Dear Forest Owner,
Here’s a note on some general matters that may interest you.
Kyoto Protocol Carbon Accounting etc
This is something we should welcome as forest growers. It may also signal the beginning of a new trend, one that values plantations for their inherent environmental benefits as well as economic value.
There’s a lot of misinformation and ill-informed comment out there on this topic. The very large forestry companies have quite a lot of ‘pre-1990 forests’, which will not qualify for carbon credits, if they come into existence. But they may have to pay carbon taxes if their energy hungry processing mills are not efficient. So that explains their opposition to the idea.
Some small growers who are stock farmers too are annoyed that they may have to pay a ‘fart-tax’ for their animals one day but may not get credit for their woodlots. They worry too much.
Happily, our partnerships are in neither of these categories and should benefit from carbon accounting. All our forests are post-1990 so qualify, they don’t own processing plants or suffer from ‘wind’, and they love the enhanced CO2 that is floating about! It acts like fertiliser for them and with a little warmer weather too they are growing very nicely.
You may also be pleased to know that it only takes half a hectare of plantation conifer forest to cancel out the average lifetime use of the average car. As our average investor has a share that represents about 5 hectares they are very much in credit!
So don’t worry about the Kyoto Protocol etc, it has got to be good for plantation forest owners like you.
This is another environmental idea that has some small forest growers grumbling but which is really quite a good thing for forest owners like you. It is aimed at getting consumers to boycott unsustainably produced timber, like tropical rainforest hardwoods from Indonesia or Siberian softwoods for example. The idea is that the end-user will only buy ‘Certified’ wood, ie wood from a forest that has complied with a set of rules about environment integrity. In New Zealand most plantations will qualify. Be assured, your forests will qualify. Some small growers are worried that it will be expensive for them, but that probably will not be so since it is likely they will be able to join affordable group schemes to gain certification.
Direct Forest Investment compared with Forestry Company Investment
Someone said to me the other day "Forestry is in a bit of a slump eh?" When I asked what gave them that (false) impression, they cited Fletcher Forests and Carter Holt Harvey etc etc.
We get the same comments sometimes from prospective investors. It is quite a problem for us because they clearly (but wrongly) think we are in the same industry as those companies. We are not and there is actually nothing in common between a wood processing company and a forest growing partnership. They are as different as cattle breeders and McDonalds.
Growing forests is all your partnership does. No debt, no factory, no staff, no board of directors, no market speculation.
Growing forests is almost inevitably profitable because forests grow well ahead of the cost of establishing and managing them.
Processing wood into forest products and selling them can be profitable too, of course, but it is a different business. Some do well. Some don’t. You and I know that but sometimes I think we are in a minority!
Painted Apple Moth
This is an unwelcome Australian guest in part of Auckland that MAF are trying to eradicate. (The pest that is) It has been there since 1999. Its caterpillars will eat the foliage of many types of plants but prefer acacias (wattles), ferns, fruit trees and some native plants. Pine needles are further down its grocery list and Douglas-fir, not even on it. Fortunately for New Zealand it does not spread quickly at all, mainly because the female moth cannot fly. I am confident they will wipe it out, as they did with the Tussock Moth a few years ago. I say that because that was a more difficult pest to deal with than this one. If you want to know more, contact MAF or look at their excellent website at www.maf.govt.nz.
Markets Growing & Diversifying Wall of Wood Gone Already
The phrase ‘wall of wood’ was coined a few years ago by the editor of a wood manufacturing industry magazine who was wondering if New Zealand wood processing and manufacturing companies would take advantage of the greatly increased volume of logs that will be harvested here over the next twenty years or so. He was not seeing it as a problem, rather as an opportunity for the country. Would value be added here or would the increasing harvest surplus be exported? His view was for wealth and employment creation it might be better for the country if more processing occurred here.
Of course to the sole purpose growers, especially those who have added value to the trees by pruning, it does not matter if their logs are sold and exported or processed locally then exported, because it’s the export market that sets the price.
Well, harvest volumes have increased considerably and so what is the current situation? Are they all being exported? Is there an over-supply or low prices?
Well no, it’s very good news. Most of the added volume is being processed here before export. There is no over-supply, indeed there is a shortage of many of the better grades and prices are higher than they have been for years.
Rather than having too much future supply there is now concern that we may not be able to secure some markets because we cannot supply them with enough! Many people assume we have too many pine forests but the opposite is true. New Zealand supplies only 8.8% of Asia Pacific’s and 1.1% of the world’s forest products trade. We will do better when we double that. For example China currently imports more wood than our entire production and is forecast to double that demand before very long. With harvests declining in North America and the tropics, there is no doubt New Zealand’s future harvests will continue to be in strong demand.
I visited a fine example of the local processing industry the other day on a Farm Forestry Association field-day. The Shand’s Road Sawmill Company has a new computerised Swedish-made mill at Rolleston that is currently set up to supply just one market, the ‘packing’ or ‘box’ wood market in Asia. Previously this market would just buy logs, as still happens as well of course.
The logs used are low grade and would mostly be sold cheaply for chip or firewood here if not processed by this mill or exported. Instead it is very efficiently rough sawn, kiln dried and exported. The machinery scans each log and automatically cuts it into various sizes to maximise the value recovered. Most of it is going to Thailand at the moment. It is dried using heat generated solely from burning sawdust from the mill. All other waste is chipped and sold to the MDF plant in Sefton. In due course that may be used on-site to generate their electricity plus a surplus they could sell to the national grid. That would mean no carbon tax for them.
This is very good news for growers and the local economy but also the environment here and in Asia since this timber is substituted for tropical hardwoods, now being protected at last.