WoodWeek – 11 November 2009
Greetings from sunny Rotorua. It's a mixed bag this week on the market front. Forestry export volumes out of New Zealand are stunning and continue at a record pace, tempered by news which is much less positive for Australian wood producers, but with a slight lift starting to happen there. However there are more positives - especially sales of the newly revised 'Business Management of Logging' publication which are absolutely BOOMING - get your order in soon - the first print run has already SOLD OUT!
This week's 'hot' topic is the advance of forestry technology in operations. This month's issue of New Zealand Logger magazine has a focus on harvesting head technologies. Meanwhile, for forest owners and managers - technologies for improving forest planning and operations are being showcased at the FIEA ForestTECH Conference Series happening on both sides of the Tasman. Right now the two-day conference and one-day practical field trip is happening in Rotorua - the heart of NZ forestry. Next week, from Monday, the FIEA conference team and speakers will be in Albury, NSW, running the programme for the benefit of the Australian audience.
Technology in forestry is something which is not well-understood by people outside our industry - especially those influential people in high schools involved in promoting forestry as a career to young people. FITEC has been moving to change this with their promotional push with INZONE careers promotions vehicle. But each and every person working in our industry can also be instrumental in letting others know that a career in forestry can combine a love of the outdoors with rewarding work, involving smart use of operations technologies. There - the secret's out - have a great week!
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This week we have for you:
Contractors' Key Indicators
Surprise, surprise - both the Kiwi and Australian dollars continue to strengthen this week on the back of Fonterra raising its forecast payout to dairy farmers by 19% in NZ and the Australian Reserve Bank lifting the cash rate across the ditch last week by 0.25%.
NZ CONTRACTORS' KEY INDICATORS
11th November 2009 | | Interest Rates | Diesel Price Watch |  | 90-day bill rate = 2.81% | NC | Average (excl GST / all regions) = $0.96 | | Exchange Rates | NC | Change (month) = +8% | | NZD/USD = 0.7426 |  | Change(quarter) = +1% | | NZD/Yen = 66.85 | NC | Change (year) = -14% | | Labour Cost Index - Forestry/Logging | Consumer Price Index | | Sep 09 quarter = 1002 | | Sep 09 quarter = 1095 | | NC | Change (quarter) =+0.2% | | Change (quarter) =+1.3% | | N/A | Change (year) = N/A* | | Change (year) = +1.7% |
*Note:The LCI has been re-expressed on a June 2009 quarter base (=1000).
AUSTRALIAN CONTRACTORS' KEY INDICATORS
11th November 2009 | | Interest Rates | Diesel Price Watch | | 90-day bill rate = 3.96% | NC | VIC (excl GST) = $1.06 | | Exchange Rates | | NSW (excl GST) = $1.05 | | AUD/USD = 0.9279 | NC | TAS (excl GST) = $1.12 | | AUD/Yen = 83.48 | | SA (excl GST) = $1.07 | | Wage Price Index - All Industries | Consumer Price Index | | June 09 quarter = 123.1 | | Sep 09 quarter = 168.6 | | Change (quarter) = +0.6% | | Change (quarter) =+1.0% | | Change (year) = +3.8% | | Change (year) =+1.3% |
TPT Forests Export Market Report
Once again another month has passed without too much excitement and the landscape appears similar to that reported last month. The only serious excitement has been the wild swinging of the NZD exchange rate over the recent two weeks.
It would appear that supply is remaining strong over the country and no significant changes expected before Xmas. September shipments were a record 905,000 m3 nationwide putting Q3 at just over 2.5 M m3 which equates to over 10 M m3 on an annualised basis - a NZ record. We are expecting domestic demand to pick up over the next 6 months across most sectors as underlying activity in NZ and Australia improves and finished goods inventories are replenished. The million dollar question remains to what extent the NZ domestic ‘recovery’ has legs going into next winter. This also rings true for other developed nations, unemployment is not expected to fall anytime soon which are causes for concern for economic recovery.
The markets on the whole continue to be running along well. As a general theme the worst has past in both Korea and Japan, which were impacted very heavily during the earlier part of the year by collapsing demand. Although TPT continue to expect an improvement in activity in these two markets it will be in the form of a gradual improvement rather than any step change in demand. India has relatively high inventories at the moment but will sort itself out over the next few months.
China remains the epicentre of the markets as it continues to run strong and supply appears restricted from its main supplier, being Russia. September usage came in at just under 500,000 m3 which is the highest consumption on record, so ‘touch wood’ Q4 is shaping up nicely. Optimistic caution remains the theme in this market coming into Xmas with emphasis on Russian supply and pricing going into the traditional harvest season.
Competition from a variety of sources is still strong in the markets from both a log and lumber perspective. However there appears less and less ‘dumping’ activity as suppliers seek to achieve sustainable returns buoyed by slowly improving trading conditions in their traditional domestic markets.
The NZD has continued to climb against the USD over October and is now regularly trading in the 0.71- 0.73. The Reserve Bank of Australia’s surprise hike last week has seen the AUD climb up and this is likely to get more investor attention if another hike follows in its track.
So it’s so close to Christmas in terms of export business it’s a ‘steady as she goes’ through to December close down, and come to the New Year with a refreshed view on life ready for another challenging 2010.
(Sourc: TPT Forests)
Logging Publication Selling Fast
Copies of “Business Management of Logging”, published by Future Forests Research and marketed by FICA, have been selling like hotcakes. The entire first print run sold out last week and we have re-ordered stock already.
If you want one - you really need to order it NOW – they are available to FICA members for $50 + $10(p&h) + GST or to non-members for $100 + $10(p&h) + GST. Non-members must pay on ordering – All major credit cards are accepted.
Call Susan on 07 921 1382 to place your order.
Good News on the Harvesting Research Front
Future Forests Research (FFR) were advised last week that their application to the new Primary Growth Partnership (PGP) fund for government funding support to carry out harvesting research has been accepted by the investment advisory panel. A full business plan for the project for final approval and recommendation is to be submitted to MAF by 1 February 2010.
FFR Chief Executive Russell Dale says the total project is for $6.5m over 6.5 years with PGP providing funding on a joint dollar for dollar basis over the project life. The industry contribution of $3.25m includes $0.5m of in kind contribution.
The objective of the programme is to improve the competitiveness of the supply chain through significant improvements in harvesting productivity on steep country.
“The next phase is to develop the full proposal to PGP setting out the objectives, detailed programme of work and timelines, who will do it, project governance, in kind contributions and confirmation of industry co-funding arrangements,” says Mr Dale.
(Source:Future Forests Research)
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TFCA Responds to Senator Brown’s Recent Motion
Last month the Greens, headed by Sen Bob Brown, passed a motion in Federal Parliament calling for a $20 million assistance package for Tasmanian Forestry Contractors. On its own, this may not be a big concern for TFCA members, but unfortunately Bob Brown tied this request to a Forestry Tasmania and Gunns payback arrangement as well as a corresponding forest resource lockup. Therefore it was soundly defeated by the Government and Opposition.
TFCA lobbied hard though for the recognition of contractor issues and suggested to both the Government and Opposition that outright rejection without some acknowledgment of contractor’s issues will not help anyone.
That said, we all know that the previous forest lockups have significantly contributed to the problems and anything further in this area will not help our sector or the industry generally.
Furthermore, TFCA is extremely disappointed with the efforts of Senator Brown to exploit the problems of forest contractors for his own political gain. If you consider that he has significantly contributed to the industry’s woes especially through his own overseas misinformation campaigning, which has contributed to market access issues, it is certainly disgraceful for him to be taking this current stance. Given his recent success at raising money to pay his own legal bills, maybe he can now raise money for the industry and the communities that he so readily kicks.
(Source: Tasmanian Forest Contractors Association)
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Tough Year for Industry Confirmed
“The release of the Australian Forest and Wood Products Statistics, March and June quarters 2009 by ABARE this week documents the tough trading conditions experienced by the forest and wood products industry in 2008/09,” said A3P CEO Richard Stanton. “Thankfully some sections of the industry are reporting improved markets for their products in the first half of 2009/10 as a result of continued strengthening of the housing and construction sectors in response to the new home owners grant, improving consumer sentiment, and other Government stimulus measures,” he said.
Mr Stanton believes new house construction is still well below the level required to meet the long-term underlying demand for new dwellings in Australia and feels the Federal and State Governments should not be complacent about the need to continue to address the housing shortage. “While conditions are now improving Australian wood products and paper manufacturers are once again facing the challenges of a very strong Australian dollar impacting competitiveness in both the domestic and export markets,” he added.
Key statistics for 2008/09 shown in the ABARE data include:
A 17% fall in housing starts to 131,000 units;
Major declines in export volumes of some products including sawnwood (20%), wood-based panels (15%) and paper and paperboard by (10%);
5.2% fall in the value of Australia’s forest product exports to $2.3 billion, mainly driven by a significant drop in the value of both woodchips and packaging and industrial paper exports;
1.1% increase in the overall value of imported forest products to $4.5 billion. The increase was due to rises in the value of imports of paper manufactures, miscellaneous forest products and paper and paperboard. The value of sawnwood and pulp imports fell in 2008-09.
Mr Stanton says publicly available forest and wood product statistics such as these released by ABARE are a very important resource and calls on the Government to continue to underpin and financially support the collection and dissemination of this information with the support of the various companies and associations who provide the data.
(Source: A3P)
RMA Legal Decision Due This Week
Environment Court Judge Jeff Smith is expected to deliver a decision this week on a contentious legal issue, which has been raised in a case that Environment Bay of Plenty has brought against New Zealand’s largest forestry management consultancy, PF Olsen Limited.
The decision, which was heard in the Tauranga District Court last Thursday, is expected to be considered in several other cases on the same issue which are currently before higher courts.
The issue stems from PF Olsen Limited facing two charges under the Resource Management Act 1991 (RMA) - one charge of disturbing exotic and plantation vegetation in an erosion hazard zone and one charge of discharging contaminant onto land in circumstances which may have resulted in that contaminant entering water. Both relate to a harvest area in the Waitahe Forest, near Opotiki. PF Olsen has not entered a formal plea.
Environment Bay of Plenty Group Manager Water Management Eddie Grogan said the legal issue that has been raised is whether convictions can be recorded for offences under the RMA. “Environment Bay of Plenty is arguing that under the RMA there is a two path course which means that we can issue an infringement notice or decide to take prosecution – the later option we only usually take for offences where there is serious environmental damage,” Mr Grogan said. “In this particular case, we decided to take the path of prosecution against PF Olsen because of the seriousness of the offence.”
PF Olsen’s legal representation is arguing that the offence can only be dealt with as an infringement and that people found guilty of infringements cannot have a conviction recorded against them for that offence. The company also claims the prosecution is a nullity because Environment Bay of Plenty did not seek leave of a District Court Registrar before bringing the prosecution, which was a requirement when issuing a summons for an infringement offence.
PF Olsen Limited’s offences relate to between 15 and 17 April 2008 when five slash piles collapsed following heavy rainfall in the area. This resulted in large amounts of slash, debris and sediment sliding down from ridges into valleys and streams below.
On 18 April 2008, Environment Bay of Plenty received a complaint that debris from the defendant’s collapsed skid sites had blocked streams on an adjacent property. As a result of Council’s investigation, Council alleges that the collapse of the skid sites had caused significant erosion and that at least two streams in the area were completely blocked in places and partially blocked in others with a combination of woody debris, sediment and logs.
Judge Smith reserved his decision on the legal issue raised in this case and said due to the importance of the issue he would like to give his decision within the week.
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Minister Welcomes Consultation on Methyl Bromide
Minister for the Environment Nick Smith welcomes the decision by Environmental Risk Management Authority New Zealand (ERMA) to seek public submissions on its reassessment of fumigant methyl bromide.
“This is an important opportunity for the public to have their say on the use of methyl bromide,” Dr Smith said. “This chemical is ozone depleting, is a greenhouse gas and has been the subject of concerns over public health. However, it is also very important to exports of logs and timber in meeting biosecurity requirements. I have a particular interest in this review as the MP for Nelson where its use has been controversial and I was part of the Select Committee that recommended such a reassessment in 2006.”
“The strength of this review of methyl bromide’s use is that it is thorough, technically focused, and open to public submissions. I encourage all those who have been part of this debate from both an industry and health perspective to have their say,” said Dr Smith.
In July 2008, ERMA decided there were grounds to reassess the substance because of increased use and community concern. Following that decision, ERMA New Zealand staff have spent more than a year researching and evaluating information from many sources in New Zealand and overseas.
The application for reassessment sets out the results of this review and includes the preliminary recommendation that methyl bromide be re-approved in the medium term for quarantine and pre-shipment purposes only, with tighter controls on its use.
This is only a preliminary recommendation by staff of ERMA New Zealand. A final decision will be made by members of the Authority itself, after consideration of public submissions and evidence provided at public hearings.
To read the executive summary and for information on making a submission go to the ERMA website.
All submissions must be received by 5 pm, Friday, 18 December 2009.
Forestry Plantations Queensland Sold by Christmas?
Media reports this week have revealed the Bligh government has confirmed Forestry Plantations Queensland is scheduled to go on sale within weeks, as a part of Premier Anna Bligh’s $15 billion asset privatisation program. The sale could occur sooner than the original proposed timeframe of three to five years, with the potential of completing the forestry asset's sale before Christmas.
...and finally... a field trip to Flemington…
A group of primary school children, accompanied by two female teachers, went on a field trip to Flemington Racecourse to see and learn about thoroughbred horses.
When it was time to take the children to the toilet, it was decided that the girls would go with one teacher and the boys would go with the other.
The teacher assigned to the boys was waiting outside the men's toilet when one of the boys came out and told her that none of them could reach the urinal.
Having no choice, she went inside, helped the boys with their pants, and began hoisting the boys up, one by one, holding their bodies to direct the flow away from their clothes.
As she lifted one, she couldn't help but notice that he was unusually well endowed.
Trying not to show that she was staring, the teacher said, "You must be in year four."
"No, Madam," he replied, "I'm riding Cupid's Arrow in the 5th at 2.15.
Buy and Sell
...and finally, finally...some real groaners...
This lorry full of tortoises collided with a van full of terrapins. It was a turtle disaster.
I told my girlfriend I had a job in a bowling alley. She said 'Tenpin?' I said, 'No, permanent.'
I went in to a pet shop. I said, 'Can I buy a goldfish?'
The guy said, 'Do you want an aquarium?' I said, 'I don't care what star sign it is.'
I went to buy a watch, and the man in the shop said 'Analogue.' I said 'No, just a watch.'
I went into a shop and I said, 'Can someone sell me a kettle.' The bloke said 'Kenwood' I said, 'Where is he then?'
My mate is in love with two schoolbags. He's bi-satchel.
I went to the doctor. I said to him 'I'm frightened of lapels.' He said, 'You've got cholera.'
I met the bloke who invented crosswords today. I can't remember his name, its P something T something R.
I was reading this book today, The History of Glue. I couldn't put it down.
The recruitment consultant asked me 'What do you think of voluntary work? I said 'I wouldn't do it if you paid me.'
And on that note, enjoy the rest of your week. Cheers.
John Stulen
Innovatek Ltd Rotorua Office
PO Box 6160
Rotorua 3043
New Zealand
Ph:+64 7 921 1382
Fax:+64 7 348 1420
Web page: www.innovatek.co.nz
This week's extended issue can be viewed at www.woodweek.com
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