WoodWeek – 16 January 2019

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Greetings from your WoodWeek news team. Welcome back! Yes it had to happen – your work is still here waiting for you; now the holiday break has come to an end for another year! We hope you have come back refreshed and have a feeling that it’s “good to be back’ for you and your team again. If not, time to look at this week’s job vacancies.

Our team is back on the job and we’re keen to bring you the wood news that matters to you – each and every week – for another year! We look forward to your suggestions for content and your feedback on the issues of the week. As always any contributions of good (clean) jokes are welcomed.

First up today – owners of forestry blocks more than a hectare in size might soon be up for thousands of dollars in extra costs to harvest their trees. The introduction of new National Environment Standards for plantation forestry has altered how councils monitor forestry-based activities, and their impact on the environment. The new standard applies to forest blocks of more than one hectare, and allows councils to charge once it has fixed fees. Local councils are now responsible for monitoring permitted activities that address forestry-related earthworks, (stream) crossings, quarrying and harvesting.

On the subject of harvesting – the first half of the year is all about forest harvesting developments in technology and machinery. We are hosting HarvestTECHX in March in Vancouver and HarvestTECH for our New Zealand and Australian loggers in June in Rotorua. Both of these events are very popular with loggers and forest managers alike. We are well on the way with registrations flowing in fast for the Vancouver event. We have regular updates coming soon on what we have in store for you here.

On a less positive note, a CNI forestry silviculture company has been penalised $35,000 at the Employment Relations Authority (ERA) for underpaying four former migrant employees.

Moving to log exports where most ports around the country have seen business bolstered by continued growth in log flows. Forestry helped Napier Port to achieve a record business result. The port handled a record 5.1 million tonnes of cargo, with log exports lifting 35 percent to a record 2.2 million tonnes.

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Forest owners: Lift in compliance costs

Owners of forestry blocks more than a hectare in size might soon be up for thousands of dollars in extra costs to harvest their trees.

The introduction of new National Environment Standards for plantation forestry has altered how councils monitor forestry-based activities, and their impact on the environment.

Tasman mayor Richard Kempthorne says the council is among others around the country now responsible for monitoring permitted activities that address forestry- related earthworks, (stream) crossings, quarrying and harvesting.

It is currently consulting the public on its own tailored proposal, which includes charges of $650 per inspection before, during and after each harvest, and $120 for each test of stream water.

The new standard applies to forest blocks of more than one hectare, and allows councils to charge once it has fixed fees.

Mr Kempthorne said the council would have to hire more staff to carry out increased levels of monitoring, and the aim was to shift more of the cost from ratepayers to forestry owners.

The council's consultation paper said that given the obligation on the council to observe and enforce the new standard, and the fact that the regulations themselves provide for the council to recover some of the costs incurred, fees will offset some added costs of monitoring forestry activities.

"It is appropriate that some of the costs it incurs are, where possible, charged to the individual/company undertaking the activities rather than all of the cost being apportioned to the general ratepayer," the document said.

The proposal is for a flat inspection fee per site visit that includes assessing proposed work as per plans, confirming compliance and providing written reports.

The owner of a small forestry block in north Nelson said further compliance costs would make small holdings unviable.

Barry Bird said his 300 trees would now be good for only firewood, if someone wanted to mill them. His problem is compounded by encroaching urban growth now hindering access to the site.

"The trees are all pruned and look good, but essentially now they're just free to anyone who wants them for firewood."

Mr Bird says compliance costs are the same whether you have 10 trees, or 10,000 trees.

"If you've got 1000 hectares of forestry and you get a forestry company in to harvest them - it's a totally different ball game.

"If you're only a small holder of pine trees - if you haven't got anything over 50 hectares then you're just nuisance value. And if we're going to get these extra compliance costs I'll just chop the whole bloody lot down and say, 'come and get free firewood'," Mr Bird said.

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Source: Radio NZ

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Napier Port sets new records

Napier Port reported another record profit this year as the amount of cargo handled also hit a record. Net profit lifted 5.4 percent to $17.6 million in the year ended 30 September on a 5 .8 percent increase in revenue to $91.7 million, its annual report shows.

The port handled a record 5.1 million tonnes of cargo, with log exports lifting 35 percent to a record 2.2 million tonnes. A total of 266,006 containers or twenty- foot equivalent units passed through the port’s container terminal, and the port’s onsite packing operation handled a record 51,126 TEU containers.

Apple exports exceeded 23,000 TEU containers for the first time, while fertiliser, cement and oil imports remained relatively steady.

“We saw an extraordinary amount of cargo come through Napier Port the previous financial year as a result of earthquake damage to Wellington’s port. To not only match that figure this year, but to beat it by more than 320,000 tonnes, really shows the pace of growth in Hawke’s Bay," chief executive Todd Dawson said.

He said the port is also handling larger ships and a growing cruise industry.

A total of 684 ships called at Napier this year, including 57 cruise ships, he said. Cruise tourism in the region is flourishing, with a record 103,000 passengers visiting Napier shores in the 2017-2018 cruise season. Figures from Statistics New Zealand figures show those cruise passengers spent $23 million on credit cards alone.

The port paid $10 million in dividends to the Hawke's Bay Regional Investment Company.

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Billions more trees for carbon neutrality

New Zealand needs to plant a ridiculously large number of trees and Shane Jones' one billion tree plan is only a fraction of what is required.

According to a report released by the Productivity Commission in August, New Zealand won't be carbon neutral by 2050 without a massive increase in forestry planting to offset the carbon being produced.

The commission's models required the planting rate to double, from 50,000 hectares to 100,000ha per year and the length of the programme to triple from 10 to 30 years.

More than 3 million hectares of land had been marked as potentially suitable for forestry in a Ministry for Primary Industries map, including the likes of the Wither Hills Farm Park, in Blenheim, a council-owned recreational reserve and pastoral farm.

But Marlborough District Council environmental science and monitoring manager Alan Johnson said planting commercial forestry was not in the region's strategic plan.

He said the model going forward for the farm park was an allowance for recreation, pastoral farming and erosion protection.

"Those plans are always subject to public consultation," Johnson said. "That's coming up for review in the next two years."

The dry, tussock-covered hills of southern Marlborough were once forested with kahikatea and cabbage tree in the wetlands, matai and totara in the dryer areas and at higher elevations New Zealand beech.

"People have different values, so it's unlikely to get back to full indigenous," Johnson said.

"You will never see the Wither Hills go into a full treed state. At least not in our lifetime."

Johnson said he would like to see more trees, but that it was a matter of the right tree in the right place.

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NZ's forestry journal embraces change

New publishing system for forestry science journal - The New Zealand Journal of Forestry Science shifted to a new operating model on 1 January 2019.

Owned by Scion and operating since 1971, this international peer-reviewed journal is now published via a new website and online editorial system using OJS software, replacing those previously supplied by Springer Nature.

The journal has a new editorial team comprising Drs Peter Beets, Ecki Brockerhoff and John Moore from Scion and Professor Euan Mason from the University of Canterbury. They are supported by associate editors from USA, South Africa, China, Finland and New Zealand.

Covering the breadth of forestry science, the New Zealand Journal of Forestry Science focuses on planted forests but will consider manuscripts on a wide range of forestry topics. It has a 2017 Impact Factor of 1.333 and CiteScore of 1.42.

The journal is freely accessible online, and subscription is not necessary. Now in its 49th year there is one volume per calendar year but no separate issues. Individual articles are published online as soon as they are ready.

Read more about the journal and make a submission at https://nzjforestryscience.nz

Access to PDF files of all papers published prior to 2019 is available on the Scion website at https://www.scionresearch.com/.

Scion is the only Crown research institute to publish an academic journal and moved to this new operating model to continue its financial support for free access to more than 1550 journal papers.

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Silviculture employer fined for wages breach

Forestry shake-up as company penalised $35,000 and prevented from hiring migrants - One of central North Island’s largest forestry silviculture companies has been penalised $35,000 at the Employment Relations Authority (ERA) for paying four former migrant employees less than the minimum wage for every hour they worked.

Silviculture Solutions Ltd (SSL), an associated company of CNI Forest Management Limited and a supplier of Silviculture services to Timberlands, employs up to 250 staff in forest block growing and maintenance. SSL was determined by the ERA to have used an “illegal system of calculating pay,” and paid the workers only for “productive hours”.

The outcome follows a Labour Inspectorate audit of 10 silviculture businesses in the region in 2016, with the Inspectorate raising minimum payment concerns with SSL as early as 2009.

“The fours worker received between $241-$4,846 below their minimum wage entitlement, for more than a year. The penalties automatically place SSL on the Immigration Stand Down List, preventing them from hiring migrant workers for 18 months,” says Kevin Finnegan Regional Manager in charge of the Inspectorate’s Forestry strategy.

“Instead of paying the workers what they were legally entitled, SSL paid them for what they deemed ‘productive hours’ only – which the company calculated as the amount of trees needed to be pruned or planted, divided by the expected hours to do them.”

These so-called ‘productive hours’ also excluded travel time in transporting workers in vans through the forest to their work sites, as well as time spent preparing equipment and having required safety briefings.

“This notion of ‘productive hours’ is totally unlawful and highly exploitative of workers. The case serves as strong reminder to any contracting business that minimum employment standards in New Zealand, including payment for all hours worked, apply to everyone, including migrant workers,” says Mr Finnegan.

The determination was limited to underpayments of the four identified workers, but the ERA also determined SSL’s own accountant identified, by extrapolation, the considerable benefit the company had gained from its illegal pay system, potentially amounting to as much as $300,000 a year across the entire workforce equating to $1.6 owing to workers over a 6 year period.

“What would have made it more difficult on these workers was that about half of SSL’s workforce usually comprised of migrant staff on ‘tied’ visas, meaning their visas allowed them to only work for SSL.

“Fear can dissuade workers from coming forward in these situations. But the Inspectorate encourages anyone who has information about minimum standards not being met to phone the MBIE’s service centre where calls will be handled in a confidential manner, on 0800 20 90 20.

“This determination should send a message to the entire Forestry industry that breaches of minimum standards will not be tolerated and that ensuring entire supply chains are operating in a compliant manner is vital to the ongoing viability and reputation of the industry. The potential for investors to withdraw from Forestry because of poor social practises is high, if changes are not made,” Mr Finnegan says.

Employers are also encouraged to find out more about their rights and obligations on the Employment New Zealand website here.

Source: Scoop News

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Oji continues with Tauranga Port

Oji Fibre says new Port of Tauranga agreement provides for growth - Oji Fibre Solutions has extended its freight agreement with Port of Tauranga for another decade.

The pulp, cardboard and packaging maker has committed to consolidate most of its import and export volumes through the port. It says the new agreement includes options for scalability which should provide more flexibility to expand for growth.

Oji Fibre Solutions operates the Kinleith and Tasman pulp mills, the Penrose recycled paper mill in Auckland, and cardboard plants there and in Levin, Christchurch, Sydney, Melbourne and Yatala, south of Brisbane.

It leases a 22,000 square-metre warehouse which Port of Tauranga built at its container terminal in 2017.

Oji’s Lodestar logistics arm handles more than 70,000 containers a year and also shifts 1.4 tonnes of cargo for export and 2.5 million tonnes domestically. It operates two break bulk vessels to get its own product, and that of other producers of paper, timber and logs, to northern Asia.

In December Oji formed the Bearing 360 joint venture with domestic logistics operator Netlogix to gain scale and help maintain the viability of the declining number of shipping lines coming to New Zealand.

Lodestar general manager Murray Horne said the renewed agreement with Port of Tauranga will enable it to keep seeking operational synergies across the export supply chain for Oji and its other customers in the central North Island and Eastern Bay of Plenty.

“By utilising the infrastructure at the port, and the rail and road links to our production facilities, we deliver the most logical solution for our business,” he said.

Port of Tauranga is the country’s largest export operation. It handled the equivalent of 1.18 million 20-foot containers in the June year, almost 9 percent more than a year earlier.

It is looking at options to extend its 770-metre quay by up to 385 metres to keep up with container growth which has averaged 8 percent a year in the 15 years since 2002. It plans to add a ninth container crane in 2020.

Chief executive Mark Cairns said the new agreement with Oji strengthens the firms’ partnership and helps both companies build their businesses.

“Partnerships of this nature allow both parties to plan rationally for the long-term,” he said.

Source: BusinessDesk via Scoop News

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ANZ Commodity Price Index

Year of the log

The ANZ World Commodity Price Index fell marginally in December to finish the year down 3.4% y/y. The 0.2% fall in the index in December was the smallest of seven consecutive monthly decreases recorded since May. A strong year for forestry prices was not sufficient to offset the weaker prices recorded in the dairy, horticulture and aluminium sectors. The NZD index fell by 0.9% m/m in December. The index fell 2.2% across 2018 when measured in local currency terms.

Source: ANZ

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Plant pines, not natives for carbon credits

Landowners planting forests for carbon credits should plant pine trees rather than natives to achieve the best returns, a carbon consultant says.

Ollie Belton, a partner of Permanent Forests NZ a Christchurch-based carbon consultancy, said that the rate that natives absorb carbon dioxide was much lower than for pinus radiata.

Sequestration calculations used by the Emissions Trading Scheme for forests under 100 hectares showed that pinus radiata absorbed almost 1000 tonnes of carbon over 25 years, while native forests absorbed less than 300 tonnes.

Belton said measurements he had done on native forests of more than 100ha showed most performed less than the ETS calculations, some only achieving a half to a third of this. In contrast, many pine forests performed better than the default figures.

"When you go out and measure the sequestration rates in native forests the numbers are low. So it is hard to make a case economically for indigenous forestry."

The one billion trees by 2028 programme and Government planting grants totalling $238 million meant it was a great time to be planting trees.

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Source: Stuff News

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Scion proposes wood processing clusters

Wood processing clusters provide new opportunities for regional New Zealand - Establishing industrial clusters around wood processing is a promising prospect for regions with surplus forestry resources and can contribute substantially to New Zealand’s bottom line.

In a recently completed research project, Scion identified four regions where wood processors could collaborate with other industries to provide, share and reuse materials, energy, water, and/or by-products for mutual benefit.

If a cluster was established in each of these regions, the increase in onshore processing would provide an additional ~1000 jobs in each region, add a total of $2 billion to New Zealand’s bottom line and reduce emissions of carbon dioxide by 67,000 tonnes a year by replacing coal with biomass.

The Wood Energy Industrial Symbiosis project mapped New Zealand’s forestry, energy resources and fossil energy-using industries to identify regions where clusters of wood processing operations could be co-located with manufacturing plants.

Gisborne, Hawkes Bay, Northland and Southland/Clutha were identified as regions suitable for wood processing clusters using Scion’s WoodScape model and predictions of future log availability to calculate return on capital investment. Industrial symbiosis in Gisborne would be focused on standalone wood-processing powered by forestry and processing residues.

In Ngawha, in Northland, the availability of geothermal energy frees up residues for secondary manufacturing. In Hawkes Bay and Southland/Clutha, residues from wood processing clusters would be used to replace coal or LPG energy sources used by other nearby industries.

By working collaboratively, a group of industries can use resources more efficiently than by any individual company and can result in reduced waste and GHG emissions, job creation and regional development.

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Even more >>

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ETS revisons: Carbon Match comment

ETS revisions announced - On 12 December the Government made a much anticipated (but perhaps less enthusiastically received) announcement of the “first tranche” of ETS changes.

Those hoping for a higher carbon price and traders looking for a simple signal - for example a raising of the fixed price option to some higher level - will have been disappointed.

Instead, Acting Climate Change Minister Julie Anne Genter confirmed that the fixed price option of $25 will continue for surrenders due in 2019 “in order to maintain regulatory predictability.” It is not clear whether it will still be available for surrenders that take place in early 2020, ie for the 2019 compliance year, however.

NZU prices had firmed some 75 cents over the first few days of this week in anticipation of the announcement, which had been foreshadowed by a formal “pre- announcement” communication from the MfE on Monday.

As of market close yesterday, NZUs had last traded on Carbon Match at $25.75 and remained bid at that level, but bids were pulled on the announcement, all the way back to $24.80.

So the fizz has fizzled, for the moment. Certainly the sugar high is missing. But if you look at what else is in the diet, you might feel more positive about the mid-term and the intent to deliver a credible market.

First, the fixed price option is going. Not for the 2018 compliance year, but soon, and not just to some higher level but altogether - it is to be replaced by the much heralded but little understood “cost containment reserve”.

As an emitter, what would I rather have - a $50 or $100 fixed price option as a painful, but genuine and easily understood backstop? Or the more nebulous, yet- to-be-negotiated “cost containment reserve”, whose size relative to the size of the NZ market next year - 40 million tonnes, could be small?

Work on the Paris rule book continues this week at COP 24. Finalising this is key to how international emissions trading will work in future and NZ Climate Change Minister James Shaw is one of the Ministers who has been asked to chair this work this week.

But for the moment, and perhaps for quite some time, New Zealand remains an isolated ETS with the FPO the only real safety valve on prices.

Yesterday’s announcement still firmly signalled that the days of the FPO are numbered. So many emitters may find themselves feeling less secure in their abilities to manage carbon in 2019 than they have to date, and this is likely to keep engagement high.

Second, don’t underestimate the importance of having an actual cap on emissions under the ETS. Without this any ETS can only ever be imperfectly aligned with our international - and domestic - targets. And it’s been sorely lacking in the NZETS. But it’s unlikely to sit easily with the current basis of free allocation to industry and again, that is likely to keep engagement high.

Thirdly, Julie Ann Genter has reiterated comments already made by Minister Shaw in the past - that International units would “not be a first choice”, underlining the need for domestic action in our own backyards, not just a willingness to pay. That’s not to say we won’t see linkage - indeed today Carbon Pulse reported that New Zealand officials have been continuing talks with Quebec and California about potential linkage opportunities after spending more than a year discussing each other’s carbon schemes. But it’s clear that lessons have been learned from past experiences and the focus on environmental integrity is key to any future linkage.

Finally, as a further factor that may see prices supported over the mid term, the Government has also said that it will investigate the potential introduction of a price floor in the scheme. Opinions are divided as to whether this is a good idea, or another distortion, but certainly we would not have seen the collapse in new planting for carbon that we witnessed in 2012-2014 had we had this then. Incidentally, the floor price in the California scheme for 2019 has been set at US$15.62, or about NZ$22.70.

Source: Carbon Match

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Rain radar delayed by forest sale

The fate of the preferred site for a Dunedin rain radar is tied to a major international acquisition of Otago forestry blocks - In August it was confirmed construction of the facility had been delayed until 2020, after the MetService’s preferred site - about 40km southwest of Dunedin - was sold for the third time.

Negotiations with the new owners were ongoing, but neither the owners’ identity nor the exact location of the site had been revealed.

The delay has already prompted the Dunedin City Council to vote to lobby MetService for a speedy resolution.

The move followed concerns, expressed by DCC and Otago Regional Council representatives, that the lack of a rain radar meant Dunedin had a "significant gap" in weather information.

That made it difficult to confirm whether some rivers had peaked during storm events, including during last year’s November flooding.

However, a series of emails released to the Otago Daily Times by Dunedin South Labour MP Clare Curran confirmed the site was tied up in a major international forestry acquisition.

One email, between MetService staff in June last year, said the preferred radar site was on coastal hills to the east of Milton owned by the Rohatyn Group. The Rohatyn Group, a specialised asset management firm with offices in North and South America, England, Asia and New Zealand, had since announced the sale of its assets in the area in August. It sold its ownership of the Otago Land Company - which owned 22,500ha of forestry land across Otago - as well as its 38% stake in Wenita Forest Products. Both were acquired by New Forests’ Australia New Zealand Fund 2, in a deal approved by the Overseas Investment Office and suggested to be worth "well over $100 million", the ODT reported at the time.

When contacted, a New Forests spokeswoman said the company was "not in a position to comment on the matter".

Wenita continued to operate on the land covered by the acquisition, as well as land it owned directly, but chief executive David Cormack declined to comment on the rain radar.

MetService chief executive Peter Lennox told Dunedin Mayor Dave Cull last month the organisation remained "extremely keen" to advance the project.

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Buy and Sell

... and finally ... think about it

I used to eat a lot of natural foods until I learned that most people die of natural causes.

Can you cry under water?

How important does a person have to be before they are considered assassinated instead of just murdered?

Why do you have to "put your two cents in"...but it's only a "penny for your thoughts"? Where's that extra penny going?

Once you're in heaven, do you get stuck wearing the clothes you were buried in for eternity?

What disease did cured ham actually have?

How is it that we put a man on the moon before we figured out it would be a good idea to put wheels on luggage?

Why is it that people say they "slept like a baby" when babies wake up like every two hours?

If a deaf person has to go to court, is it still called a hearing?

Why do people pay to go up tall buildings and then put money in binoculars to look at things on the ground?

If the professor on Gilligan's Island could make a radio out of a coconut, why couldn't he fix a hole in a boat?

Thanks for keeping up with the latest wood news with us!
Have a safe and productive week.

John Stulen

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