Friday Offcuts – 30 November 2012
Click to Subscribe - It's FREE! So – the deal’s been done – well almost. However unlikely, those around the negotiating table following the collapse of the Tasmanian forestry peace talks a couple of weeks ago have been working overtime. They've been desperately negotiating behind the scenes to see if the two years of intense and heated discussions – and 35 years of infighting – could finally provide some sort of future surety to the State's forestry industry. It has.As reported in our last issue, an agreement was finally reached late last week by the Tasmanian forestry industry, union and community representatives and peak environmental groups. Legislation to enact the new reserves and saw log quota passed the lower house but the deal still needs to get through the Legislative Council. So, celebrations right now are muted. For Tasmanian’s though, the deal appears to provide them with the opportunity of mending deep seated wounds and collectively to agree on how the State’s forests in future will be managed and used. Finally, a wide cross section of Australian forestry managers, wood harvest and logistics planners, logging contractors and transport operators have just finished meeting in Melbourne. They met to discuss some of the more innovative tools being used around the globe to improve efficiencies through the wood supply chain. Case studies from forestry companies and technology providers from Europe, the US and Canada, Brazil, New Zealand and Australia outlined just how intelligent data, real time analytics and simple, easy to use web platforms are currently being used and are changing the way business in the forest products sector is being carried out. As discussed, the opportunities for significant improvements in both financial and operating performance for local companies are already proving to be substantial. Next week for the second leg of the ForestTECH 2012 series, we’re expecting the largest turnout of forestry managers and contractors seen in New Zealand for many years. Already over 200 from throughout New Zealand are expected with the events being run on Tuesday and Wednesday of next week. If you haven't already registered for Rotorua, make sure you make contact with either the FIEA or FICA offices. For the ForestTECH 2012 event, you can register on line at www.foresttechevents.com.
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This week we have for you:
Tasmanian forestry peace deal finally signedAs reported last week, an agreement was finally reached late last week by the Tasmanian forestry industry, union and community representatives and peak environmental groups. Tasmania's Premier has declared the signing of a forestry peace deal a difficult day for the state. Negotiators have confirmed they have struck a deal to end the state's forest wars protecting half a million hectares of forest from logging. In return, the legislated quota of sawlogs will be cut to 137,000 cubic metres a year.The Forest Industries Association of Tasmania's chief executive Terry Edwards says 395,000 hectares will be reserved immediately and the balance in March 2015. Mr Edwards says it will be up to Parliament to determine whether the second tranche is reserved. Key elements of the agreement include: • A legislated minimum supply of 137,000 cubic metres of high quality sawlog and the establishment of Permanent Timber Production Zones; • An additional 37,954 hectares designated as a Specialty Craft and Timber Zones, along with peeler wood supply to meet contractual arrangements; • Support for Forest Stewardship Council certification of remaining native forestry activity; • 504,012 hectares of native forest will be given legislative protection in two tranches - 395,199 hectares after enactment of legislation and 108,813 hectares by March 2015, pending the satisfaction of durability clauses; • An additional 20,183 hectares will be designated as a once-off log, restore and reserve area, and 1,228 hectares of log-of-last-resort zone. For more information and comment, click here. New web based tool supports land use decision making
New Zealand Crown Research Institute Scion is working with key agricultural partners to develop a tool called “MyLand” which will help farmers and growers make good long-term decisions about their land use. MyLand, which is at the working prototype stage, integrates many new technologies, research results and land resource information, and makes these available on a home computer.A Beta version of the software is now undergoing evaluation and user testing. MyLand will enable land managers to weigh up long-term economic and environmental considerations as they look at different land use options. These could include combining hill country sheep farming with forest woodlots, or stream-side planting on dairy farms. The software project has received backing from several organisations keen to support farmers to explore sustainable land options, particularly in areas where soil erosion and water quality are causing problems. MyLand overcomes many past hurdles by integrating results from research into land capability, environmental impacts, agricultural systems and forestry options. It also enables a user to consider multiple land uses down to a paddock level. It is a framework that could be extended to any combination of land-use options. Project leader Graham West says the tool is designed to be used by landowners or their advisors, to easily evaluate the trade-offs between profitability and environmental impacts. An industry steering group has been important in guiding MyLand’s development over the past three years. “The agricultural sector already has access to many tools that support short term operational farming decisions, but this is the first system that can be used to make long term, inter-generational decisions that include forestry options.” More >>. New Zealand Log Prices - November 2012In-market log prices have been variable this month. Pruned logs have found further support in the Chinese market and as such have risen in price since last month, to be at US$186/JAS. A grade log prices have fallen by around 1% to US$130/JAS. This small change is inconsequential to demand in China, and now marks 7 months in which the price for A grade logs have traded within a US$3/JAS range.Log exports are well supported and the volumes exported to China are steady, though many ports have been running down inventories and sit at around 1 month’s supply. At this rate prices are unsustainable and they will have to rise to offset this decline. New Zealand exports will receive support from better prices, though price rises may attract more competition from Pacific North-West exports to China, which have been declining of late. After working through over-supply issues, Indian prices have risen to reach parity with other Asian markets. The risk is that it will once again be flooded by international logs looking to enter the market with favourable prices. South Korean exports are lower. K-grade logs have lowered in value, though the larger knotted KI grades have had a price rise of around 1%. The log price indicator moved up one point to 83 this month. This has come on the back of movements in the North Island, as well as some increase in the South Island unpruned logs. North Island pruned log and unpruned log indicators moved up one point each. Most of the support for prices has come from movement in the export unpruned grades. Pruned price movements have also contributed to the shift. The offshore market is well placed for upward price pressure moving into summer. With log inventories running lower in many ports, New Zealand is the only major supplier that has been increasing exports of logs to China. This means if inventories are lifted, New Zealand suppliers are in a position to move on prices. North Island
Production competition heating up for pellets
In 2006, global wood pellet production was an estimated 6–7 million tonnes. By 2010, this had reached 13.5 million tonnes — up 110% from 2006. In 2011, the figure made another huge leap to 16–17 million tonnes (+22%), and is expected to exceed 20 million tonnes in 2012.Rising demand for wood pellets is anticipated to intensify competition between regional producers, especially due to new entrants from low-cost regions outside North America, e.g., Brazil, Russia and the Ukraine. With the European Union predicted to remain the most important market, regions with a sustainable, low-cost fibre supply and short-distance shipping (i.e., low-cost) access to Europe should be in the best competitive positions and, therefore, are expected to see their output grow faster than that of other higher-cost production regions. The importance of being a low-cost producer in the face of rapidly expanding global wood pellet production capacity was discussed in our January 2012 issue. The article showed that, while global wood pellet consumption grew at a rate of about 42%–45% in three years (2008–2010), capacity rose even faster (~70%–75%) during the same three years. As a result, a number of high-cost wood pellet producers in Western Europe (e.g., Germany, Austria, Sweden) and the U.S. were forced to close plants and/or curtail production in 2011. At the same time, capacity expansion in the main lower-cost production regions continued to grow at a rate of 20%–30% per year. Between 2009 and 2010, global installed capacity recorded a 22% increase to more than 28 million tonnes. Data for 2011 indicate that this figure will surpass 30 million tonnes. Not surprisingly, the three regions with the fastest rate of pellet production capacity growth in 2010 were the U.S. South, Western Russia and Western Canada. Versus Western Europe (the main consuming region), these three regions have much lower raw material costs. The availability of traditional sawmill residues (sawdust, shavings, chips) for the wood pellet industry has tightened substantially in Europe and the U.S. South. Growing raw material competition with the pulp and paper/panelboard industries is driving up sawmill residual wood product prices. Difficulty sourcing feedstock at competitive prices is an important factor contributing to the low utilization rate of installed capacity (only 53% on average in the major producing countries). As a consequence, the need for a more stable and secure supply of feedstock is emerging and, therefore, interest in the supply of alternative feedstock such as roundwood and forest residues (although usually more expensive on an oven-dry-tonne basis) is growing. Source: International Wood Markets Group, www.woodmarkets.com FSC certification celebrated in MelbourneFSC Certification is a bright spot in an otherwise gloomy year for Australia’s forestry industry, with FSC Australia reporting a 12% increase in Chain of Custody certificates issued and 49% increase in forest area certified (622,447has to 931,070 ha) in Australia in 2012 at its sixth annual Excellence Awards in Melbourne.FSC International Director General, Mr Kim Carstensen flew into Melbourne to celebrate the awards from the organisation’s headquarters in Bonn, Germany. Commenting on the potential for Australia to champion responsible forestry he said: "The Asia Pacific region has seen the greatest growth in FSC certification of anywhere in the world over the last 12 months. By the end of 2012 we expect more than 6,000 certificates will have been issued in this region – to forest managers, sawmills, processors, manufacturers and retailers. In short FSC is making a difference right along the supply chain in this region." Celebrated author and environmentalist Tanya Ha hosted the event that showcases both responsible forest practices, and commitments by manufacturers and retailers to source from responsibly managed forests. More than 200 guests attended the Awards that saw last year’s winner, Australian Bluegum Plantations, once again named FSC Forest Manager of the Year. OfficeMax also repeated its 2011 success, picking up awards in two categories – Retailer of the Year and the Responsible Procurement Award. The full list of the night’s winners is below: FSC Forest Manager of the Year: Australian Bluegum Plantations FSC Supplier of the Year: Town and Park Furniture Innovation in Design Award: ISIS FSC Print Services Award: The Printing Office Retailer of the Year: OfficeMax Responsible Procurement Award: OfficeMax Campaign of the Year: Kimberly-Clark “Pin to Make a Difference” Campaign Constructive Engagement Award: Sarah Rees/Chris Taylor/Adam Menary/Luke Chamberlain FSC Certification Body of the Year: SCS Global Services Sponsors of the awards included: Treasury Wine Estates and CUB. Jowat adhesives expanding into AustraliaWith the foundation of Jowat Universal Adhesives Australia Pty. Ltd., and by taking over the business of the Australian adhesives manufacturer Universal Adhesives Pty. Ltd., Jowat AG is now expanding its presence in Australia, New Zealand, and the Pacific region.Jowat AG with headquarters in Detmold is one of the leading suppliers of industrial adhesives. These are mainly used in woodworking and furniture manufacture, in the paper and packaging industry, for graphic arts, in the textile, automotive as well as in the electrical industry. The supplier of all adhesive groups is manufacturing over 70,000 tons of adhesives per year, with around 840 employees.
Australian forest stats just releasedThe Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) this week released the bi–annual Australian forest and wood products statistics update, providing insight into the economic and trade environment for the wood products manufacturing industry.The report contains trade data for the March and June 2012 quarters as well as updated production data, financial information (such as price indexes, wages, sales and service income) and industry value added data. Employment statistics for 2011–12 are also covered. ABARES Executive Director Paul Morris said for the first time, this issue of the Australian forest and wood products statistics also includes a range of socio–economic indicators. “The 2011–12 report will provide an important baseline for socio–economic indicators across the industry that in the past have not been consistently measured or reported,” Mr Morris said. This year’s report indicates that Australia’s wood product manufacturers have faced lowered domestic demand for wood products and a reduction in key export markets. Australia’s weak housing activity continued into 2011–12, with total dwelling commencements declining by 11 per cent following falls in every state and territory. Additionally, the prices of timber products used in housing construction declined by 6.4 per cent in 2011–12, putting further pressure on profitability for domestic wood producers. The high Australian dollar has also placed pressure on the domestic industry. While the value of wood product imports were down 4.7 per cent, to AU$4.2 billion, in 2011–12, the value of exports declined by around 10 per cent, to AU$2.2 billion. Exports of woodchips declined between 2010–11 and 2011–12 by 17.5 per cent to AU$729 million. Exports from Tasmania, New South Wales and Western Australia fell, but this was partly offset by an AU$81 million increase in exports from Victoria. Source: ABARES Binding bids received for Gunns' sawmill assetsThe sale of Gunns Ltd.’s sawmills in Tarpeena, South Australia, and Bell Bay, Tasmania, could be imminent as five binding bids have been received and four of these are for all the assets of Gunns Timber Products, reported The Border Watch on 27 November.The total assets would include the two sawmills and the sales and distribution network, which supports the operations in various locations, said Mike Smith, spokesperson for KordaMentha, the receiver in the Gunns liquidation sale. Nearly all of the buyers are interested in expanding the operations where possible, he said, noting that the preference in selecting a buyer is to be given to those who bid for all assets of Gunns Timber Products, The Border Watch reported. It is expected to take about two weeks to review the bids and negotiate a sale, said Smith. The asking price for the sawmills, which were put up for sale and advertised in various publications worldwide in October, is not being publicly released. Source: The Border Watch Longest tree walk in the worldLocated in the Bavarian Forest National Park in Neuschonau, Germany is the world’s longest tree top walk. This fabulous nature trail culminates with an amazing 44 meter (144 ft) tree tower. Below you will find information on this unique experience and everything is has to offer.All photographs below via the the official site at baumwipfelpfad.by     To view more of these amazing photos click here. Source: twistedsifter.com More staff at CHH mills to goAfter last week’s announcement that Carter Holt Harvey will close its Lakeside Sawmill and Pine Mouldings facilities in Mt Gambier, SA on 14 December the company this week informed staff at two New Zealand operations, Rotorua and Tokoroa that around 70 jobs are to be cut by Christmas.The proposals would see 18 positions cut at CHH’s Tokoroa plywood plant and the closure of its Rotorua Profiles plant at a cost of more than 50 jobs including contractors. The company has cited a fall in demand from export markets in Australia and a lack of new builds in New Zealand as the reason for the redundancies. Ten of the most unusual wooden products ever made
From a 40 inch LCD TV made from wood, to wooden turbines through to wooden watches with all of the components made from mostly scrap wood. Check out this amazing list – along with images – here.Tourism innovation in the forestry sector
Innovation is a primary aspect of economic growth and development and depends on the ability of entrepreneurs to create economic value by introducing new products or services, designing different production processes or rearranging organisational practices. The spreading of innovation is a key element in all economic sectors, including the forestry sector. Four types of innovation can be found in the forestry sector: product innovations (e.g., wood assortments), service innovations (e.g., biodiversity conservation and forest recreation), technological innovations (e.g., the introduction of new machinery, such as harvesters, processors or forwarders) and organisational innovations (e.g., changes in the production process or in the firm’s organisational structure). In a recent paper from a study conducted in the eastern Italian Alps in the province of Trento and in the Auckland Region in the northern part of New Zealand, researchers focused on service innovations linked to tourism and recreation in the forest. In particular, three types of recreational innovations in the forest (adventure parks, educational farms, and cultural attractions) were analysed within two case studies. The results of a questionnaire, submitted during face-to-face interviews, to a sample of New Zealand and Italian entrepreneurs indicated the level of innovation in the forestry sector, the elements of weakness and strength of the innovation process, and the potential of the transferability of novelties into each of the two contexts. For more information click here. US lumber demand strengthensUS lumber markets are finding good support from the US housing recovery. Housing starts are continually increasing and turning into real demand for timber. Saw mills in the US have been burned by predicting housing recovery in the past, and as such have held back from increasing production.Another encouraging sign seen recently was the Home Depot's announcement of sales worth US$18.1 billion this year, up 4%. This was better than expected and largely put down to the increases in the housing market. US construction will also increase in the coming months as the North East recovers from Hurricane Sandy. There is extensive rebuilding required that will likely boost lumber markets. The Crow’s construction materials cost indices are up this month, by 7% for the Western Region and 15% for the Southern Region. Both are now just under 50% higher than they were a year ago. US lumber imports have yet to pick up in any significant fashion but will if the recovery continues. US housing starts are now sitting at the five year average. There has been large growth in both single family homes being built and in apartments, which are up 25% since last month. There has been some criticism of the numbers as they are seasonally adjusted, some believe that the bias for winter inflates numbers too greatly as they take into account the economic downturn starting in winter of 2008. For now though, the increased profit at the Home Depot and rising costs for sawn timber show a real demand for construction materials in the US. Source: www.nzxagri.co.nz/agrifax Brazilian fascination with plantation forestryBrazil today is recognized as a mature country – both politically and economically and is recognized as one of the most attractive foreign investment markets in the world. International forestry expert Dennis Neilson has described Brazil as providing the sparkle for international timberland investors as Brazil ramps up its plantation forestry resources to meet increasing fibre demands.The country rapidly overcame the turbulence of the recent international financial crises and has returned as a stronger more attractive global player. The high level of diversification for Brazil’s economy and a broad range of trading partners, combined with a tightly regulated financial system, were central to mitigating the worst effects of the recent crisis. Brzail has had nearly two decades of currency and political stability, with tight fiscal discipline, increasing international reserves plus a fast expanding internal consumer market led by a developing middle class, all of which make the country one of the most promising emerging markets in the world. Brazil’s success today in spite of a generally difficult international economic climate, comes from its’ governments’ fiscal stability, aggressive infrastructure plans and increasing awareness of its internal investment opportunities, as new oil discoveries, in agribusiness, including bio-energy and forestry investment, make Brazil a more important business destination. Not to mention Brazil’s successful bids to host the 2014 FIFA World Cup and the 2016 Olympic Games. And now Brazil is “standing in the wings” along with neighbouring Chile; waiting to help the US with wood products exports to help repair the huge damage inflicted by Hurricane Sandy. This is reminiscent of WWII when Brazilian exports of iron ore were “pushed up” to help the Allies win the war in Europe and Asia. There have been a number of political and economic challenges over the years, but the plantation forest industry is a major export success story. Product exports are only a part of the success, as the large population and growing economy is indicative of a large domestic market. Already,38% of the pulp, 80% of the paper production, around 67% of the lumber production and almost all of the composite panel production is consumed internally. To gain an insight into opportunities and progress being made by Brazilian forest products companies RH Donnelly & Associates are hosting two plantation forestry tours in Brazil in early 2013. The first tour in the South for pine & frost hardy eucalypt plantations is scheduled for 10 – 17 March, 2013 and the tour in the North 17-24 March, 2013 for eucalypt. Further information is available from rhdonely@xtra.co.nz. Jobs
Buy and Sell...and one to end the week on...Worksafe ... and about time!
And on that note, have a great weekend and we look forward to catching up with many of you next week in Rotorua. Cheers. Brand PartnersOur Partners & Sponsors Friday Offcuts is made possible through the generous support of the following companies.
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