grant-scheme/





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Morgan Foundation calls Government out

In the rush to comment on NZ's climate change record last week the Morgan Foundation launched a new report called Climate Cheats. It shows that New Zealand was by far the biggest buyer of fraudulent foreign carbon credits from the Ukraine.

Now the Government is handing over these fraudulent credits to meet our international emissions reduction targets. We are calling on Government to protect our international reputation as being clean, green and free from corruption by dumping these junk carbon credits.

You can read the executive summary below, listen to an interview below or download a copy here.

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Primary industries cooperate on careers

Over $3.5 million a year to grow primary industries talent - Young Kiwis with an interest in the primary industries can apply for over $3.5 million in study assistance each year, says Andy Somerville of GrowingNZ.

GrowingNZ is representing the primary industries at the upcoming national Career Expo series.

GrowingNZ’s new online directory presents more than 150 types of scholarship offered by a wide range of organisations. These are targeted at secondary-level students to help them in their next step, or to students on tertiary courses.

“This adds up to nearly 1000 individual scholarships being handed out each year.

“The common factor is that all these scholarships are for young people with an interest in helping take quality food and fibre to the world, or working with water, land, plants or animals – which is what the primary industries are about.

“We have many challenges and opportunities – such as reducing our environmental footprint. We are looking to young people to help shape the future of these important industries, which earn about 70% of New Zealand’s export income each year.

“The roles range from water scientists and robotics engineers to food safety specialists and the farmers of the future who will work with sophisticated technologies.

“And the scholarships focus on different personal strengths or subject areas, so every young person should have a look to see what could be there for them.

“For students and their families wanting to know more about the primary industries, we will be at the Career Expos coming up in Christchurch, Auckland, Hamilton and Wellington in May and June.”

The scholarships directory is on the GrowingNZ website www.growingnz.org.nz GrowingNZ is an initiative of the Primary Industry Capability Alliance, a membership organisation. The members are: DairyNZ, Beef+Lamb NZ, Ministry for Primary Industries, NZ Young Farmers, Primary ITO, Lincoln University, Taratahi Agricultural Training Centre, Ara Institute of Canterbury, Foundation for Arable Research and Forest Owners Association.

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Science leaders call for climate action

Good opportunities to act now on climate change - There are many actions New Zealand can and should take now to reduce the threat of climate change and transition to a low-carbon economy, a report released last week by the Royal Society of New Zealand finds.

Cover-full-report-Transition-to-Low-Carbon-Economy-for-NZThe report, Transition to a low- carbon economy for New Zealand, has been written by a panel of New Zealand experts chaired by Professor Ralph Sims, and will be launched in Wellington, supported by the co-chair of the mitigation working group of the Intergovernmental Panel on Climate Change, Professor Jim Skea.

“Many mitigation options are already well-understood and achievable. They often also have flow-on benefits. Business-as-usual approaches will not get us where we need to be, ambitious action is needed now by all New Zealanders,” says Professor Sims.

Mitigation is where we take action to either reduce greenhouse gas emissions or support their removal from the atmosphere.

Royal Society of New Zealand President, Emeritus Professor Richard Bedford said the report was timely. “It provides a scientific analysis of the complex situation we find ourselves in and what we can best do about it,” he says.

“All New Zealanders need to understand the threats of climate change, accept that we need to change the way we act, realise there are trade-offs that will need to be made, and become personally involved in implementing mitigation solutions.

“The sooner we make changes, the more likely it is that we can avoid the worst impacts of climate change.

“The good news is that there are many opportunities to reduce or capture greenhouse gas emissions in all sectors now.

“This study is a first step to enable an open debate around options, choices and timeframes,” says Professor Bedford.

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... and finally ... best story this week

Australia and the USA are in election mode… enjoy these quotes...

If God wanted us to vote, he would have given us candidates. (Jay Leno)

The problem with political jokes is they get elected.

We hang the petty thieves and appoint the great ones to public office.

Politicians are the same all over. They promise to build a bridge even where there is no river. (Nikita Khrushchev)

When I was a boy I was told that anybody could become President; I'm beginning to believe it.

Why pay money to have your family tree traced; go into politics and your opponents will do it for you.

Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other.

I offer my opponents a bargain: if they will stop telling lies about us, I will stop telling the truth about them.

A politician is a fellow who will lay down your life for his country.

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Don't like political humour? Try this:

"Has your son decided what he wants to be when he grows up?" I asked my friend.

"He wants to be a garbage man," he replied.

"That's an unusual ambition to have at such a young age."

"Not really. He thinks they only work on Tuesdays."



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

If you enjoy WoodWeek - pass it on. And tell a mate to subscribe as well – it’s FREE!

John Stulen
Editor
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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