WoodWeek – 6 May 2020

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Greetings from your favourite wood news source. After 13 years at the helm of Australia’s largest plantation owner, Nick Roberts has just announced he is stepping aside as CEO of Forestry Corporation of NSW.

Moving to our key log export market, China, competitors from Germany and the Czech Republic moved in as their log sales to this key market soared over 250% and 300% respectively and to 1.11 million cubic metres and 393,000 cubic metres respectively.

Upcoming events for innovators in our industry continue to be online ones. The Forest Industry Engineering Association (FIEA) announced today its annual Forest Industry Safety & Technology conference will be going ahead in June – in digital form. The new program is online now! Click here to view the program and register.

Listening to media brainstorming, some economists have suggested New Zealand consider attracting billionaires to invest in our remote paradise. In forestry, as many of our readers know, these investors have been here and continue to invest. This week we report on an Austrian investor given approval to buy a $5m sheep and beef farm in Hawke's Bay, making this his third acquisition.

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Nick Roberts to step down

End of an era for Forestry Corporation CEO - After 13 years at the helm of Australia’s largest plantation owner, Nick Roberts announced last week he was stepping aside as CEO of Forestry Corporation of NSW.

Nick said it had been a privilege to lead the business over the years taking carriage of the State’s 2 million hectares of forests and supplying renewable timber to the diverse customer base in NSW. With a strong focus on replanting and regrowing, more than 500 million trees would have started their lives in the NSW native and plantation forests under Nick’s leadership.

The future sustainability of the forests and a strong commercial forest and timber industry in NSW has been at the heart of Nick’s journey with Forestry Corporation.

“The safety of the forest and timber industry has been a personal passion of mine and an area while there is always more to do, I believe we have made a solid collective progress."

Nick’s career to-date has spanned all facets of the forest and timber industry with roles across the globe.

“I’m very proud of Forestry Corporation and the changes the business has embraced over the past decade. The impact of the 2019-20 bushfires on the business has been significant and as an organisation, we are now entering a new re-building phase. It is important that the business has leadership to see it through the planning and implementation of this phase and so I asked the Board to consider the future leadership of the Corporation as the organisation faces this next set of challenges."

As the Board seeks a new CEO, Nick will remain with Forestry Corporation over the coming months to steer the business through its initial bushfire recovery including the substantial salvage timber operations already underway; repair of millions of dollars of infrastructure; and the initial replanting efforts for the State’s plantations assets.

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China: Germany leaps up log supplier ranks

Among supply countries providing more than 100,000 cubic metres of log imports in the first two months of 2020 were Germany and the Czech Republic where imports soared over 250% and 300% respectively and to 1.11 million cubic metres and 393,000 cubic metres respectively.

China’s log imports from Argentina also soared over 170% to 103,000 cubic metres. In addition, China’s log imports from Brazil, France and New Zealand rose 31%, 8% and 1%. All other sources saw a sharp decline. In 2019, around 12 million cubic metres of standing timber in North Rhine-Westphalia alone was lost to a bark beetle attack and efforts are underway to salvage as much of the timber as possible.

New Zealand was the main log supplier to China in the first two months of 2020 accounting for 29% of total log imports. Imports from New Zealand totalled 2.25 million cubic metres in the first two months of 2020, a year on year slight increase of 1%.

The second ranked log supplier was Germany at 1.11 million cubic metres, a year on year soaring of over 250%, accounting for about 14% of the national total. The average price for imported logs from Germany was the lowest at US$90 per cubic metre.

The third ranked supplier of logs was Russia at 0.867 million cubic metres, a year on year increase of over 300%.

Source: ITTO TTM Report April 2020

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Forest Safety Conference to proceed - online

Forest Safety Conference confirmed for June; goes international - The Forest Industry Engineering Association (FIEA) announced today its annual forest safety conference will be going ahead in June – in digital form. The new program is online now: click here to view.

“While lockdown conditions have forced enormous restrictions on all of us, we have a large loyal following of safety leaders in forest management and their contractors. We think they’ll welcome this series,” said FIEA director John Stulen, “as they’ve been coming together for safety updates since 2013.”

“We’re adapting to this new normal until conferences can return,” said Stulen. “We’ve shifted our speakers and their presentations online. In April, our MobileTECH Ag webinar series was well-received and highly rated,” he added.

“We’ve taken 12 of our key presenters from our two-day conference and they are adapting their message to the shorter webinar format.”

The topics covered include:
Keynote Session: Recognising Fatigue Factors for Positive Workplace Change
Session 2: Te Kupenga Mahi and other Cultural Factors: Why They Matter for Improving Safety at Work
Session 3: Adopting and Adapting the Latest Safety Technologies and Practices for Forestry
Session 4: New Safety Techniques and Technologies for Log Transport & Logistics

John Stulen says that the safety leaders, who number in the hundreds now in forest companies and their contractors, have all been loyal conference delegates since 2013. Our strong links with Canadian and Australian safety leaders also helps to bring new ideas of safety innovations that work in all 3 countries.”

“Hats off to our sponsors who have been 100 percent supportive of us,” commented Stulen. “They have been hugely supportive of this move and we’re working closely with McFall Fuel, VicForests, SafeTree and WorkSafe New Zealand to bring the experience of our practical experts together like this.”

“We’re really quite excited about the webinar style – it allows easy interactions too,” said Stulen. “We’ve confirmed all of our speakers and sponsors that were scheduled to take part in the physical event. Everyone has been fully behind the move and, as usual, we’re looking forward to a great learning experience using the webinars.”

The digital conference will be held on 16th and 18th June. An international audience is expected.

Registrations are open and online now. See: www.forestsafety.events.

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Billionaires already here for forestry

Austrian investor given approval to buy a $5m sheep and beef farm in Hawke's Bay - Austrian billionaire Wolfgang Leitner has sunk another $5 million of his vast fortune into land to expand forestry in Hawke's Bay, this time buying a sheep and beef farm at Tangoio, north of Napier. Application details indicate plans to plant 640 hectares in forest.

In 2019 Leitner applied for consent under the special forestry test to buy Ponui Station, which includes 14 hectares of commercial forestry and just over 700 hectares grazed by sheep and beef stock. His application Was been given permission by the Overseas Investment Office (OIO) for an $8 million purchase of land near Wairoa under a rule that fast-tracks forestry deals.

He also acquisition a freehold interest in 489 hectares of land at 633 Waimaha Road, Tahunga, Gisborne. According to Forbes, Leitner's fortune is worth US$1.5 billion (NZ$2.4 billion). He is the CEO of one of Austria's largest companies, plant and equipment manufacturer Andritz.

For details of his recent deals see below:

Tongaio property

Ponui Station

Gisborne property

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SnapSTAT: Sponsored by GlobalHQ

The below graph is provided by AgriHQ as part of their monthly Forestry Market Report. To receive a free copy of the full report, simply contribute to the following log price survey; AgriHQ Log Price Survey.

Otherwise, a full list of AgriHQ's forestry coverage options can be viewed here.

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Rayonier: Quarterly results analysed

Interim Rayonier results suggestive of industry trend – Rayonier reported Q1 EPS of breakeven, below BMO at $0.04 and consensus at $0.07. Adjusted EBITDA of $47.1mm was below BMO's forecast $53.1mm and consensus at $53.8mm. PNW and New Zealand timberlands were ahead of BMO, more than offset by a miss in Real Estate (R/E). FY20 EBITDA range reduced to $200-230mm from $245-270mm. BMO at $229mm. Timber volumes and EBITDA guidance reduced for all regions.

New Zealand (NZ). Slightly above BMO adjusted EBITDA $10.2mm; BMO $9.1mm, 4Q19 $16.1mm, 1Q19 $22mm. Q1 harvests declined 20% y/y due to COVID-19 disruption. Sawlog prices were weak – exports -18% y/y and domestic prices -16% y/y.

Source: BMO Capital Markets Canada

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Levy trust backs off work with uncertainty

Late last week the Forest Growers Levy Trust (FGLT) revised its work plans down and advised its funders it is anticipating borrowing and using reserves to maintain as much of its yearly work programme as possible. It also decided to reduce its work programme by a million dollars, following disruption to forest exports and production caused by the international spread of coronavirus.

FGLT chair Geoff Thompson (pictured), says it’s anticipating covering an even larger fall in its revenue and is planning on using reserves and borrowing so as not too significantly disrupt its funding of industry good activities. The FGLT had previously budgeted to spend $8.5 million in 2020, mostly in forest research, but also other projects, such as health and safety and biosecurity.

Income for the FGLT is from a levy on harvested logs, set currently at 27 cents per tonne. Geoff Thompson says the outlook for forestry over the short term is highly volatile.

“The current market in China for log exports appears healthy, but we know other countries have sought to fill the gap in China which New Zealand has left while we have been in lockdown. The beetle salvaged spruce trade out of Europe into China is looking to resume, and there are quantities of bushfire damaged logs now being shipped out of Australia.”

“Likewise, the domestic timber market has been shut-down too and nobody is sure what the local demand will be in the new economy which will emerge when coronavirus is under control. The FGLT is going to constantly review and revise its budget over the next few months. That may mean we are able to reinstate the budget-cut we have made if the markets go well enough to fill the gap of the past two months.”

“We are committed to the least disruption as possible to indicate our commitment to the forest industry.”

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Plan to grow forestry workforce

Government is joining forces with the forestry and wood-processing sector to help attract a diverse workforce of more than 5000 additional people in a post- COVID-19 world, Forestry Minister Shane Jones says.

The inaugural meeting of the Forestry and Wood Processing Workforce Council was held last Friday. The council will implement the Workforce Action Plan that was presented to Shane Jones in January and identify what should take priority as New Zealand emerges from COVID-19 lockdown.

“The forestry and wood-processing sector is at the heart of many regions and the communities within them. With a workforce of more than 38,500 and contributing more than $6.9 billion in export revenue, it will play a critical role in New Zealand’s economic recovery,” Shane Jones said.

“Forestry will play an important role in rebuilding our economy. The world wants our timber and wood products and the industry needs more workers. There is a huge opportunity for people to retrain and take up work in the industry.

“It is estimated the forestry and wood-processing sector will need another 5000 workers by 2025. That’s why it's important for the Government and sector to work together. We need to build a fit-for-purpose education and training system that equips workers to carry out the increasingly sophisticated tasks in sustainable forest management and wood-processing.”

The action plan addresses common forestry and wood processing workforce challenges by complementing and building on existing initiatives, as well as beginning new ones. The actions initially cover the forest-growing industry, which includes nursery operations and the planting, maintenance management and harvesting of commercial forests and some parts of the primary wood-processing industry, specifically sawmilling and wood treatment.

“While COVID-19 has been unprecedented global, New Zealand has some of the best timber and wood products in the world. So, we need a skilled workforce to keep this sector moving forward and seize that opportunity,” he added.

You can read the Forestry and Wood Processing Workforce Action Plan 2020-2024 here.

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New tech for wood check

FWPA - New technology to predict wood quality in standing trees – Australia’s FWPA has launched their latest episode of the WoodChat podcast, (Episode 15) focusing on developments allowing growers to easily assess wood quality across their resources.

The researchers have been using technologies known as IML-RESI and eCambium, to develop processes and tools that will support decision making around location and management, improving the quality of forest stands.

Leading the FWPA-supported research was Dr Geoff Downes. He is confident of its ability to predict, maintain and improve timber quality in plantations. He added it will help decrease risk and improve the productivity, competitiveness and profitability of growers and processors.

“Being able to measure wood quality in standing trees at a particular site, cost- effectively and with minimal effort, means growers get a better understanding of the properties of processed timber, which determines price.

“Industry feedback so far has been incredibly positive. This project has 12 industry partners, including growers and processors, many of whom are now assessing their own resources using this technology.

“Communication between growers and processors helps them understand how the standing tree properties will relate to the products that ultimately come out of the sawmill.”

During this episode, our hosts also speak to industry partner Dr Dominic Kain, Geneticist at HQ Plantations, who shared details of his own involvement with the project.

This episode is the latest in the series of WoodChat podcasts, following topics including building safely with timber in bushfire-prone areas, and how FWPA has joined forces with Australia’s other agriculture and horticulture industries to develop new pest diagnostic technology.

WoodChat represents FWPA’s ongoing commitment to engaging ways of communicating news and innovations to the industry and beyond. Each episode includes in-depth conversations with experts on recent discoveries and current initiatives.

You can listen to WoodChat on SoundCloud and iTunes.

Source: FWPA Australia

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Carbon Match: NZU Update

Late yesterday the ETS Reform Bill was reported back by Select Committee, whose input saw it grow from a 225 page missive to a 432 page markup. It now awaits a second reading.

Navigating the amendment bill is like a choose-your-own-adventure novel - vaguely disorientating even to those who thought they had a handle on the plot. An update on the state of play has been provided by the Ministry itself here and the report of the Select Committee is here.

Refinements recommended by the Select Committee include:
  • introducing "activity-specific" reduction of the general phase-out rate, whereby the Minister would be able to reduce the phase-out rate for a specific eligible industrial activity deemed at risk of emissions leakage, while maintaining or increasing the set phase-out rates for other eligible industrial activities;

  • deferring the commencement of many of the forestry-related policy changes to 1 January 2022 because further work is needed on related forestry regulations;

  • extending the timeframe for participants to opt in to averaging accounting, before averaging becomes mandatory for post-1989 forests.

It's worth noting that the National party has opposed the progression of this bill for the next 12 months, saying that this is a "long, complex, multifaceted, administratively complicated bill that upon enactment will have widespread and costly implications for every sector of the New Zealand economy" and objecting to it being advanced during the COVID-19 adjournment of Parliament.

While the support of the Nats isn't required, the withholding of it does highlight afresh the need for NZ First to remain supportive, if this package of reforms is to become legislation this side of the election.

One of the aspects of keen interest to businesses with liabilities (and to NZU holders in general) was the proposal by the Ministry for Environment to ultimately remove the fixed price option and replace this with a cost containment reserve pegging off Government auctions that are expected to be launched next year. That proposal included was that a fixed price option remain in place for emissions produced in 2020, but at a higher rate of $35.

It’s not clear where this proposal now sits - the Select Committee report does not appear to contain any specific recommendation on raising the FPO, although further changes are still possible as the bill winds its way through the parliament.

At this point it's hard to get too excited one way or the other - the same uncertainties prevail and we will just have to stay tuned. NZUs last traded at $24.55 and remain bid and offered around that level as of writing this, but check back at 1pm for live pricing.

Source: Carbon Match Weekly

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... almost finally ... Hurray for Kiwi ingenuity

I am sure you will all agree that lockdown can be a real drag sometimes, especially when the weather is not cooperating. So, you've got to admire those around us who take inspiration from isolation (mine, as you see, is onomatopoeia) and create something really useful.

Read on you lucky people:

The Wheely Wash - a Taranaki builder's lockdown invention - Start with boredom, add in some Kiwi ingenuity and it's surprising what can come out of being in coronavirus lockdown.

Oakura builder Gareth Shearman has come up with the 'wheely wash', a way of washing hands without touching the taps or the soap dispenser.

Shearman has heard the "wash your hands" message from his doctor neighbour and everyone else, he said.

"But at the supermarket there's not a heck of a lot of options for washing your hands. I thought there has to be a better way of doing it."

So, the Taranaki man rummaged around in his garage to see what he could come up with. He found an old wheelie bin - which didn't belong to the council - and scrubbed it up.

"I've used a bucket to make the sink and I've made my own taps out of conduit piping. It's pretty DIY, Kiwi ingenuity style. Then water from the basin drops into the wheelie bin."

If shops are going to use it they can't have hoses running to supply the water, because they'll be a trip hazard, he said.

"I thought let's try and make something totally mobile."

More >>

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Buy and Sell

... and finally ... it's a dog's life

~ The reason a dog has so many friends is that he wags his tail instead of his tongue.

~ Don't accept your dog's admiration as conclusive evidence that you are wonderful.

~ Lockdown level 4 has turned us into dogs. We roam the house all day looking for food. We are told “no” if we get too close to strangers. And we get really excited about car rides!

~ Day 28 at home and your dog is looking at you like, “See? This is why I chew the furniture.”.

~ The average dog is a nicer person than the average person.

~ Anybody who doesn't know what soap tastes like never washed a dog.

~ If your dog is fat, you aren't getting enough exercise.

~ Women and cats will do as they please, and men and dogs should relax and get used to the idea.

~ You can say any foolish thing to a dog, and the dog will give you a look that says, 'Wow, you're right! I never would've thought of that!'

~ If you think dogs can't count, try putting three dog biscuits in your pocket and then give him only two of them.

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

John Stulen, Editor

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