WoodWeek 25 August 2021
As many parts of our economy are now in lockdown, news comes of a total ban on methyl bromide fumigation aboard ships is part of a comprehensive suite of new rules imposed by a Decision-making Committee of the Environmental Protection Authority (EPA). Stepped increases will apply to the recapture of methyl bromide from containers and covered log stacks, starting from 1 January 2022. This phased approach will be more achievable than a single target, allowing the EPA to ensure that requirements are being met by industry at each stage. The decision also introduces much stricter accountability and reporting measures.
Thanks to the great team at Forest 360 we bring you their latest log export market update commentary. Since September 2020, forest owners who have managed to harvest their trees have unquestionably experienced the dairy equivalent of the land of milk and honey. Log prices have traded at record highs and some returns to stump have been off the charts. It used to be that a pruned stand close to the Port of Tauranga and a pruned log sawmill was the poster child of forestry returns. Up until July this year forests all over the country have been literal golden geese with returns consistently sitting between $40K - $60K per ha dependant on several different factors.
Looking to the logging equipment market, John Deere announced late last week it has agreed with Hitachi Construction Machinery to end the Deere-Hitachi joint venture manufacturing and marketing agreements.
From North America we have an update from Hancock Natural Resource Management pondering future timberland performance. Will the current resurgence in inflation bode well for timberland performance? As the United States and other developed economies emerge from the COVID-19 pandemic, inflationary pressures have resurfaced accompanying the strong economic rebound. Will the past relationships between inflation and the return performance of timberland hold?
Finally, this week's SnapSTAT graphic shows the long-term price trends comparing S1 domestic grade logs and Export A Grade logs. Thanks to our feature sponsors - Chainsaw & Outdoor Power and Oregon.
This week we have for you:
Methyl Bromide Rules ResetEPA Bans Ship Hold Fumigation - Methyl Bromide Rules Reset - A total ban on methyl bromide fumigation aboard ships is part of a comprehensive suite of new rules imposed by a Decision-making Committee of the Environmental Protection Authority (EPA).
Methyl bromide is a toxic and ozone-depleting substance, which India and China require to be used on logs they receive from New Zealand. It is a biosecurity tool, used internationally to kill pests.
"The EPA’s role in regulating hazardous substances involves carefully balancing environmental, health, economic, and cultural factors," says Dr Chris Hill, General Manager of the EPA’s Hazardous Substances group. The decision released today sets a roadmap to full recapture of methyl bromide. It provides a clear and structured pathway for industry to reduce the amount of methyl bromide emitted. The decision recognises the benefits associated with methyl bromide use, while also protecting human health and the environment.”
"Ship hold fumigation will be banned from 1 January 2023. This rule change is significant as the amount of methyl bromide used is much higher than elsewhere, and it is not currently possible to recapture methyl bromide during ship hold fumigation. Therefore, in this setting, the risks to human health and the environment outweigh the benefits."
Stepped increases will apply to the recapture of methyl bromide from containers and covered log stacks, starting from 1 January 2022. This phased approach will be more achievable than a single target, allowing the EPA to ensure that requirements are being met by industry at each stage.
The decision also introduces much stricter accountability and reporting measures.
"Operators using methyl bromide will be required to provide annual reports to the EPA about their activities in greater detail than before, to ensure actions are being taken to reduce methyl bromide emissions. This information is additional to the existing requirements administered by WorkSafe NZ," says Dr Hill.
There will also be larger buffer zones to prevent people from being in the vicinity while the gas is being used. As well, local councils and affected parties, including neighbouring marae and other community facilities, must be notified in advance of fumigation happening.
Revoking the approval for methyl bromide (in other words banning it outright) was not in the scope of this reassessment, but the decision released today sets far more stringent controls on its use.
"While methyl bromide use is being phased out globally, in New Zealand its use increased by 66 percent between 2010 and 2019. We are currently out of step with most other countries which are turning away from this ozone-depleting substance.
"However, the combined controls imposed by this decision will result in methyl bromide emissions being reduced significantly over the next five years. The aim is also to disincentivise the use of this fumigant. While the EPA would like to see methyl bromide use phased out as soon as possible, we acknowledge that this is the only biosecurity treatment that some key overseas markets are prepared to accept," says Dr Hill.
The Decision-making Committee is encouraging continued negotiations with international trade partners to reduce and where possible eliminate the use of methyl bromide, and explore acceptance of alternatives. The committee strongly supports a strategic approach to the reduction of methyl bromide use and acknowledges that recapture is just one of the tools needed to ensure reduction and ultimate elimination of methyl bromide emissions.
Forest 360: Log markets never fail to repeat history(OPINION, Dan Gaddum, Forest 360) It is interesting that despite the headline of the article, some pundits started talking about such wishful thought patterns with comments on the recent bull run of log prices such as “It’s a paradigm shift in export log demand and price” and “The macro fundamentals of the market have changed for the better”. Sure enough, finding the people happy to admit they said such optimistic things is a bit like trying to find people to admit they voted for Labour.
Since September of 2020 forest owners who have managed to harvest their trees have unquestionably experienced the dairy equivalent of the land of milk and honey. Log prices have traded at record highs and some returns to stump have been off the charts. It used to be that a pruned stand close to the Port of Tauranga and a pruned log sawmill was the poster child of forestry returns. Up until July this year forests all over the country have been literal golden geese with returns consistently sitting between $40K - $60K per ha dependant on several different factors. These returns really shine a spotlight on the opportunity with marginal land in New Zealand … and I haven’t even mentioned carbon yet.
Since July record prices and the fortunes that go with it have reversed as they inevitably do (refer Figure 1).
However, there is still a lot to be positive about – notwithstanding New Zealand’s return to level 4 lockdown which will invariably change things again and probably not for the better in the short term. Although if the last lockdown is any judge of the future, the medium term is likely to surprise to the upside.
Record softwood log prices were primarily supported by sky-high US lumber prices, but this market has seen a 70% price reduction from peaks of $1700/mbf in May, but at close to $500/mbf remain above the long run average. At this level lumber supply will gradually return to China markets and start to fill the void that had driven log demand to record price levels.
So, what are we positive about?
See Figure 1 below - TGA At Wharf Gate Price History
Source Forest 360
NZIF Annual Awards WinnersThe New Zealand Institute of Forestry (NZIF) has announced the winners of its prestigious 2021 awards last week - In what has been an exceptionally volatile year for many, the forestry sector remains a significant contributor to the New Zealand economy.
NZIF President James Treadwell says the industry is working hard to benefit Aotearoa / New Zealand and New Zealanders, not only with significant returns to GDP but also to offer social benefits including carbon capture, recreation opportunities, clean water, biodiversity and general wellbeing.
“We’re fortunate with our high-calibre industry professionals who set the standards for others to aspire to. The NZIF relishes the opportunity to celebrate with ‘the best of the best’ and to proudly champion the recipients of NZIF’s awards.”
This year’s NZIF award recipient was acknowledged for their diverse range of skills and experience. From hard graft and commitment at grass roots level to high level policy planning and execution and academic leadership.
The NZ Forester of the Year award went to Paul Millen. The award was presented in Wairarapa on Monday night by Minister Nash (Minister of Forestry).
The NZIF Forester of the Year is a highly coveted prize rewarding a person for their outstanding contribution to the forestry sector throughout the year. Paul is described as a visionary with the ability to bridge both academic and industry groups. He understands the science and can communicate this to people at all levels from professional foresters to tree enthusiasts. He has massive drive, energy, and capacity for work, and has made and will no doubt continue to make an outstanding contribution to the NZ forest industry.
The NZIF has also appointed a new Fellow, Murray Dudfield, particularly for his tireless work on rural fires over three decades.
Future Timberland Performance Pondered(Hancock Natural Resource Management) Will the current resurgence in inflation bode well for timberland performance? As the United States and other developed economies emerge from the COVID-19 pandemic, inflationary pressures have resurfaced accompanying the strong economic rebound.
US consumers have regained their confidence, leading to a resurgence in demand for goods and services. In the first quarter of 2021, US GDP grew at an annual rate of 6.4%, and in June, the US Federal Reserve (Fed) lifted its projection for US GDP in 2021 to 7.0%.
Boosted by rates of economic growth that haven’t been experienced since the early 1980s, inflation in the United States has also bounced back strongly and has been particularly prominent in explosive increases in the prices of lumber and wood panels. The circumstances of the current episode of inflation are unique—a global economic recovery from a major global pandemic—and the lack of clear historical points of comparison raises questions concerning the magnitude, duration, and implications for timberland of this particular outbreak of inflation. Will the past relationships between inflation and the return performance of timberland hold?
John Deere and Hitachi end Joint VenturesJohn Deere and Hitachi Construction Machinery to End Joint Venture Manufacturing and Marketing Agreements; John Deere to Acquire Deere-Hitachi Joint Venture Factories — John Deere announced late last week it has agreed with Hitachi Construction Machinery to end the Deere-Hitachi joint venture manufacturing and marketing agreements. John Deere and Hitachi will enter into new license and supply agreements, which will enable John Deere to continue to source, manufacture, and distribute the current lineup of Deere-branded excavators in the Americas.
As a result of the new agreements, the following changes will go into effect on Feb. 28, 2022, contingent upon regulatory approval.
> John Deere will acquire the Deere-Hitachi joint-venture factories in Kernersville, NC; Indaiatuba, Brazil; and Langley, British Columbia, Canada.
> John Deere will continue to manufacture Deere-branded construction and forestry excavators currently produced at the three Deere-Hitachi factories. These locations will discontinue production of Hitachi- branded excavators. John Deere will continue to offer a full portfolio of excavators through a supply agreement with Hitachi.
> John Deere's marketing arrangement for Hitachi-branded construction excavators and mining equipment in the Americas will end; Hitachi will assume distribution and support for these products. "For many years, John Deere and Hitachi enjoyed a mutually successful partnership in the Americas," said John Stone, president, John Deere Construction & Forestry Division and Power Systems. "As we turn the page to a new chapter of Deere-designed excavators, we remain committed to supporting our customers of today and tomorrow."
"Looking to the future, John Deere will build on our legacy of quality and productivity and accelerate development of industry-leading technology and machinery that answers the fundamental need for smarter, safer, and more sustainable construction so our customers can shape tomorrow's world," Stone continued.
John Deere and Hitachi began a supply relationship in the early 1960s; then in 1988 the companies started the Deere-Hitachi manufacturing joint venture to produce excavators in Kernersville, NC. In 1998, Deere- Hitachi expanded the relationship to include the production of forestry swing machines at Deere-Hitachi Specialty Products in Langley, BC. In 2001, John Deere and Hitachi combined their marketing and distribution efforts in the Americas. In 2011, excavator manufacturing was expanded with the addition of the Deere-Hitachi Brazil factory in Indaiatuba, Brazil. The agreement is subject to the receipt of certain required regulatory approvals as well as certain other customary closing conditions.
Puruki: Our most productive forest for 50 yearsNew Zealand’s most productive forest – New Zealand has a small number of ‘experimental forests’ reserved for research. The Scion-managed Puruki Experimental Forest (Puruki) is the jewel in the crown. Data and models from Puruki underpin almost every management decision modern forestry companies make today; something never even imagined at the time the forest was established.
Given our changing climate, it is urgent we understand the functions of forests in a wider landscape. Forests are central to New Zealand’s solution for improving water quality, carbon storage, landscape multifunctionality, and biodiversity. Experimental forests are necessary to demonstrate possibilities at scale, to provide data that validates our models, and to help researchers understand impacts of a warming climate on forest health, resilience, and productivity. They are also a place to demonstrate new and sustainable forestry practices that can shape and transform future forest management, leading to new forest designs tailored to products, for example, short rotation species for biobased plastics or fuels.
Long-term access to experimental forests like Puruki is essential to carry out the science that will help to realise New Zealand’s opportunity for more biobased products and answer key questions for our nation’s future.
The beginning - Puruki forest is located in the central volcanic plateau of the North Island. The forest is part of the Purukohukohu Experimental Basin established in 1968 in response to a call by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) initiative to address a global decline in freshwater resources.
An ambitious programme of long-term research was established to understand the effects of land use change on local hydrology and derived volcanic soils. The land that is now Puruki forest was converted from pasture to forest in 1973, then harvested and replanted with second rotation pine forest in 1997. The second rotation is now 24 years old and approaching harvest.
Highlights from 50 years of research
Source: Scion Research
Hawke’s Bay gains 1BT Jobs1BT forestry projects deliver boost for Hawke's Bay - Biodiversity, erosion control and carbon sequestration in Hawke's Bay are receiving a boost with 3 native tree planting projects launched in the region. Alex Wilson, director forest development, Grants and Partnerships at Te Uru Rākau – New Zealand Forest Service, says planting blocks of trees can improve land and water quality, help reduce carbon, and bring economic benefits for local communities.
"Te Uru Rākau – New Zealand Forest Service has partnered with Te Mata Park Trust Board to plant 12 hectares of new plants and trees on land belonging to the increasingly popular Te Mata Park.
"Mana Whenua are engaged in relation to sites of archaeological significance and a Rōngoa garden has been established and will continue to be developed in conjunction with local iwi," says Mrs Wilson. Around 59,000 native eco-sourced seedlings will be planted over a 3-year period, resulting in an extension of the park's existing bird corridor linking Cape Kidnappers and Havelock North. The project will also provide seasonal employment to the local community and include the help of many keen volunteers over its duration.
Mike Devonshire, Trust Chairman, says the Te Mata Park Trust Board is delighted to receive more than $600,000 in funding from Te Uru Rākau – New Zealand Forest Service's One Billion Trees (1BT) Programme. "This support will form the backbone of our project, ensuring marked improvements in native biodiversity and birdlife habitats, as well as providing employment for many local contractors.”
"As Te Mata Park is protected under a QEII covenant, the restoration of this land will be enjoyed by thousands of park users, in perpetuity. We are very grateful for the support we have received for this ambitious project." Another Hawke's Bay project receiving funding from the 1BT Programme is Ocean Beach Sanctuary located on the Cape Kidnappers Peninsula. The sanctuary is receiving $160,000 to help increase its seedling production by expanding its nursery and employing a nursery coordinator to ramp up production.
"The nursery, which has produced thousands of plants over the years, has found the demand for seedlings was outstripping its existing production," says Ms Wilson. "By expanding the nursery, an additional 110,000 seedlings are expected to be produced over a 3-year period."
Funding has also been committed to the Hawke's Bay Regional Council. It's receiving almost $1 million to boost its existing native species planting programmes, including the programmes of partnering organisations, NZ Landcare Trust and Hastings District Council. Hetty McLennan, Hawke's Bay Regional Council Catchments Advisor Biodiversity, says the funding is a huge win for the region.
Celebrating science in forestryNational Science Week 2021: Celebrating the role of science in our forests – The Institute of Foresters of Australia and Australian Forest Growers (IFA/AFG) is celebrating the role that forest science plays in ensuring a healthy and resilient future for Australian society and the environment for National Science Week 2021. IFA/AFG CEO Jacquie Martin highlighted the benefits of forest management underpinned by data and research, paying tribute to the membership’s forest scientists.
“Science is at the core of effective forest management and at the core of what the IFA/AFG’s members do in their work looking after all land tenures including state forests, national parks and private forests,” Ms Martin said.
“Sustainable forestry – the science and craft of creating, managing, conserving, using and caring for forests - ensures all values of forests can be supported and enhanced, ultimately ensuring a resilient and healthy future for Australian society and the environment.
“Robust scientiﬁc inquiry and civil debate is vital to progress in any field of endeavour, and forestry is no different. The benefits of evidence-based forest management are far-reaching and include maintaining and improving biodiversity, addressing climate change, carbon sequestration, supporting a circular economy and managing fire risk.”
“By applying research outcomes and working closely in collaboration with Traditional Owners, forest scientists do so much for nature and society by providing solutions and improvements to a range of environmental issues.”
“As part of National Science Week, I’d like to acknowledge and thank our forest scientists for the vital role they play in managing our forests, as well as celebrate the role of science in our society more broadly.”
and finally - something for a laugh
Two Irishmen flying in a biplane, one says to the other “ If we fly upside down, will we fall out?” His mate says “ No Paddy, we’ve been friends for years.”
I thought it was the washing machine shrinking my clothes...
Turns out it is the refrigerator.
I never repeat gossip: so listen carefully the first time.
I use to hate it when my mom would dress me and my twin brother in the same clothes. We could hardly walk.
I was in a cafe the other day.Two waitresses were having an argument about how long to leave the tea bag in.
It ended up being a big brawl, I asked the manager how did that happen?
He said ‘I don’t know but it’s been brewing for ages!!!
Apparently, it’s only appropriate to say, “Look at you! You got so big!”, to children.
Adults tend to get offended.
See you again next week.
We welcome comments and contributions on WoodWeek. For details on advertising for positions within the forest products industry or for products and services, either within the weekly newsletter or on this web page, please contact us.
Copyright 2004-2022 © Innovatek Ltd. All rights reserved