20 FEATURE SUPPLEMENT
Thursday, June 16, 2022 Wairarapa Times-Age
FEATURE SUPPLEMENT 21
www.age.co.nz Thursday, June 16, 2022
FORESTRY IN WAIRARAPA Good reasons for Plantation Forestry still apply A Rangit˜kei farmer believes production forestry, rather than permanent carbon credit pine forests, will help reduce greenhouse gas emissions and provide jobs and economic value. Many farms in New Zealand have been converted to forestry in recent years due to rising carbon prices, but the Government recently proposed to remove exotic forests, which include pine forests, from the Emissions Trading Scheme from next year. Denis Hocking farms sand dune country near Bulls, about 50% in sheep and beef, and 50% in forestry. A forestry advocate, he believed there was too much anti-forestry sentiment. Rural communities have feared for the loss of farms and workers due to farmland being turned into long-term carbon credit pine forests. Hocking said forestry had been a more productive earner than sheep and beef
forestenterprises.co.nz 0800 746 346 Timber milled on his farm is used for building fences. Denis Hocking shows how it works.
farming for decades on “poorer” land, production forestry was a better mitigator of greenhouse gas emissions than permanent carbon forests, wood was a valuable resource and low-energy alternative to steel, and there was labour demand for production forestry. “You can get a bloody good income without actually doing anything. I would suggest Government policy should be directed to trying to persuade people [into production forestry], which will generate a lot more export value.” He said forestry, not planted on prime pastoral land, earned twice the amount per hectare per year than sheep and beef farming. Production forestry still o° set carbon emissions and the timber could be used as a substitute for fossil-fuelintensive materials, with overseas processors keen on New Zealand timber. “I do not like the idea of building up forestry sinks,
Creating wealth. Naturally. Since 1972. For fifty years, we’ve been helping kiwis grow their wealth by investing in sustainable forestry. The forests we manage in Wairarapa, Hawke’s Bay and Gisborne are among the most productive in the country. Harvest is underway and investors are seeing their returns.
contained about 300 tonnes of carbon, but if those trees were cut down and the land planted with pinus radiata, it contained about 180 tonnes.
Denis Hocking shows students around his farm forestry for a ÿ eld trip
just plant and build up all the carbon we can and just bugger o° . I think we are leaving a liability for the future generations. “Production forestry makes a lot more sense for emissions than permanent sinks. Wood can play a follow-up role to that carbon storage.” He believed no-shear sheep were
likely to lead to more job losses in rural centres than forestry, and having farming cadets learn forestry skills would restore jobs. Massey University emeritus professor of sustainable energy and climate mitigation Ralph Sims had a similar attitude to Hocking. “If it’s managed properly, it’s far better to do that than just
plant trees, let them absorb carbon and walk away and get paid for the carbon, which is the concern for farmers.” He said production forestry had three products: logs, biomass for fuel and carbon credits for reducing emissions. Ralph said a hectare of land which had been in native bush for thousands of years
By cutting it down and replanting it, over a decade it would average about 90 tonnes of carbon, while replanting in native bush would take about 150 years to get back to 300 tonnes. He said native forestry had its place, particularly in hill country that should never have been deforested. It depended on the type of land where
forestry should be planted – not ˛ at arable land – but there was a need for more timber.
As we replant each forest, we aim to inspire the next generation of forestry investors. To grow your wealth, contact us.
“Timber has got to take the place of steel and concrete in our building because it locks up carbon in relatively low emissions compared with cement.” He said a third of every tree, the tops and the branches, had value as biomass that could be used for fuel to run power plants, which is done in Europe, while the logs could also be sold.
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22 FEATURE SUPPLEMENT
Thursday, June 16, 2022 Wairarapa Times-Age
FEATURE SUPPLEMENT 23
www.age.co.nz Thursday, June 16, 2022
FORESTRY IN WAIRARAPA nt at James Cook School and Talofa Lava o lou ingoa o Jackson I’m a stude become a forester. I am really I’m here writing to you about why I want to use different equipment and interested in forestry because foresters get to being out in the bush especially enormous machinery but all though I just love of talent like controlling drones, when you get to be free. Forestry takes a lot have the talent to do all of those creating maps and also science and I believe I three things.
Before I enter this industry, what type of people would you like to take into this forestry industry? I would like to know if you’ll take more experienced people or would you take less experienced people? I know a lot about it mainly because my dad owns his own forestry business and has taught a lot to do with forestry like how old the trees are and what to do if you’re lost and stuff like that. I was pretty amazed when he showed me the difference between the trees because I was really confused about how they all look the same.
Southern N orth Island Wood Counci presents “W l ood is Good” to James Cook School in Mar ton.
Forestry is an amazing career and it e older I will takes a lot of talent. Hopefully when I becom ter. Thank you for taking your be able to join this industry and to become a fores rd to hearing back from you. time to read this letter and I’m looking forwa Yours Sincerely Jackson
The June fallout Marcus Musson. Director Forest360
June is historically the poorest performing month in the export log market and this June is no exception with A grade generally in the mid $90s/m3 across most exporters. There’s nothing new in this level at the bottom of the price cycle, as we have seen it several times in the past few years, but this year the di° erence is the increase in costs due to fuel. If you deduct the increase in logging, cartage and roading costs over the past 12 months from the current export prices, you’re looking at a further reduction in return of $12/tonne. This gives an equivalent A grade export price in the early $80s/ m3 which is the lowest since November 2015 (when costs where probably $20/tonne lower). With current costs for your average forest sitting in the high $90s/tonne it doesn’t take a rocket scientist to ÿ gure out there’s less in current export returns than Amber Heards lawsuit. Generally, in June there is a supply and demand imbalance
in China as the seasonal demand drops during the Chinese hot season, and the global slug of volume that has been delivered over the Chinese New Year holiday pushes inventory levels higher than what the customers’ ÿ nanciers are comfortable with. In this scenario, it’s reasonably easy to see the price drop coming (by monitoring inmarket inventory increase) and relatively predictable as to when it will revert (again, based on inventory reduction). Conforming true to form however, 2022 is di° erent. The sharp price drop this time around has come about for several non-inventory speciÿ c
$180 $160 $140 $120 $100 $80 $60
Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19 Aug-19 Nov-19 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21 Feb-22 May-22
An open letter to “The Forestry” – We just want to be free
Export A Grade AWG Price ($/JAS) A Grade sales price $NZ/JAS AWG
Log Market Update -
Period reasons with freight cost and demand being the two key drivers. Although construction in China has been on the ropes since the Evergrande debacle surfaced its head last year, the current demand issue is more due to the continued Chinese covid elimination strategy which has seen 93 out of the top 100 cities locked down. Underlying demand for NZ logs
is still relatively solid as supply has dried up from Europe, the Paciÿ c northwest and Russia. So long as Putin keeps carrying out his legacy, it’s unlikely supply will resume from these regions. Shipping costs are completely out the gate and, contrary to what we had initially expected, the Ukraine situation has created more demand for energy and grain in Europe resulting in
vessels leaving the Paciÿ c for the more lucrative Atlantic region. Current freight costs are over double those of around 18 months ago and freight is now more than half of the sales price of export logs. Covid and general lack of labour continues to constrain port operations with many ports bursting at the seams – a problem that this current price
level is likely to ÿ x rather quickly. It is very likely that NZ supply will drop around 40% over the next few months as many forests either shut down or drop production signiÿ cantly. It generally takes 6 weeks for this reduction to be felt in China and, if history is anything to go by, the rebound will be very sharp and likely starting in August. The fallout of this drop is likely to be felt with logging and cartage contractors who are already feeling the pressures of wage and general cost increases. Those that operate in the woodlot sector are always the ÿ rst to feel any slowdown and are also generally less well capitalised than their counterparts operating in the corporate sector. Domestic markets continue to box on strongly with solid demand for both pruned and unpruned logs. Most sawmill managers will be turning their phones o° as forest managers try to be their new best friends in securing additional supply to o° set some of the export losses. If the downturn lasts longer than a few months, it is likely
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If you live in a rural community, make the most of having less log trucks on the road for the next month or two as it will be short lived. The Chinese market is very reactionary, and sentiment driven and, as shown in the graph left, things turn very quickly. Inventory in China is currently at modest levels and we are likely to see panic buying once customers are faced with the reality of supply reductions, remembering that there’s not much in the way of alternate global supply. If you’re a forest owner thinking of harvesting shortly, you’re best to make your move sooner rather than later as you’re much better o° catching the start of the wave than waiting for it to pass you by.
The Southern North Island Wood Council provides a collective voice for the forestry sector in Taranaki, Whanganui, Manawatu, Wairarapa, Tararua and Wellington. Members have a common interest in ensuring the long-term success of the sector. Membership is open to any company or individual with an interest in the local wood industry. Erica Kinder, SNI Wood Council CEO, can be contacted for more information.
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that domestic supply will also be impacted as more forests are shut down. Much of what is exported is not of suitable quality for domestic markets so you can’t just switch this volume between markets, and, if you can’t sell the o° al, you can’t produce the chops.
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