WoodWeek 18 May 2022
Click to Subscribe - It's FREE! Greetings from your WoodWeek news team. How's your week going? We have lots of updates for you, from log market updates to harvester technologies to carbon forestry issues. Thanks to the team at Forest360 for more log market insights. Today Marcus takes a peek at how the challenges of shipping and vessel logistics, fuel costs, China’s Covid lockdowns play havoc with returns for log exporters.Staying with export markets we are pleased to have the latest quarterly feature, with the support of Forest Economic Advisers (FEA) on China log market dynamics with two key graphic updates - inventories and daily sales. FEA have a range of services available to forest companies. See their preview for you of softwood log inventories at China's ports. Looking to domestic log demand, Forest360 reports it remains buoyant for both pruned and unpruned sawlogs. Many mills have mirrored other parts of the supply chain with large staff absenteeism due to covid which has impacted production. The building industry will likely blame log exports for timber supply issues again, however, thankfully, the Gib suppliers have taken the heat away from us which is much appreciated. For our industry, here is a short and sweet extract from the Emissions Reduction Plan details announced yesterday: 1 Wood Residues: Forestry Minister Stuart Nash said $73.5 million from Budget 2022 will go towards increasing woody biomass, which offers the best alternative to coal in our efforts to reduce carbon emissions from fossil fuels.(More: To see our Residues to Revenues Conference details click here >>). 2 Carbon Forestry: “Forests can provide an abundant, natural resource to store carbon. Funding of $256.2 million will go towards maximising the contribution of forestry in boosting carbon sequestration to achieve New Zealand's future carbon goals. (More: To see our Carbon Forestry Conference details click here >> ). Almost finally, in other news, ANZ reports that demand for land to convert to forestry has waned with the change in carbon rules. STOP PRESS! The company behind multi- national furniture and home accessories brand IKEA claims its purchase of a large Southland farm is for production forestry, not carbon farming.
This week we have for you:
Forest360 Log export market update![]() As vessels are generally paid for on a time basis, any non-productive wait times outside of loading or unloading increases the m3 unit cost. As NZ ports grapple with covid absenteeism and a general lack of staff anyway, the ability to unload and load vessels has been impacted creating wait times around the country. In addition, the EPA has effectively ruled out the use of methyl bromide, the only fumigant accepted by China for the top deck cargo (around 1/3 of the vessels cargo) which has resulted in the industry moving to debarking of all deck stowed logs as a substitution. While debarking sounds like a better option, in reality you can’t build one overnight and therefore exporters are scrambling to secure top deck cargos where they can. As the Port of Tauranga has the most available debarked volume, vessels are waiting up to 2 weeks at Tauranga waiting for a load due to congestion – at $US35,000/day or $NZ1.65/m3/day. Thankfully, the NZ dollar has been playing ball with a drop not seen since the first round of covid lockdowns which has helped offset some of the freight cost increases. This will be cold comfort to Grant Robertson as the direct impact of the depreciated dollar will keep the foot firmly on the inflation throttle. The China covid elimination strategy hasn’t gone so well in recent weeks with some very hard lockdowns in some of the busiest cities in China. This has flowed through to weak demand as its pretty hard to convert logs to lumber from your 30m2 apartment in Beijing. We are expecting to see reasonably sharp increases in inventory if the lockdowns continue through May, which is likely as the Chinese govt don’t like to admit defeat, even if the general population is starting to lose its sense of humor with being locked down. Supply from NZ is down on previous months due to port constraints, subdued returns and a general level of unease by forest owners regarding global stability. Global supply is also lackluster is not expected to increase from current levels for the remainder of the year which bodes well for NZ and the potential for price increases through Q3. Increased fuel costs also are starting to bite harvesting and cartage contractors, and many are passing on this cost in the form of fuel adjustment factors (FAF). Your average harvesting crew will chew through around 4 litres of diesel per tonne of log and, with around $0.82/litre increase in the last 12 months, you’re looking at harvest cost increases in the order of $3.28/tonne. Greta also hates trucks as they generally only get around 1.6km per litre on average which equates to 1.9 litres of fuel per tonne per 100km. Using the same increase in fuel cost and an average cartage distance of 150km from forest to mill or port, the actual increase in cartage cost is $2.33/tonne. Add these together and over the last 12 months you’re contributing and additional $5.60 per tonne or around $3,000/ha to the fuel producers’ bottom line. How long the increased fuel costs last is anyone’s guess but so long as the wee man in Russia keeps lobbing bombs at his neighbours we’re more than likely stuck with it. Any reductions that were provided through govt concessions in excise tax and road user charges have been countered by the exchange rate which has increases the cost of all imports. Domestic log demand remains buoyant for both pruned and unpruned sawlogs. Many mills have mirrored other parts of the supply chain with large staff absenteeism due to covid which has impacted production. The building industry will likely blame log exports for timber supply issues again, however, thankfully, the Gib suppliers have taken the heat away from us which is much appreciated. Source: Forest360 Champion Freight: Log export market update![]() Year-on-year the chart shows total log export values to China to the end of January were UP 18 percent contributing to overall log exports being buoyed by 14 percent across all export markets. Log exports to South Korea were up for the year by UP 13 percent up while volumes while logs to Japan were up 20% and to India were down 69%. Source: Champion Freight FEA update: China softwood log inventories![]() ![]() China’s Softwood Log Inventories at Ocean Ports -- FEA industry sources in China report that softwood log inventories at the country’s main ocean ports totalled 5.7 million m3 on April 30, 2022, a decrease of 2% (-92,000 m3) from the previous month, as follows: • Radiata pine log inventory volumes from New Zealand and South America amounted to 3.43 million m3, up 5% from a month earlier and comprising 60% of overall log inventories (versus 57% in March). • North American Douglas-fir and hemlock log volumes totalled 797,000 m3, a decline of 0.5% from the previous month and accounting for 14% of overall log inventories. • European spruce log totalled 1.05 million m3, down 15% from a month earlier and comprising 18% of log inventories. • Softwood log inventories from other countries (including Japanese Sugi, European red pine logs, etc) amounted to 419,000 m3 (-14%). Average daily sales at ocean ports were estimated at 49,000 m3 for the month (the worst April average daily sales since 2017), versus 110,875 m3 in April 2021. There were several reasons for this. First, the lockdown of Shanghai (starting at the end of March) has dramatically impacted the production and distribution of the timber in neighboring regions, especially Taicang. Second, the lockdowns in dozens of cities have dampened the real estate market recovery and weakened the impact of government easing measures. For more information on FEA’s China Bulletin where this data is reported monthly, please visit https://getfea.com/publication/china-bulletin or contact Dave Battaglia at dbattaglia@getfea.com ![]() STOP PRESS: IKEA shifting into carbon forestry?![]() An international company which recently bought Wisp Hill Station in Southland claims its objective is, first and foremost, to create a production forest, not to mine carbon. This is despite the fact the company is in the process of registering with the Emissions Trading Scheme (ETS). The 5,500ha sheep and beef farm is the first land bought in New Zealand for Ingka Investments, the investment arm of the group and its retail business IKEA. The purchase agreement became unconditional with the approval of land acquisition by the Overseas Investment Office on Friday, August 27, last year, bought from the Ward family. A lease-back requirement will allow the family to properly phase out their operations over a minimum three- year period. Country-Wide was refused a verbal interview with Ingka Investments, and received written statements instead. Ingka’s forestland investments portfolio manager of Andriy Hrytsyuk said the plan is to grow a productive forest within an afforestation project which expands its global forestry portfolio and demonstrates its commitment to responsible forest management, with a focus on timber sales to generate a return on investment. More >> Pine ban would impact carbon budget![]() The first of three emissions plans, released on Monday by Climate Change Minister James Shaw, reinforced that “Forestry has a critical, ongoing role in reaching the net-zero component of Aotearoa New Zealand’s 2050 target.” However, the Government’s proposal to restrict exotic trees from the permanent category of the ETS – its first action under the plan’s Forestry section – will ensure that target can’t be met. Climate Forestry Association spokesperson Dr Sean Weaver says it is scarcely believable that the Government’s long heralded emissions plan will be undermined by a single policy designed to appeal to the anti-forest lobby. “The Government is putting New Zealand’s whole climate change strategy on the line for a misguided policy that will affect less than 3% of Aotearoa’s most marginal, rugged and hard to reach land,” says Dr Weaver. “The emissions reduction plan figures show that removing exotics from the permanent category would increase emissions by 45 million tonnes by 2035. And worse, this is likely a to be a significant underestimate – already the uncertainty created by the consultation has put a large amount of planting on hold. “Even the first Budget period 2021- 2025 is likely to blow out if exotics are taken out of the permanent category of the ETS, given how hard it is to make native planting commercially viable and the impact the consultation on removing exotics has already had on planting rates. “The Government’s new plan acknowledges that regenerative forestry can improve carbon removal and storage, and protect carbon stocks in the long-term – New Zealand simply cannot afford to reject this vital tool for decreasing our carbon footprint. Dr Weaver says although the Climate Forestry Association supports native afforestation, and members have significant native reforestation projects, the slow growth rates of native trees alone will mean their impact on the country’s new carbon budgets will be minor and late. “While investing in understanding the carbon yield of native trees and finding ways to reduce the cost of native afforestation is a laudable aim, the strategy – as yet undefined by the Government – will do little to meet our immediate needs to address the climate emergency,” says Dr Weaver. “Exotic trees are our sprinters – they grow quickly and sequester much more carbon over the short term. Native trees, which grow far more slowly, are our long- distance runners, sequestering carbon over the long term. The point is, we need both, for immediate carbon reductions now and long-term sequestration. “As the Government’s initial plan highlighted yesterday, without the right policy settings that recognise the role of exotic trees in our climate strategy, we will fail to meet our emissions targets. That will cost taxpayers tens of billions of dollars as we are forced to subsidise indigenous reforestation, and buy expensive and uncertain credits offshore to offset what will now be a shortfall of nearly 150Mt. “The Government’s plan has put a great deal of focus on providing incentives to reduce transport emissions. We applaud this because it is long overdue. But there is little point in doing that if at the same time we are getting rid of the exotic reforestation tool that will capture more than two years’ worth of the country’s entire road transport system. The gains we make in transportation reductions will be cancelled out by the losses in the forest sector. “It’s time this Government took climate change as seriously as it says it does and put every resource we have available here in Aotearoa to work on reducing emissions.” Source: Climate Forestry Association Attention: Young forestry workers - A unique opportunity![]() FIEA has teamed up with the WIDE Trust, a charitable Trust formed in 2018 that supports the development and education in New Zealand’s forestry and wood industry sectors. FIEA conferences and exhibitions have set a benchmark for years. They are the leading series of technology related events, run in both New Zealand and Australia, where new and emerging technologies, operating practices and research are able to be regularly showcased to local companies. They’re always well supported. After 24 years, they’ve been able to build up strong communities of like-minded individuals that meet up once a year – or every second year. Newsletters, have been set up to complement the tech events with three industry- focused monthly newsletters going out each month now to around 6,000 readers for each newsletter. So, what’s being offered? To help out younger employees, recent graduates, new entrants and students into the industry, this new arrangement is going to enable five free registrations to attend upcoming major technology events with all major conference expenses being paid. So, free beer and food as well as the opportunity of learning about new technology, staying abreast with the very latest in research and operating practices, learning about emerging technologies (within and outside our own industry) and networking (with senior management, tech providers and your counterparts from across the country). Now that’s an offer just too good not to look at further. As we come out of two years of postponed and rescheduled events because of Covid- 19, we’ll start this offer to attendance at this region’s major forestry technology events, Environmental Forestry 2022, planned for Rotorua, New Zealand on 28-29 June 2022 and Residues2Revenues 2022 which will run in Rotorua on 26-27 July 2022. Details for each event can be found on the two event websites, www.environmentalforestry.events and www.woodresidues.events Conditions: Applicants for the five places for each of the first two events have to be actively employed within the forestry or wood products industries or in a recognised training scheme, apprenticeship or course. To ensure the package is targeting the right person, the applicants should also be 35 years or younger. What do I do if interested? Places will be filled on a first in- first served basis, provided the eligibility criteria have been met. So, if keen on picking up one of the five available spaces for either the upcoming Environmental Forestry 2022 or Residues to Revenues 2022 events, please make contact with gordon.thomson@fiea.org.nz Note: This same offer will be made available to younger industry employees or students for all FIEA run and managed events planned for later in 2022. Details will follow. New harvester features intelligent boom control![]() With IBC, operators no longer need to control each independent boom function separately. One joystick moves the boom tip horizontally, while a second guides it vertically, for faster cycle times and more precise control. IBC’s smooth and fluid motion actively dampens functional change of directions, protecting boom structures and increasing wear life. IBC also automatically controls swing speed based on the overall position of the attachment. “The continuous product development, new features, and the updating of systems and solutions are an integral part of John Deere’s way of operating,” said Jim O’Halloran, product marketing manager, John Deere. “Intelligent Boom Control is an example of an important operator assistance feature that we will continue to evolve throughout full tree forestry. Developing solutions for our customers’ needs are our number one priority and investing in innovation like IBC is an example that helps the overall productivity and profitability for the whole machine life cycle.” Improved productivity, compared to the same machine without IBC, is another benefit for customers. IBC allows the operator to focus on controlling the attachment, helping improve efficiency. The controls used for reaching and securing trees for harvest intuitively mirror how the equipment might function if it were the operator’s arm. More >> ![]() ETS proposals frustrate Maori landowner group![]() But that could have a heavy impact on some iwi, who rely heavily on forestry to get income from their last remaining lands. About 1.6 million hectares of the country remains in Māori hands, most of it the remaining slithers of a century of confiscation, reclassification, sales and land grabs. But the head of the Māori Forestry Association, Te Kapunga Dewes, said much of that leftover land was considered marginal. "Which means it's steep, erodable, in the middle of nowhere. It's still exceptionally valuable to us as Māori from a whakapapa and a relatedness perspective, but in terms of its economic wealth generation it's not that great." Dewes said forestry was often the only way some iwi, hapū and Māori trusts were able to make money from their remaining land. In the case of the Central North Island it formed the basis of significant Treaty settlements. But the government was proposing to remove exotic forests such as pine from the emissions trading scheme, a plan Dewes described as an outrage. More >> Source: RNZ News ![]() NZFOA: Natives are nice, but not enough![]() But the Association is warning that a huge emphasis in the ERP on planting native trees ignores how urgent it is to deal with the climate change crisis. The Forest Owners Association President, Grant Dodson, says he, and just about every other New Zealander, are fans of native trees and would like to see more of them planted. “They are our original land cover. Indigenous trees are deeply imbedded in our culture. Species, such as rimu, kauri and pūriri are fantastic trees and produce great timber and wood.” “But native trees are not capable of reducing our net emissions in any substantial degree this side of next century. They grow too slowly.” “In many cases, expectations of carbon sequestration from natives are overstated in the current official data tables. That makes the problem worse.” “It’s a fact of life that exotics, such as pines or eucalypts, do a much faster job of locking up atmospheric carbon. That’s why the Climate Change Commission last year budgeted another 380,000 hectares of additional exotic planting by 2035.” “Native trees are a decoration in climate change efficiency terms. A great decoration to be true. But a decoration nonetheless. In fighting climate change we need tools - not decorations.” “We could plant enough huge areas to get some carbon volumes from native trees earlier than the year 2100. But I’m sure farmers wouldn’t like millions of hectares of farmland going into kowhai or tutu.” “It’s also hugely expensive and difficult to establish forests of mixed native trees. Browsers, such as possums eat them. Weeds, such as old man’s beard, grow all over them. “Future planting is always going to be a mix of both native and exotic. Native trees have their place. But there is a huge income opportunity for farmers from fast growing exotic trees. There are very compelling economic benefits to New Zealand if we diversify farm revenues this way,” Grant Dodson says. “We especially welcome the government’s plan to expand forestry extension services and invest in bioenergy. But we seriously caution the focus on native plantings as a way to help solve the climate emergency.” Source: NZ Forest Owners Association SafeTree: New industry drugs code to be developed(SafeTree to develop new drugs code – Safetree has been asked to update the industry’s alcohol and drugs guideline with a view to ensuring it is effective and reflects current best practice thinking. The existing NZFOA guideline focuses heavily on testing – which at the time it was written in 2008 was how people thought they could best keep alcohol and other drugs out of the forest.Fourteen years later more is known about the best ways to manage this issue, and we want to include this knowledge into the new guideline. Initial research done for Safetree suggests there is no clear evidence that testing, on its own, provides a strong deterrent against drug use. There are signs of people ‘gaming’ the testing system and changing their behaviour to avoid detection, including swapping to ‘harder’ drugs like methamphetamines or synthetic drugs that are less detectable through testing. Some responses to failed tests have the potential to damage trust and make it harder for workplaces to help workers who want to change their behaviour. Interestingly, the research also highlights that alcohol and other drugs are not just a problem workers bring into the workplace. Workplaces themselves can have a significant impact on alcohol and drug use. Workplace stress – including long and irregular hours, job insecurity, low pay and boredom - can cause distress that is known to affect consumption of alcohol and other drugs. The availability of drugs and alcohol within the workplace, and attitudes in the workplace towards using them, also mean workplaces can have a significant impact on levels of usage by workers. With that in mind, we’re developing principles to help guide us in the revision of the guideline. These principles will aim to help workplaces: • Effectively manage the risks created by impairment from alcohol and other drugs in the workplace. • Improve worker health and wellbeing, including educating workers on the risks, and options to get help. • Keep alcohol and other drugs out of the forests and keep people working safely in them. The SafeTree team will consult with the sector on the development of the guideline. But in the meantime, if you have ideas and experiences you'd like to share please get in touch with us at info@safetree.nz . We’d also like to hear stories of new things people are trying to manage these risks and encourage healthy lifestyles among workers. Source: Fiona Ewing, SafeTree Carbon Match: Carbon market update![]() At 348 pages, the most succinct summary we've seen is the Green Party's own. The plan is a broad based aspirational roadmap intended to cover the next 15 years. Its success may span several Governments. But it is backed by serious money today. To fund the plan the Government has established the Climate Emergency Response Fund (CERF), a multi-year investment of $4.5b into climate change initiatives, funded by revenues from the NZ ETS. The first allocation of $2.9b will cover the 2022-2025 emissions budget. Transport, as you might expect, is an area of Big Spend. In that sector, the intent is to make zero-emissions vehicles 30% of light vehicles and reduce the total kilometres light vehicles travel by 20%, by 2035. It has been allocated an investment from the CERF of $1.2b, and aims to take the equivalent of around 180,000 cars off the road by 2035. As part of that, a new $569m Clean Car upgrade programme follows on from the already existing Clean Vehicle Discount Scheme, and is an acknowledgement to the need for a "just transition" by providing assistance to lower and middle income households for shifting to low emissions vehicles. Then, there is $350m for investment in alternative transport services and infrastructure. Other transport initiatives funded will include a vehicle social leasing scheme, behaviourial programmes and a focus on decarbonising the public bus fleet and the freight sector. In Energy the success of the existing GIDI (Government Investment in Decarbonising Industry) fund, focused on emissions reduction in process heat, is to be leveraged and dramatically upsized, with over $650 million allocated over the four-year Budget 2022 period (2022/23 to 2025/26). Energy Minister Megan Woods said in her press release that the expanded programme "is estimated to deliver projects that will make up around one sixth or 17 percent of our total emissions reductions required between 2022 and 2025, and around one third or 35 percent of our emissions reductions required between 2025 and 2030, so it is doing some heavy lifting for our climate goals.” The government will also look at its public procurement approach to explore long term electricity PPAs, with the Minister noting that this could "fundamentally change the electricity landscape, by leveraging the buying power of Government to help unleash new renewable generation". In addition there is $18m for the development of energy strategy, regulatory framework for offshore renewable energy, and a roadmap for the development of hydrogen. With respect to Agriculture and land-use, the Government has committed $710 million over four years, again to be funded through the Climate Emergency Response Fund (CERF) to accelerate efforts to lower agricultural emissions, expand the contribution of forestry to reduce carbon, and produce alternative ‘green’ fuels. Another new research centre is to be established, called the Centre for Climate Action on Agricultural Emissions, focusing on applied research and farmer uptake, partnering with key private sector businesses. Further details are expected on Thursday, with Budget 2022 initiatives to include $6 million to support the implementation of a He Waka Eke Noa pricing system for agricultural emissions - expected to take place by 2025. A breakdown of the big Climate Emergency Response Fund spend can be found in the online documents. With 15 Ministers and 18 portfolios having formal responsibilities set out in the 348 page plan, Shaw has repeatedly said that now "every Minister is a Climate Minister." You can understand the appeal of sharing that very big burden. The Minister and his officials have worked tirelessly on institutional frameworks and legislation designed to make the kitchen of climate change action less political. On that, they seem mainly to have succeeded. But there are certainly a whole load of chefs. Let's hope for good collective focus and creative, but disciplined, spending. Only then will we see a quality broth. NZUs are offered from $76.50 on Carbon Match as of writing. Log in for live pricing - Carbon Match - open every weekday 10am-5pm. ![]() New Global Partnership Announced At World Forestry Congress![]() “The United Nations Strategic Plan for Forests 2017-2030 calls for a world where forests are sustainably managed, contribute to sustainable development, and provide economic, social, environmental, and cultural benefits for present and future generations. An estimated 1.6 billion people, or 25% of the global population, rely on forests for their subsistence needs, livelihoods, employment, and income. The private sector is fundamental in the promotion and implementation of sustainable forest management, so working with our partners in the forest industry will be critical to our ultimate success and we are delighted to have ICFPA supporting the UN Forum on Forests in this important work,” says Barbara Tavora-Jainchill, Programme Management Officer, Forest Affairs for the United Nations Forum on Forests Secretariat “There is no path to a lower carbon economy without sustainable forest management and sustainably sourced forest products. This new collaboration between ICFPA and UNFF will allow us to advance policy insights and learnings across international borders to build a resilient global economy – one that creates greater economic and social opportunities for the nearly 2 billion people who live in or near forested communities around the globe,” says Derek Nighbor, President, International Council of Forest and Paper Associations. ![]() Jobs
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