Friday Offcuts – 1 November 2024
Click to Subscribe - It's FREE! Welcome to this week's edition of Friday Offcuts.This week, Australia's State of the Forests Report highlights a remarkable increase in forest area, carbon storage, conservation, and economic contributions, and underscores the importance of sustainable forestry practices. Meanwhile, Forestry Australia has voiced concerns about the new ACCU Scheme and where our sector fits, and a trial results on illegal logging detection has sparked further discussions. In New Zealand, soaring electricity costs continue to threaten manufacturing, with industry leaders urging government action to protect regional jobs and economic stability. FOA also addresses non-tariff trade barriers that hinder global market access, despite New Zealand's strong environmental standards and innovation. In technology, we spotlight Scion’s virtual reality training tool, which enables immersive learning for forestry workers, and SCA’s new electric timber truck, thats paving the way for low-emission forestry. Finally, we’re just a couple of weeks out from ForestTECH 2024, which showcases advancements in remote sensing, inventory management, and mechanised silviculture. Join us in Rotorua, NZ (20-21 Nov) or Melbourne, Australia (26-27 Nov). Virtual tickets are also available to international attendees. Read these and more in another packed edition of Friday Offcuts. Enjoy.
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This week we have for you:
Australia's State of the Forest Report released
The Australian Bureau of Agricultural and Resource Economics and
Sciences (ABARES) has, this week, released Australia’s State of the Forests Report: Synthesis
2023. ABARES Executive Director, Dr Jared Greenville, said the five-yearly report covered all areas of Australia’s forests—public and private forests, forests managed for production and forests managed for conservation—and the full range of social, economic and environmental values. “Gaining a better understanding of our forests is a crucial part of ensuring they are managed sustainably,” Dr Greenville said. “That’s why this report is so important—it provides the information that Australia’s policy-makers and planners need if they are to plan continued growth into the future."
For more information please visit: Forests Australia. Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Government action required on NZ electricity market rules
Tony Clifford, Managing Director, Pan Pac Forest ProductsThis past year, several long-standing manufacturing businesses were forced to close, with sustained high electricity prices being a significant part of the decisions for these closures. The impact of such closures on our regional economies is significant, not the least being job losses that strip communities of life and critical incomes that have sustained them for generations. In addition to the tax loss and export revenue to the overall economy, many suppliers to those mills will also be forced to close or downsize, causing further job losses and economic pain for regional communities. Despite talk of an ‘energy crunch’, excessive electricity costs are not simply a seasonal issue that manufacturers might reasonably be expected to budget for. For the past six years, wholesale electricity costs have progressively increased. The graph below highlights the 2.5 times increase in New Zealand’s electricity prices compared to our Canadian pulp and lumber competitors’ prices, which have hardly moved since 2016 (data set does not include the so-called ‘energy crunch’ in August 2024). Wholesale electricity prices in New Zealand began to rise when the Pohokura gas field shut down in Q4 2018 due to an engineering failure. However, when the gas field came back onstream in early 2019, electricity prices remained higher under the same hydro conditions prior to the event. Prices have continued to increase every year since, as generators test the wholesale market to see what it can bear. Analysis work by the Electricity Authority in 2019 and 2020 identified through statistical modelling that NZ$38/Mwh of the increased pricing could not be justified by costs. To highlight this issue, major energy users in the pulp and paper industry such as Pan Pac Forest Products, which contributes 6% to regional GDP, have been petitioning the Government since June about New Zealand’s unsustainable electricity market. Our campaign had nothing to do with the high spot prices experienced in August; we understand inter-month volatility. We have been in the wholesale electricity market for over 50 years – longer than every advisor to the Government.  We were not looking for a permanent sweetheart deal such as that provided to aluminium smelter Tiwai Point. However, we were hoping for a commitment from the Government to make real changes to the affordability of electricity to prevent more businesses from closing. They also need to provide confidence to heavy users of electricity that continuing to invest in our businesses has credible long-term benefits. Instead, we read in the media a statement from the Minister of Energy that “Neither the Government nor the Electricity Authority nor the system operator [Transpower] will step in to insulate wholesale market participants from risk or to protect [major energy users] from their failure to manage their own energy supply risks.” These statements show a lack of understanding of the challenges faced by major energy users. We accept that we did not have hedges in place to cover very high wholesale electricity prices for two weeks in August – but that is a symptom of the problem, not the root cause which is affordability. Traditionally, Pan Pac hedged 50%-60% of its electricity requirements and was prepared to pay the premium charged by generators for the smoothing effect it provides. However, since 2021 the price of hedges has soared so high they exceed our break-even costs of pulp production. We understand the Electricity Authority is considering a range of options to improve the market transparency and affordability; however, the options shared publicly appear to be more tweaking than genuine reform. We are not criticising the large generators – they are working under the current market rules and are motivated and expected to provide maximum returns for their shareholders (including the Government). There is no regulation that says they are required to make electricity affordable. Rather than blame major energy users for hedging decisions made back in 2021, it is up to the Government to take real action before more businesses close down and more communities are affected. Source & image credit: Pan Pac Forest Products  Carbon methods for native forests must be ‘nature positive’
Forestry Australia is calling on the Australian Government to ensure
that new ACCU Scheme carbon methods, developed for
managing native forests, are truly ‘nature
positive’, of high integrity and robustness, and will support the
long-term health and resilience of our native forests and
communities.Acting President, Dr Bill Jackson said Forestry Australia acknowledges the Australian Government has this week announced a short list of new carbon methods for the ACCU Scheme. “Forestry Australia submitted a strong carbon method proposal for consideration under the Proponent-Led Method Development Process for the ACCU Scheme. “At this stage, the Forestry Australia-led proposal has not been prioritised; however, we are very encouraged by the advice from the Emissions Reduction Assurance Committee that our proposal has excellent alignment with the Offsets Integrity Standards and triage criteria and supported it for development, if or when departmental resources permit,” Dr Jackson said. “Forestry Australia remains fully supportive of its proposed new carbon method and is looking forward to engaging with the Australian Government to progress its further development in the near future. Forestry Australia calls on the Australian Government to commit more resources to the ACCU Scheme and its proponent-led method development process.” The proposed method, Enhancing Native Forest Resilience, is focussed on improving the health and resilience of native forests and encouraging active, adaptive management of native forests across all land tenures to assist Australia in meeting its Paris Agreement targets. “Our proposed method is also based on enabling broader participation in the carbon market, which could include State forest management agencies and national parks managers as well as community groups, not-for-profits, private native forest landowners, and First Peoples," Dr Jackson said. Forestry Australia’s method is based on a growing body of published work that shows forests that are actively managed can have greater carbon sequestration and storage potential. The proposal encompasses restorative forestry practices and active forest management focused on improving habitat values, carbon stocks and resilience to droughts and wildfires. Source: Forestry Australia  Non-tariff barriers – how do we get more for NZ wood products?
The Food and Agriculture Organization of the United Nations
(FAO) released its State of the World’s Forests
report in July, which found global demand for wood and forest products
is increasing. However, those forests are facing escalating
threats due to climate change, storm events, loss of biodiversity, fires
and biosecurity incursions of pests and diseases.In this global landscape, New Zealand is well-placed to export high quality sustainable timber. While we too have felt climate impacts like cyclone damage from Gabrielle, we have strong biosecurity systems and haven’t experienced the large fires that some of our trading partners have. We have a sustainable plantation forestry system that means we aren’t harvesting native timbers, and we have a comparatively strong regulatory system for environmental risk management through the National Environmental Standards for Commercial Forestry. We also have strong labour laws, and New Zealand is renowned for our transparency and accountability. Why, then, is New Zealand radiata pine a commodity product and largely traded in only a handful of markets? Part of the reason New Zealand’s forest products are not reaching their full potential for market competitiveness is due to non-tariff barriers. While most of New Zealand’s diplomatic efforts have focused on reducing or eliminating tariff barriers (and what great work we’ve done on free trade agreements), non-tariff barriers are harder to track. Some examples of non-tariff barriers can include phytosanitary requirements, local environmental and industry standards and direct subsidies to our competitors. But hang on, didn’t I just say our biosecurity and sustainability systems give us a competitive advantage? They do, but only if we can meet the reporting requirements and standards that our trading partners set, and this is what makes non-tariff barriers so tricky. For instance, we should easily be able to meet any deforestation regulations or requirements because, with our plantation forestry model, we are not deforesting any areas for timber production in New Zealand. However, the European Union deforestation regulations, which are due to come into effect at the end of the year, have unclear reporting requirements which means they could end up serving as a trade barrier to New Zealand. Forest Owners Association and the Wood Processors and Manufacturers Association appeared before the Foreign Affairs, Defense and Trade Select Committee on 17 October to put our case to government for more support in addressing these non-tariff barriers to increase competitiveness of New Zealand wood and timber products. We are also working with Te Uru Rākau on an export double strategy for timber and wood products. Obviously, this strategy will have to be value based as opposed to volume, but there’s a lot of potential in diversifying both forestry products beyond timber. We can also do more to market the high-quality timber we grow and share our great story around sustainability. In the State of the World’s Forests report, the FAO concluded that the path to a sustainable future lies in harnessing the power of innovation. Certainly, for New Zealand timber products, innovation will be key to realizing our full global market potential and bringing that value home to New Zealand communities. More >> Source: Dr Elizabeth Heeg, Chief Executive, NZ Forest Owners Association. Virtual reality adds another tool to forestry training kit
A training program where new forestry recruits learn to make crucial thinning decisions
through immersive virtual reality simulations of forests could be just around the corner.
And the technology to get us there could also be used for training across the forestry
processing chain and to refresh experienced workers’ skills.Scion recently developed an interactive, 3D virtual reality training tool to supplement forestry worker training on-site. The prototype has caught the attention of industry players who are exploring how it can be customised to depict their own forests. Trainees who put on the virtual reality headset find themselves in the middle of a computer-generated model reflecting a realistic production forest in New Zealand. The trees are based on physiological-based models of Pinus radiata (Radiata Pine). Scion developed the tool as part of the Virtual Thinning project funded by Forest Growers Research’s Precision Silviculture Programme. Scion portfolio leader Grant Evans says the tool combines science, technology, and gamification. “We’re using fundamental science – what we know about the physiology of the trees – with VR technology and gamification, which is making it more engaging,” he says. “This simulation is based on real-world attributes, and we’re able to generate scenarios that really enhance first stage training or decision-making." Using the tool also makes training logistically easier given travel is not needed, and mistakes made in virtual reality aren't reflected in real forestry blocks. A trainer watching on screen can guide the trainee. “VR has been around a long time in entertainment. Now people have started to see the real applications,” Evans says. Options for the tool are limitless. “Levels” can be created to make choosing which tree to thin easier or harder. Variables can be changed to adjust stocking rate, tree species and age. There are decades of tree bioinformatics available to draw on and more than 70 potential variables. The current focus is on variables that impact log quality and forest value such as sweep, branching and broken tops. Evans says industry leaders engaging with the initial prototype have already identified further applications and extensions, such as connecting it to other software like geographic information system operator ArcGIS. Scion forest management scientist Lania Holt says Scion is now working with industry to ensure the tool can reflect their forests. “Companies are looking for realistic scenarios. Ultimately, where they want to go is to take the prototype and combine assets with industry in a way that depicts the forest based on their data.” Scion is working to customise the tool for forestry company Rayonier-Matariki Forests, who are responsible for more than 110,000 hectares of forest nationwide. “I’m hugely impressed,” says Rayonier-Matariki Forests Quality Manager Fraser Field, who is part of the development testing team. “I immediately fell into training mode when I tested the tool.” Last year Rayonier built its own VR process for entry-level workers, but Field says this is “a huge step forward. We will be able to build a virtual forest with sizes, features, and characteristics specific to our own conditions. We will modify and improve our training practices now to incorporate Scion’s VR, including training for NZQA unit standards. I have lots of ideas now about how to extend the use of this tool in training.” Source & image credit: Scion  Realising healthy and resilient forests for our future
Some 300 scientists, researchers, forestry professionals and
foresters have gathered for Forestry Australia’s National
Symposium being held in Ballarat this week. The key theme
for the Symposium is healthy and resilient forests for our
future.Acting Forestry Australia President, Dr Bill Jackson, said healthy forests can deliver a range of environmental, social, cultural, and economic benefits. They are also much more likely to withstand future shocks and stresses, such as those generated by bushfires, invasive species and climate change. Kirsha Kaechele, co-owner of MONA and sponsor of the Forest Economics Congress, spoke on the art of radical diplomacy, saying “negotiators need to get out of those ugly boardrooms." Ms Kaechele said we can't move forward without caring for people. Australia can have the best forest practice in the world by working together; for all sides to be brave enough to welcome broad conversation; and invite peer-review to achieve truly sustainable practice. Professor Lori Daniels from the Forest Services Centre in Canada spoke about the need for transformative change based on active management that combines the depth of Indigenous knowledge with western ecological science. “In Canada, forest managers are considering a new future of diversified, proactive, collaborative and evidence-based management for forest resilience,” Professor Daniels said. Secretary of Australian Government Department of Agriculture, Fisheries and Forestry, Adam Fennessy, identified the key role forestry can play in solving many of societies' key challenges. He announced that the Federal Government is supporting this potential through investing in national forest policy, capacity and capability, climate change and research and development. Forestry Australia is proud to facilitate conversation and explore strategies that address these issues and create a bright and innovative future for forests in Australia. Source & image credit: Forestry Australia Timber testing trial raises major concerns about illegal logging
Results of the Commonwealth Department of Agriculture, Fisheries and Forestry’s (DAFF’s) testing trial on timber species and harvest origins, has clearly demonstrated the need for the Albanese Government’s tougher illegal logging laws, with some alarming results from the study, Chief Executive Officer of the Australian Forest Products Association, Diana Hallam said today.The recently completed DAFF trial tested 146 timber products and 39 distinct species using different scientific methods including DNA, stable isotope, trace element, wood fibre and wood anatomy analysis. A quarter of the tested products were found to be inconsistent with declared species, origin, or both. Diana Hallam said, “We welcome DAFF’s trial, but unfortunately the results show there’s plenty of work to do on supply chain custody and ensuring Australia is free of illegally logged timber and fibre products. These results are something we have suspected and feared." Earlier this year, AFPA strongly supported updated Commonwealth legislation aimed at cracking down on illegal imports and these results show just how important a stronger legislative and regulatory framework is to combat this issue. We know many importers are doing the right thing, but those that aren’t, are undermining Australia’s biosecurity and deceiving consumers. In one example, we’ve been made aware of some private product testing which showed the breakup of some laminated veneer lumber (LVL) product, 80 per cent originating in China and 20 per cent from Russia, with the Russia component not declared. “Importers and certifiers need to be on notice, so we are pleased the Albanese Government and DAFF is taking the issue of illegal timber very seriously. Obviously, the best way to avoid illegal timber and fibre is to buy Australian grown and manufactured which also supports our economies and communities, but we must work to a future where all imported product is above board,” Diana Hallam concluded. Source: Australian Forest Products Association (AFPA)  Australian Pine Log Price Index updated to June 2024
The latest Australian Pine Log Price Index for January to June 2024
period has been released.The Australian Pine Log Price Index (“the Index”) is compiled by KPMG using data provided by Australian softwood growers. The Index documents changes in pine log prices achieved by large-scale commercial plantation owners selling common grades of plantation softwood logs to domestic processors. KPMG updates the Index biannually, with the two reporting periods being January to June and July to December. The Index has a base period of January to June 1998. KPMG acts as the independent Index manager and collects confidential data on log volumes and stumpage values for all sales, including long and short-term contracts and spot transactions, at the end of each reporting period. Quantity information on export sawlogs and export pulpwood is also provided. The following report presents the result of the Index from January to June 2024. The prices for all classes of sawlogs, preservation logs and export sawlogs are reported in dollars per cubic metre ($/m3). The prices for the pulplogs and export pulplogs are reported in dollars per tonne ($/t). The report is attached here for your information. Source: KPMG PF Olsen NZ log market report – October 2024
Market SummaryThe domestic demand for sawn timber in New Zealand remains well below production capacity. Mills have reduced orders for logs, so forest owners have to export a higher percentage of their production. Fortunately, At Wharf Gate (AWG) prices for export logs increased by an average of 9 NZD in October. The CFR log prices in China have risen steadily over the last couple of months. A strengthening USD against the NZD along with a relatively stable market in China means these AWG price increases should be consolidated in November. However, this pricing is still fragile, especially if there is significant increased log supply through New Zealand’s summer months. The PF Olsen Log Price Index increased $4 in October to $120. The Index is now $1 above the two-year average, and level with the five-year average. Domestic Log Market Sawmill managers report that sawn timber sales are still very slow, with high inventory levels of sawn timber in the supply chain. It is estimated there is over 40% of sawmilling capacity not being used in New Zealand as mills slow down production. Spring has arrived in New Zealand and there has been little increase in demand for timber from DIY projects. This is the time of year when these projects begin, but it seems many households are controlling their spend and in the current economic slowdown. These sales are usually the higher margin sales as well. Many mills continue to reduce orders of logs. With some harvest jobs starting as the weather improves in New Zealand, there is more supply than local mills can handle. Export Log Markets - China China softwood log inventory is about 2.7m m3 and the inventory levels fluctuated along with supply levels, as log demand has remained steady at 60k m3 per day. The CFR price range for A grade is currently 124-128 USD per JASm3 for A grade. This has increased steadily over the month and now appears to be stable. However, wholesale log prices have recently dropped slightly (10-20 RMD per m3), as sawmill inventory levels have increased. The furniture and MDF markets are faring better than the construction market. Therefore, the higher-grade logs, such as pruned and A grade, are easier to sell than the lower-grade logs. The smaller KIS grade logs are easier to sell than the larger KI grade logs, as KIS (along with K grade) is used by MDF manufacturers. The China Caixin Manufacturing PMI slipped in September to 49.3 from 50.4 in August. (Any number above 50 signals manufacturing growth). This is the lowest level since July 2023. In general, supply edged up while demand dropped. The log market was a contrast to this though, as log supply dropped over this period. More >> Source: Scott Downs, Director Sales & Marketing, PF Olsen  SnapSTAT - Checkerboard Forests As an alternative to the courtroom, environmentalists and the logging industry are hashing out their differences over the world’s largest game of checkers. While that would be far more interesting than legal proceedings, this strange pattern is actually the work of 19th century forest policies that granted railroad companies every other square mile of land. Over time some of these were sold off for timber harvesting, leaving behind this residual tapestry.
In the Pacific Northwest, the checkerboard approach appears to be the rule, not the exception. It's a strategy also used for somewhat more sustainable forest management, with some squares cleared while others grow. Explore on Google Maps and you'll see just how much of the landscape is patterned.
More: Here Port of Tauranga reports increase in cargo volumes
Port of Tauranga Limited has reported increased cargo volumes in
the first quarter of the 2025 financial year. In the three
months to 30 September, total trade increased 7.6% in volume compared to
the same period last year, to 6.2 million tonnes. Container volumes
increased 17.0% to 292,860 TEUs1.Port of Tauranga Chief Executive, Leonard Sampson, told the company’s Annual Meeting of Shareholders that the company continued to demonstrate resilience through its diversity of cargo and income streams. “After a sharp drop in cargo volumes this time last year, we’re pleased to see some recovery,” he said. Import volumes reflected slightly stronger domestic consumption, increasing 6.8% in volume to 2.0 million tonnes for the quarter. Exports increased 8.1% in volume to 4.2 million tonnes. “We are cautiously optimistic that the second half of the financial year will see slow improvement in cargo volumes, after a particularly challenging 2024 financial year,” said Mr Sampson. “However, global disruption, low international commodity prices and the nascent domestic economic recovery are expected to continue to impact the Port for many months to come.” Based on the first quarter’s results, and notwithstanding any significant changes to market conditions, Port of Tauranga expects full year underlying Net Profit After Tax to be in the range of NZ$110 million to NZ$120 million. More >> Source & image credit: Port of Tauranga New electric timber truck in operation
SCA's new electric timber truck with a crane is finally rolling in the
Östavall area. The truck, which is a collaborative project
between SCA and Scania, is the first in Europe to collect timber in
the forest for further transport to a timber terminal. On
October 21, the truck was showcased to the media.The yellow timber truck moves almost silently into the timber terminal in Östavall. Behind the wheel sits Rolf Lövgren of Lövgrens Åkeri & Entreprenad. He owns the new timber truck with support from SCA and has driven it for a few days. “It is very quiet and comfortable to drive, and I don’t get as mentally tired as I can after a full day with background noise from the engine. It is very positive," says Rolf and continues, "it takes a while to get to know the truck and learn how to drive it in the best way to conserve the battery. You want to charge more than you consume. If I have 50 percent battery left at the end of the day, I have stood still and charged unnecessarily. It will be exciting to see how it performs during the winter.” Important milestone The new electric timber truck marks another important milestone for SCA and the work to electrify heavy timber transports. The truck is expected to result in 170 tons lower carbon dioxide emissions per year compared to a regular timber truck. "This is an important project for us to continue contributing to a more sustainable society," said Ulf Larsson, CEO of SCA. “By managing the forest and making renewable products that can replace those with a high carbon footprint, SCA creates about 13 million tons of positive climate benefits each year. That figure can become even better as we transition the heavy road transports in our value chain.” The new electric timber truck is part of the forest industry’s innovation project TREE, which aims for half of the new trucks in the forest industry to be electric by 2030. SCA is one of several participants. More >> Source & image credit: SCA  Competenz appoint new GM of Corporate Services
Competenz is pleased to announce the appointment of Murray
Newman as General Manager, Corporate Services. With a rich
background in finance and corporate governance, Murray brings over 20
years of executive experience across diverse industries, most recently
in senior roles at NTT NZ Limited and Intergen, where he held positions
as CFO and General Manager, Corporate Services.In his new role, Murray will lead Competenz’s corporate services teams, leveraging his financial acumen and deep expertise in building strategy and organisational culture. Murray’s key priorities in the first 100 days include implementing a technology roadmap and getting hands-on insights by joining training advisors in the field. He acknowledges that the sector faces uncertainty due to pending government announcements, but he’s focused on preparing Competenz for future growth and resilience. "Competenz is full of people passionate about our learners' outcomes. I’m excited to transition into the work-based learning industry, building relationships across the organisation and supporting Kiwis as they work toward their trades." Source & image credit: Competenz Jobs
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... and one to end the week on... a map of our wild world
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In the working world of forestry and wood, many of us are working closely with maps and, out in the forests, with animals. Here’s a story about a clever young man who has combined his love of both and his talent in art and drawing to create WILD WORLD — a great visual treat!