NZ Reserve Bank Will Lift Rates

NZ Reserve Bank Governor Alan Bollard is expected to raise the official cash rate this week while at the same time acknowledging that the pace of economic growth has been less than projected. Bollard is unanimously expected to raise the OCR by a quarter point to 3% on July 29, according to all 20 economists in recent Reuters survey.

The RBNZ tightened monetary policy for the first time in three years on June 10. Since then data has shown the economy expanded 0.6% in the first quarter, less than the bank’s 0.8% forecast, while the housing market and consumer spending have remained weak, and net migration has weakened.

Manufacturing expanded for a tenth straight month in June, according to the BNZ-Business NZ performance of manufacturing index, which rose 2.2 points to 56.2. Retailing, though, remains fragile, as evidenced by the incessant Chain store discounting. Core retail sales fell 0.2% in May, and total sales growth of 0.4% may only reflect a pre-GST hike spend-up on automobiles and major appliances.

As Bollard noted in last month’s statement: “We expect households to remain relatively cautious, with the housing market and credit growth staying subdued.”

Queensland Forestry Strategy Released

New 20/20 vision of Queenslands timber plantations.

A strategy aimed at supporting the future expansion of the States $4 billion forest and timber industry and increasing employment in that sector was released yesterday.

Minister for Primary Industries, Fisheries and Rural and Regional Queensland Tim Mulherin said, "the new strategy would see the State Government step up its encouragement of increased investment in Queenslands timber plantation sector. The Queensland Timber Plantation Strategy 2020 signals a new direction for the government".

The strategy establishes a fundamental change in the role of government from direct ownership of timber plantations to one of leadership and strategic direction setting.

The recent sale of the Queensland Governments plantation estate to the private sector has opened the way for a more commercially focused approach to the states timber plantations. The aim of the Strategy is to provide an investor-ready environment for a competitive, sustainable timber plantation sector. Over the next decade, the Queensland Government will concentrate on five core areas to support new investment:

China-Canada Chemical-Free Deal Rocks the Boat

Confirming the cliche that "change is only constant" comes news that the log export trade which the New Zealand forest industry has been feasting on, has a new player thanks to a revised trade agreement between China and Canada. The net effect of the trade deal is that small and log-grade Canadian Hemlock logs can now be shipped from BC ports without phytosanitary treatment requirements when heading for China and requirement treatment on arrival at the destination port. The dispensation did previously exist for shipments made during the Canadian winter, but the rules have now been changed to allow year-round shipment without treatment on leaving Canada.

The breakthrough deal changes the rules of the game in a few respects:
1. Hemlock logs can now be landed in Chinese ports (two to begin with) at a lower cost,
2. China has created a non-tariff barrier to logs from New Zealand, but it is a case which New Zealand will have to take up with the Word Trade Organisation or Chinese government in the first instance.
3. The new competition has some potential to challenge New Zealand radiata pine exports based on wood properties.

NZ Wood Processors CEO Appointment

The Wood Processors Association of New Zealand (WPA) announced today that Dr Jon Tanner has accepted the role of Chief Executive Officer and will take over in mid-August. Rob Davies, Chief Executive of CHH Woodproducts New Zealand welcomed Jon into the role. “Following the resignation of Peter Bodeker we undertook an exhaustive search process and are very pleased to have found in Jon the mix of style, skills, energy and experience we were looking for."

“With a strong scientific background Jon has demonstrated the ability to work through and find lasting solutions to complex issues with Industry participants, regulators and community groups in a range of jurisdictions. Jon has worked in a range of roles, internationally and in New Zealand, most recently as the Chief Executive Officer of Organics Aotearoa New Zealand (OANZ) where his ability to influence both the diverse range of industry participants and regulators was a key success factor in moving OANZ forward."

“Under the leadership of Jon we will continue to build our strong voice with central and local government to ensure the needs of WPA and FTMA members and the benefits of the Industry to New Zealand are understood. Jon is committed to building on the legacy created by Peter and up for the challenges that lie ahead,” said Mr Davies.

Positive Outlook for Nelson/Marlborough Forestry

Local sawmiller signals positive prospects for domestic wood processing in Nelson/Marlborough. An estimated 1750 jobs will be created in Marlborough within 10 years as trees mature and forestry production doubles, according to an industry leader there. Kaituna Sawmill general manager Matt Bond told Marlborough District councillors last week that Nelson Forests Ltd, which owns Kaituna, was planning to double its processing capacity. Log processing in Marlborough was expected to double within 10 years.

Marlborough produces 850,000 cubic metres of wood a year, with about 150,000 cu m of that processed in the region, accoridng to Bond. The remainder was exported as logs to Asia, or processed in Canterbury or the West Coast. The regional industry is predicted to expand as thousands of trees planted about 30 years ago mature and worldwide demand for wood increases.

A study in 2008 funded by the Marlborough Forestry Industry Association shows forestry contributes $170 million to the Marlborough economy and employs 456 full-time workers. Mr Bond said, "production could increase to 1.5 million cu m by 2020, and the aim was to process it all in the region." "More processing plants were not necessary, but existing ones would need to expand," he said.

Willmott Forests Calls for Advice

Following a media statement earlier this month Willmott Forests has sought the advice of outside advisers as their MIS sales have fallen short of targeted levels. Even though Australia is facing a major shortfall in future sawlog supplies for their existing domestic wood industries, public/retail investment in plantations is declining rapidly. Continuous private investment is essential to maintain the industry by securing plantation expansion and to maintain second rotation plantings.

The retail investment market for forestry based agricultural products has severely contracted from the FY2009 levels. Nevertheless, it is encouraging that investment in long rotation timber plantations has received continued support through Willmott Forests’ Premium Forestry Blend – 2010 Project which achieved a share of approximately 25% of this diminished market. Willmott differs from most MIS investment promoters in that it concentrates on pine rather than eucalypt plantations. The company manages over 50,000 hectares of planted forests. In the six months to Dec 2009 profit was up to AU$9.2 million from $4.2 million for the same period in the previous year.

Corporate review Undertaken
The Board and management of Willmott Forests are now undertaking immediate actions to address current challenges for the Company, arising from the lower than expected level of FY2010 sales. The company called in outside advisors the help with this review of the business.

These actions include:
• undertaking a detailed review of the Company to ensure it continues to meet its important strategic goals
• aligning the Company’s cost base with the current levels of sales activity
• developing a detailed capital management plan which may include divestment of non-core assets and significant debt reduction; and
• seeking our financiers’ consent to the revised capital management plan.

The company has the early support of key stakeholders who will be engaged in this process. Given the nature of the process, the Willmott requested and has been granted a suspension of its securities from official quotation by the Australian Securities Exchange. This will allow the company time to complete the review and then be in a position to inform shareholders of the results and likely impacts of this process on the company’s current business activities.

FICA Logging Costing Workshop in Balclutha

In the last week of August FICA will run a contractors field trip in the Otago/Southland region and an evening meeting/dinner at the Rosebank Lodge in Balclutha followed by a logging costing workshop the next day.

The field trip is open to FICA members and sponsors. Non-members can attend (subject to numbers) - please contact the FICA office for availability. A FICA members update meeting will follow at 6:00pm on Thursday, 26th August followed by dinner.

FICA will run a Logging Costing Workshop on Friday, 27th August. See the attached document for information.

Please complete and return by fax or email to FICA - places are strictly limited so register ASAP to make sure you don't miss out.

NZ Wood Pellet Exporter Gains Certification

Kiwi wood pellet manufacturer Nature's Flame has had their pellet fuel product endorsed by DIN CERTCO, Europe's leading product quality standards body for residential wood pellet fuel. DIN CERTCO is an arm of Germany's Institute for Standardisation and its wood pellet certification criteria is being used as the basis of a proposed European Standard. "Achieving certification required Nature's Flame to demonstrate quality assurance through its entire production chain," said general manager, Kerry Ellem.

"It's a difficult and reasonably expensive certification to get and to maintain because it certifies our processes as well as the quality of the final product," Mr Ellem says. "It is the proxy European quality standard and having the DIN plus certification mark on our packaging is an important part of what customers look for in selecting wood pellet fuel."

Nature's Flame is about to ship a 600 tonne cargo of pellet fuel to Italy. Packaged in 15kg bags, the consignment is for a customer supplying households in northern Italy. The Solid Energy business is also exporting bulk cargos which are helping European electricity generators reduce emissions from their plants.

Nature's Flame fuel also carries BioGro international certification of its ash, meaning it can be confidently applied in organic gardening and does not need to be sent to landfill.

Background: Nature's Flame wood pellets in New Zealand are made at plants in Taupo, Rotorua and Rolleston, near Christchurch, from untreated pine wood residues. The business was established in 2003. Kerry Ellem, previously CEO of Selwyn Plantation Board Ltd between 2000 and 2008, was recently appointed as General Manager and is based in Taupo. He replaced Eric Gillan, who has returned to a contracting role in the forestry sector.

Buy and Sell

... and finally ... What's little Johnny been up to?

Little Johnny's at it again......
A new teacher was trying to make use of her psychology courses. She started her class by saying, 'Everyone who thinks they're stupid, stand up!' After a few seconds, Little Johnny stood up. The teacher said, 'Do you think you're stupid, Little Johnny?' 'No, ma'am, but I hate to see you standing there all by yourself!'

* * * * * * * * * * *

Little Johnny watched, fascinated, as his mother smoothed cold cream on her face. 'Why do you do that, mommy?' he asked. 'To make myself beautiful,' said his mother, who then began removing the cream with a tissue. 'What's the matter?' asked Little Johnny. 'Giving up?'

* * * * * * * * * * *

The math teacher saw that little Johnny wasn't paying attention in class.. She called on him and said, 'Johnny! What are 2 and 4 and 28 and 44?' Little Johnny quickly replied, 'NBC, FOX, ESPN and the Cartoon Network!'

* * * * * * * * * * *

Little Johnny's kindergarten class was on a field trip to their local police station where they saw pictures tacked to a bulletin board of the 10 most wanted criminals. One of the youngsters pointed to a picture and asked if it really was the photo of a wanted person. 'Yes,' said the policeman. 'The detectives want to capture him very badly.. Little Johnny asked, " Why didn't you just keep him when you took his picture? "

* * * * * * * * * * *

Little Johnny attended a horse auction with his father. He watched as his father moved from horse to horse, running his hands up and down the horse's legs and rump, and chest.. After a few minutes, Johnny asked, 'Dad, why are you doing that?' His father replied, 'Because when I'm buying horses, I have to make sure that they are healthy and in good shape before I buy. Johnny, looking worried, said, 'Dad, I think the Cable guy wants to buy Mom ..'

* * * * * * * * * * *

but wait there's MORE (and it gets worse - must warn you ...) Part 2 - Sad but true ...
Johnny's teacher asked all the kids what their dads did for a job. Some kids yelled fireman, police officer, chippy, plumber etc.... but Johnny kept his mouth shut - so the teacher asked him 'C'mon, Johnny - this isn't like you - so what does your father do for a job'

"My dad dances in a gay club and takes of his clothes for the men. If they pay enough, he will go out with a man, rent a hotel room and sleep with them."

The teacher sent the other kids out to lunch and took little Johnny aside to ask if that was true. 'No' said Johnny "He plays football for England , but I was too embarrassed to say."

And on that note, enjoy the rest of your week. Cheers.

John Stulen