WoodWeek – 26 July 2017

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First things first – to the markets: Unpruned logs weakened slightly, falling to $124 a tonne from the previous month, according to AgriHQ's monthly survey. Export pruned logs bucked the trend, edging up to $164 a tonne. Nearly all the weakness stemmed from the exchange rate swinging out of exporters' favour.

AgriHQ analyst Reece Brick said there did not appear to be any slowing in Chinese demand for New Zealand logs. In-market prices in China firmed through June and July to their highest level in more than three years, and the usual decline in activity during the summer months hadn't been noted this year, he said. In the New Zealand domestic market, values for all log grades reported by AgriHQ were either steady or slightly firmer.

"The pull of export markets is still too strong for mills to be able to bargain the market lower," Brick said. "Many sellers are still finding a premium selling logs through the wharf gate, and it’ll take a solid correction in this area to for any reprieve to come to the market."

Looking at growth markets - the engineering of wood components for commercial building is growing fast in Australia. Local builders and developers, led by smart operators like Lendlease and Strongbuild, have worked out how to automate many of the large building jobs using factory prefabrication. Case studies of their recent successes will feature in our new engineered timber conference in Rotorua on 28 September.

In carbon markets this week, we have an update from the team at OM Financial (OMF). NZU prices continue to move around. A few weeks ago, OMF saw prices hit a low for the year, but they’ve rallied up in three weeks to just short of the year’s high at $18.

To the regions now, where there is talk of a forestry levy to help meet the $25 million roading maintenance costs for the Gisborne region. The Gisborne District Council’s Future Tairawhiti committee is investigating.

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Export log prices weaken

NZ export log prices weaken as higher kiwi dollar bites - New Zealand export log prices generally declined over the past month as a gain in the New Zealand dollar made the country's products less competitive.

Most grades of New Zealand unpruned logs weakened by between $1-to-$3 a tonne, with A-grade logs falling to $124 a tonne, from $127 a tonne the previous month, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. Export pruned logs bucked the trend, edging up to $164 a tonne from $163 a tonne. Nearly all the weakness stemmed from the exchange rate swinging out of exporters' favour, with the New Zealand dollar firming about 7 percent against the US dollar since mid-May, AgriHQ said.

Forest products are New Zealand's third-largest commodity export group behind dairy and meat products, and the Ministry for Primary Industries expects annual log export revenue to slowly increase from $2.22 billion through 2016 to $3.1 billion in 2021 as more logs are harvested and sent overseas.

"Wharfgate log values took a slight backwards step on last month, but as far as exporters are concerned, there's little to be worried about," AgriHQ analyst Reece Brick said in his report. "Fortunately, the exchange rate is where the negative vibes end," Brick said, noting that overseas demand, shipping rates and oil prices remained favourable.

"All factors considered, sentiment through the log export sector is optimistic," Brick said. "Wharfgate values are anticipated to stabilise or strengthen a little as the year progresses, with only currency movements casting a little doubt over medium-term prospects."

Brick said there appeared to be no slowing in Chinese demand for New Zealand logs. In-market prices in China firmed through June and July to their highest level in more than three years, and the usual decline in activity during the summer months hadn't been noted this year, he said.

Meanwhile in India, the implementation of a goods and service tax on July 1 temporarily hurt demand, but Indian ports appeared to be short on log volumes and the market is expected to settle back to its normal routine after a period of adjustment, he said.

In the New Zealand domestic market, values for all log grades reported by AgriHQ were either steady or slightly firmer.

"The pull of export markets is still too strong for mills to be able to bargain the market lower," Brick said. "Many sellers are still finding a premium selling logs through the wharfgate, and it’ll take a solid correction in this area to for any reprieve to come to the market."

Source: BusinessDesk via Scoop News

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NZ Carbon market update - OM Financial

NZ Carbon Market Update - NZU prices continue to move around even with little news emanating from the bowels of power. We (OMF) have seen prices hit a low for the year at $16.35 just a few short weeks ago only to rally over $1.50 in three weeks to just short of the year’s high at $18.

This volatility is simply a result in the failure of government to keep the market informed. Most officials exist in bubbles either unaware of market requirements or have market experience that could be written on the back of a postage stamp. The old saying “no news is good news” is an anathema to markets. They need news, updates, input like a human needs air.

We understand that some of this information may be deemed sensitive in nature but that is no excuse to be completely silent. The Reserve Bank is a case in point – the foreign exchange and interest rate markets expect regular timely updates and every six weeks they get that. In addition - RBNZ officials are often quoted at lunches and presentations on expectations or market views. Our government and officials need to be more open and transparent.

We do expect prices to move higher longer term – all the fundamental risks are to the upside – the election, likely changes to the ETS such as the $25 price cap removal, the unwinding of settings and the simple fact New Zealand needs much more carbon that is currently available once the Paris Agreement begins.

Source: OM Financial Limited

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Forest roading levy mooted

One of six options for funding to consider - A forestry levy that will help meet the $25 million cost of keeping roading up to standard for the industry is being recommended for investigation to the Gisborne District Council’s Future Tairawhiti committee meeting.

The levy is one of six options presented to the committee, which consists of the full council, and the recommendation would see the council set up a working party with the Eastland Group and Eastland Port to discuss its feasibility.

The introduction of a levy would have to be part of the next 10-year long-term plan consultation process. The council is seeking a legal opinion to determine if the levy is legal.

A levy based on weighting has been investigated by the Far North council.

The remaining options are to keep with the existing differential targeted rating model, to update that model, to change to a weight-based model, a mixture of the roading differentials and a forestry levy or to ask for additional government assistance.

Staff are recommending investigating the present differential levels, investigating a forestry levy, or investigating a combined differential and forestry levy.

Weight-based model not recommended - They are not recommending proceeding with a weight-based model or retaining the status quo. An application for additional government assistance is recommended only when a forestry levy is known to be obtainable.

At present, the council receives $24.4 million for its subsidised roading programme from the government through a financial assistance rate of 62 percent. Ratepayers fund the remaining 38 percent or $9.6 million.

Eastland Port has announced plans to expand to accommodate more than five million tonnes of wood by 2027.

Opus has estimated that the cost of upgrading the pavement of selected rural roads to a standard that would allow log extraction would be $25m over the next 10 years.

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Further reporting

Source: Gisborne Herald

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China’s forest industry output rises

Rise in total output value of China’s forestry industry - According to the State Forestry Administration (SFA), in the first half of 2017 the total output value of China’s forest industry rose 7.4% to RMB 2.77 trillion. The total value of China’s foreign trade in wood product rose 11% to US$71 billion.

The increase has been put down to recent policy changes which promoted the national forestry and forest industries. In the first half of 2017, in compliance with the 13th Five- Year Plan for Forest Industry Development, regional plans have been released by 11 national departments.

National policies promote optimising the structure and productive capacity of enterprises in the sector. In the forestry sector an emphasis has been placed on forest tourism. In the first half of 2017 the numbers of tourist visiting forest areas rose 17% to 700 million and this generated an income of around RMB550 billion. In the second half of 2017 the SFA will continue to accelerate the development of the wood processing industries through providing macro-economic guidance and support.

In addition, timber industry demonstration zones for leading enterprises will be further promoted. In terms of specific measures, the SFA will speed up the establishment of the national forestry industry investment fund and the so-called emerging forestry strategic industries development fund projects.

Source: ITTO Tropical Timber Market Report & Global Wood

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PEFC certification: Great progress reported

Great progress with PEFC Eco-Certification of New Zealand forest practices - Illegal forest management practices are a global problem. Governments and markets around the world are increasingly requiring proof of legality for harvested wood products. This has created a demand for labelling and endorsement of sustainably managed and legally harvested forest and wood products. The Programme for the Endorsement of Forest Certification (PEFC) is an eco-certification system that is recognised as providing assurance of legality and sustainability and is increasingly required for access to some of NZ’s major markets.

Globally, more than 300 million hectares of forest have achieved PEFC certification, making it the world’s largest forest certification system, promoting sustainable forest management, verified through independent, third-party certification. Over 18,800 businesses worldwide hold PEFC chain of custody certification, which ensures that material reaching consumers has originated from a PEFC certified forest.

PEFC certification became available in New Zealand in 2016. This followed the recognition of New Zealand Forest Certification Association (NZFCA) as the PEFC national governing body for New Zealand in early 2015. PEFC endorsement for the New Zealand forest certification scheme based around the New Zealand Standard for Sustainable Forest Management (NZS AS 4708) was achieved at the end of 2015. NZFCA acknowledges the assistance it has had from Australian Forestry Standard Ltd., its counterpart in Australia.

In the last month, three forestry companies (RMS Forests Ltd., (the former Wellington Regional Council forests), Hancock Forest Management NZ Ltd., and Timberlands Ltd.) have achieved PEFC certification for over 400,000 hectares of forest - about 20% of NZ’s plantation forest estate. Two more forest management companies are in the process to be certified. In addition, 27 companies involved in forest products processing and other supply chain activities (timber products suppliers, printers, stationery merchants, etc., (some using imported PEFC certified material) are certified to the PEFC chain of custody standard. This is providing opportunities for NZ forest produce to participate in export markets that demand PEFC certification as a way of demonstrating legal and sustainable forest management.

“It is really encouraging to see forest managers adopting PEFC on such a scale, so soon after we were able to bring it to New Zealand”, said NZFCA Chair, Dr Andrew McEwen. “The New Zealand forest and wood products sector relies heavily on exports with around 70% of production being exported. Increasingly their main markets, particularly Australia, North America and Asia are demanding third party certification as proof of legality of harvest and quality of forest management. Most of the countries New Zealand exports to are now PEFC members and recognise PEFC certification as meeting their import requirements.”

“Our client, has been pleased to obtain PEFC certification as, with the recent addition of the Wellington Region’s forests to its international portfolio, this meant that all its estates are subject to independent third party environmental certification – a long standing objective of the organisation” said Mr Kit Richards Environment Manager for PF Olsen Limited, the manager of the RMS forests.

Mr Colin Maunder, Forest Risk Manager for Timberlands Limited said “the company is proud to achieve PEFC certification which now complements our existing certification through application of a systematic management approach and strengthening our commitments to managing carbon.”

“It is fantastic to see the first forest area in New Zealand achieve PEFC certification. The certification of these plantation forests will enable processors and others along the forest products supply chain to procure PEFC-certified material from local, sustainably managed sources,” said Ben Gunneberg, CEO of PEFC International. “On a personal level, it was been wonderful to see New Zealand move so swiftly along the PEFC journey; joining the alliance and achieving PEFC endorsement in 2015, and now their first PEFC certified hectares. And we look forward to many more to come!”

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Engineered wood speeds building projects

Engineered wood eases labour constraints for commercial building - Labour shortages are limiting growth in both commercial building, with the recent profit downgrades at Fletcher Challenge highlighting the depth of the problems. However, commercial wood solutions already being implemented by industry leaders in Australia, Canada and New Zealand and hold the key to removing labour constraints. Engineered wood building components using automated manufacture to reduce labour content and speed project completions. (Photo: The post connection at the heart of the Brock Commons timber structure)

The engineering of wood components for commercial building is growing fast in Australia. Local builders and developers, led by smart operators like Lendlease and Strongbuild, in Australia’s major cities, have worked out how to automate many of the large building jobs using factory prefabrication. Case studies of their recent successes feature in an engineered timber conference coming to Rotorua in September.

Conference director John Stulen says, “Right now there’s a surprising contrast - the leading builders and developers working with wood for commercial building are finishing projects on time, on budget, without the constraints or problems blamed by the very large construction companies like Fletcher Challenge for their profit shortfall.”

“In fact, the world’s tallest timber building, at 18 stories high, Brock Commons, in Vancouver, Canada was delivered ahead of schedule,” says Stulen, “and we’ve got their lead project manager as our keynote speaker coming to our conference.”

Local designers and architects are now rapidly realising that a range of the products offered by engineered wood manufacturers get around many potential problems with challenging builds – and labour is just one of the issues that are solved by using automated manufacturing for wood panel floors, walls and engineered beams to reduce labour content.

Stulen predicts, “The next big thing set for speeding up construction jobs is timber floor cassettes. Commercial builders, developers and designers will be seeing many more solutions with these systems soon. The overall project savings from wood solutions are obvious and being captured by leaders in this industry – our conference will be full of case studies showing how wood solves many problems that traditional commercial construction practices and materials can’t.”

The conference, “Changing Perceptions of Engineered Timber in Construction” is running on 28 September in Rotorua. It's the second annual conference and attracts building owners, developers, architects, engineers, specifiers and many service and supply companies. The theme is “Advantages of Timber in Mid Rise Construction.”

The Rotorua Lakes Council are active event partners promoting their successful “Wood-First” policy. Rotorua is home to many wood manufacturing businesses including New Zealand’s largest solid wood producer – Red Stag Timber.

The conference is set to be part of a wood technology week of events coming to the city in September, including the FIEA WoodTECH 2017 two-day conference and trade expo.

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Women are making the cut in forestry

It never rains, it pours, they say. Well for the second week in a row the mainstream media have provided another positive story about the forest industry. Here it is complete with video introduction.

Balanced on the bonnet of a forestry ute, Veronica Hall's freshly baked chocolate cake is carefully sliced and eagerly devoured by her workmates – loggers in hi-viz marked with grease and mud.

A cold wind carries the smell of fresh cut pine and the view from the ridgeline looking toward the St Arnaud Range, south of Nelson, is spectacular.

The CWL crew's two diggers, hauler, and Bell timber grab are silent for the smoko break.

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Source: Stuff News

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Possum decision flawed say foresters

Possum advice ‘flawed’, forestry scientists claim- Advice that led to the Leadbeater's Possum being classed as "critically endangered" has been criticised as flawed by leading Australian forestry scientists.

In a submission to the federal government, The Institute of Foresters of Australia contended not all available evidence was considered by the Threatened Species Scientific Committee, and that the body relied on erroneous and questionable assumptions to make its April 2015 determination.

The scientists said the TSSC's assumptions, such as the extent of possum habitat, population density, actual population numbers of the possum, and the impacts of harvesting and wildfire, were not based on sound science.

The TSCC examined five criteria population numbers, geographic distribution, area of occupation, number of mature individuals and probability of extinction with the 'critically endangered' determination based on population numbers.

"Under the other four criteria the species would be considered vulnerable or endangered," the paper read.

"...the identification of at least 400 new colonies during 2014-16 (many being in young regrowth forests) would perhaps double the estimates used by the TSCC in its determination."

Given the difficulty in surveying the possum, the IFA said the TSCC used habitat as a surrogate for population numbers.

To be classified as critically endangered, a species must lose more than 80 per cent of its population over the last three generations, 18 years in this case.

The TSCC's decision was based on habitat lost due to wildfire and timber harvesting, and the high likelihood of a further 80 per cent reduction in habitat due to wildfire over the next 18 years.

IFA contended in its paper that the assessment was flawed because of estimates of habitat area, habitat occupancy and the unsupported conclusion on stopping timber harvesting.

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Source: Gippsland Times

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UC Forest Engineering running workshops

After a very successful 2016 series, the Forest Engineering team at the School of Forestry, University of Canterbury in New Zealand will again be offering four 1-day (back-to-back) workshops covering GIS/LiDAR, Roads and Stream Crossing, Cable Logging Planning and Steep Slope/Cable Assist operations. Last year over 60 people participated including six from Australia. The workshops will be held at the School of Forestry in Christchurch from the 28th through to the 31st of August.

For more information on the workshops click here or contact kristopher.brown@canterbury.ac.nz .

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Wilding conifer work confirmed for five areas

Wilding conifer work plan announced -Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry have announced the Government will control the spread of wilding conifers over an additional five priority areas this year in Canterbury, Otago and Southland.

The five new areas, covering 371,000 hectares of affected land, add to the 1 million- plus hectares of successful control delivered last year across 14 priority areas.

“Our national wilding conifer control programme last year was so successful that we’ve been able to bring forward some of the work planned for the programme,” says Mr Guy.

“Our success last year was due largely to the way everyone got stuck in together to control the spread of these invasive trees as part of the War on Weeds. This year, by tackling these areas earlier, we’ll reduce the amount of wilding conifer spread from them and have more hectares under control over the longer term.

“Planted in the right place conifers can provide timber, increase carbon storage, decrease erosion and provide shelter for stock. But in the wrong place conifers are a major threat to our ecosystems, land and farms – where they compete with native plants and animals and can severely alter natural landscapes.”

This is the second year of the national control programme to remove self-sown trees that have spread from introduced conifers. These invasive trees affect over 2 million hectares of New Zealand, and prior to the national control programme were spreading at a rate of 90,000 hectares a year.

The programme is being implemented by the Ministry for Primary Industries, Department of Conservation, and Land Information New Zealand in partnership with other central government agencies, local government, forestry and farming industries, iwi groups, landowners, researchers and community trusts and organisations.

“Wilding conifer management is an excellent example of working across Government to achieve results for conservation and the economy,” Ms Barry says.

“LINZ is also involved in this work, with the launch of its new Wilding Conifer Information System in Queenstown today a vital tool in control efforts.

“As the number one enemy in the War on Weeds, we understand that turning back the spread of wilding conifers is crucial. If we did nothing, wildings would cover nearly two and quarter million hectares of the conservation estate by 2035.”

This year the national programme contribution towards wilding conifer control across all management units will be $6.35 million, and is supported by co-funding of $1.88 million from other parties. Over the four years of phase 1 of the National Wilding Conifer Control Programme, the Government has pledged $16 million.

The five new priority areas added to the programme in 2017/18 are:

Tekapo West, Tekapo East, Ohau (McKenzie, Canterbury) - These three areas are a significant step towards tackling some of the most significant and well-known areas of wilding conifers in New Zealand. This work will protect iconic high country tourist landscapes, conservation values (such as kaki/black stilt habitat), farmland, recreational opportunities and water catchments for hydro-electricity and irrigation.

Lammermoor (Otago) - Lammermoor addresses spread at a relatively early stage across an extensive area of land that is highly vulnerable to invasion. This area contains significant conservation values and highly sensitive water catchments as well as large areas of vulnerable farmland.

Mid-Dome (Northern Southland) - Mid Dome will commence work to address a significant and high profile infestation and protect significant investment in the area. The national programme can realise significant efficiencies through the rapid removal of seeding trees, resulting in substantial savings in the longer term.

More about the wilding conifer control programme, and last year’s successful control efforts, can be found on the MPI website.

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MBIE check finds issues for kiwifruit workers

At least half of kiwifruit contractors in the Bay of Plenty have failed to provide employment contracts or pay the minimum wage, a Ministry of Business, Innovation and Employment (MBIE) investigation has found.

A Labour Inspectorate operation audited 62 labour companies and interviewed nearly 700 workers over three months last year. They found 53 per cent of employers failed to meet minimum employment standards, and almost all of these employers were using migrant labour.

Inspectors uncovered 94 breaches of the standards, and issued 20 improvement notices and six 'enforceable undertakings'. Two of the employers given improvement notices were also fined $1000 each.

NZ Kiwifruit Growers chief executive Nikki Johnson said the findings were disappointing, but not surprising.

"We've been aware of issues around labour compliance for some time... the operation that MBIE have announced took place in the 2016 harvest so we've been working proactively on this issue for some time.

"The level of non-compliance is perhaps surprising, but it does mean that the work we are doing is justified... we'll be looking for improvement across the industry."

Ms Johnson said in the past 12 months the industry had been driving programmes to improve employment in the kiwifruit sector.

"It's been an ongoing issue for horticulture, it reflects probably the demand we have for labour and the fact that we're searching high and low to bring people in to help us particularly in the seasonal scenario."

The responsibility lies with the employer, but the industry also has its role to play, Ms Johnson said.

"As an industry we take it very seriously; right from us who represent the growers, right through to Zespri who are marketing the fruit... it's a critical issue for us and something we're really focussed on."

Ms Johnson said from next season all orchard contractors and growers will be assessed as part of a new programme to monitor compliance of employment law and worker welfare.

She said if there was an audit done this year, it would be a much better result because the profile of employment problems has been raised.

"We've been working hard, particularly with our growers to help them understand how they can have some impact when they not directly employing people but are utilising contractors."

Source: Radio NZ

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Buy and Sell

... and finally ... lawyers don't lie

A lawyer, with a wife and 12 children, needed to move because his rental agreement was terminated by the owner who wanted to reoccupy the home. But he was having a lot of difficulty finding a new house to rent.

When he said he had 12 children no one would rent a home to him because they felt that the children would destroy the place.

He couldn't say he had no children, because he couldn't lie -- we all know lawyers cannot and do not lie. So he sent his wife for a walk to the cemetery with 11 of their kids.

He took the remaining one with him to see rental homes with the real estate agent.

He loved one of the homes and the price was right -- the agent asked:

"How many children do you have?

He answered: "Twelve."

The agent asked "Where are the others?"

The lawyer, with his best courtroom sad look answered "They're in the cemetery with their mother."

Have a safe and productive week.

John Stulen

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