22 FEATURE SUPPLEMENT
Thursday, March 18, 2021 Wairarapa Times-Age
FEATURE SUPPLEMENT 23
www.age.co.nz Thursday, March 18, 2021
FORESTRY IN WAIRARAPA No increase in fire danger levels in New Zealand forests A recent professional paper published in the New Zealand Journal of Forestry has found the facts are clear. The number of days with fuel available for combustion at an intense level has remained the same, or actually reduced since 2000 for almost all the weather stations analysed. Indicators of increased ÿ re spread potential show even more widespread decreases. This is in part explained by changing
wind patterns across New Zealand and associated increase in rainfall along the Southern Alps as well as longer term climate change.
Growing wealth
latest investment o˛ ers. More than $1m in investment was received over a matter of days.
Masterton company Forest Enterprises manages sustainable forests for 6,500 investors who have grown their wealth with trees. The company is recognised as New Zealand’s leading forestry investment manager. New investments sold out In a surge of applications received in January, Forest Enterprises sold the last 10% of shares in its two
Fears of forest ÿ re have been increasing in public perception ever since the large ÿ res in Australia two years ago that were so visible on our news networks. However most New Zealanders are unaware of the major di˛ erences in both our types of
Work is already underway on the next investment o˛ er which the company hopes to launch it later this year. 2021 harvest expected to be 1 million tonnes Forest Enterprises’ managed harvest volume is expected to be around a million tonnes in 2021. Around 650,000 tonnes will be from Wairarapa, making Forest Enterprises the largest harvesting company in the region.
forests, and our climates. Forests in New Zealand are fragmented with many based in high rainfall areas that refuse to burn. Beech forests on the eastern sides of the Southern Alps are examples of this. Unlike Australia most of our native forest species are not adapted to germinate with ÿ re, and our plantation forests are highly regulated, planned and assisted with ÿ rebreaks, natural vegetation breaks and armies of trained forestry workers coordinated in each region. The very few examples of large uncontrolled forest ÿ res in New Zealand are proof of this. Over the past 10 years 65% of NZ forest ÿ res were caused by A large-scale harvesting program has meant the company has grown to 28 sta˛ , including the ÿ ve owners and a small Gisbornebased team. One third of the investments established by Forest Enterprises in the 1990s are already harvesting, and the rest will start in the next few years. As the investments complete harvest, the company intends to o˛ er the replanted forests to the next generation of investors. $75 million in returns to investors, and counting Those who had the foresight to
escapes from agricultural burns, cooking and camping ÿ res, and a large number by arson. Trees don’t cause ÿ res, people do. There will always be risk. Risk is not something we can eliminate from our rural and forested lands, if not ÿ re, then erosion or mass ° ooding are equal risks that apply to the same terrain. We can only manage these risks along with all the other aspects of land management that professional foresters juggle in their decisions every day. – Data taken from the impact of recent climate on ÿ re danger levels in New Zealand, Murray Dudÿ eld, H. Grant Pearce and Geo° Cameron NZ Journal of Forestry, Feb 2021. invest in forestry in the 1990s are seeing returns. The latest distributions Forest Enterprises made in February grew the total paid to its investor in harvest income to over $75 million in the last four years. This is good income for Kiwis who are also supporting climate change solutions and sustainability. Contact Forest Enterprises to learn more about earning investment returns from sustainable forestry: 0800 746 346 | invest@ forestenterprises.co.nz www.forestenterprises.co.nz
Log Outlook for March As we bid farewell to summer the foot is still ÿ rmly on the production throttle with March log pricing generally ° at with February. Average A grade prices are around $145/ m3 at wharf gate which is historically a shortlived price point before things turn to custard due to supply and demand imbalances. This year appears to be di˛ erent thanks to the Chinese import bans on Australian logs, low inventory levels in China and subdued supply from other log producing countries. The expected in° ux of volume from Europe has not manifested due to a large snowfall in January and issues with container freight. The key head wind at the moment is the signiÿ cant
increase in ocean freight costs which will likely keep the lid on any further price increases. Global commodity demand and a resumption of a large grain export program from Australia has vessel owners rubbing their hands together. To add to the vessel supply issue, the ban on Aussie grain into China has resulted in sales being diverted to Europe and the Middle East which is a considerably longer journey and e˛ ectively lessens the number of available vessels. This is not likely to correct itself in the short term unfortunately, however, to put it into perspective, shipping rates are around half of what they were pre GFC in 2007 when global commodities were in hot demand – then along came Fanny Mae and Freddy Mac which sorted that problem out. What is becoming increasingly evident is the potential a˛ ect on NZ log supply with increased carbon returns. Carbon prices have skyrocketed in the past 12 months and now sit at around $39/NZU (carbon tonne) which is comparative with harvest
returns on many forests. While Carbon can only be sold once (ie you can’t sell carbon from successive rotations without paying back most of it at harvest) it does give forest owners a viable alternative to harvesting. Considering many forest owners will only experience one forest rotation in their investment life, carbon will give consistent revenues throughout the growth cycle of the forest. As an example, if you had a forest planted in 1995 in the Southern North Island that had been registered in the NZETS since 2008, you would be sitting on $18,000 of carbon per hectare as of today. Over the next 28 years
this forest will continue to grow and you will receive another $32,000 based on todays prices. Obviously you would end up with a 54 year old forest which may have marginal crop value but by that time most investors would be in their 90’s and probably not too concerned. Where carbon prices will head to in the next few years is anyone’s guess but it would be fair to say a reduction is extremely unlikely. A report by the Productivity Commission in 2018 stated, ‘All evidence points to the prospect that emissions prices may need to rise to at least $75 a tonne, and possibly, if new emissions-
reducing technologies are slow to emerge, to more than $200 a tonne, over the next three decades.’ So assume we get really good, really quickly at reducing emissions and carbon is at $75/tonne, that’s $62,000 per hectare over the next 28 years in the above example – not too bad really and very unlikely that harvest returns on forests a reasonable distance from the port will be able to match or even come close to. If we are actually not that good at reducing emissions (more likely) then at $200 per carbon tonne that ÿ gure is $164,000/ ha – we may as well pack up the logging toys and go home.
March Statistics Log Prices (S/tonne)
China Log Inventory
Carbon ($/Unit)
Export A
Pruned
Sawlog
$145
$191
$124
4.5M
$38.98
fl at
fl at
fl at
+1.2M
+.25
Export Log Market Volitility Indicator Price Reduction
Currently, around 30% of NZ’s forests are planted post 1989 so this has the potential to have a huge e˛ ect on our harvest availability. As the government has pledged NZ to be carbon neutral by 2050, the theory is that carbon demand, and hence values, would decrease signiÿ cantly as we will all be driving Nissan Leaf’s (heaven forbid) and cows will be farting oxygen. If this is the case, then the cost of surrendering (buying back) our carbon that we have sold and converted into boats and holiday homes will justify harvesting our 54 year old forest. What is likely is that carbon prices will continue to rise which will put pressure on bare land values and see more conversion from farmland into forestry. The cost of the carbon will be passed onto consumers (which is the whole idea to stop us from buying things that emit carbon) which will in-turn have a large impact on in° ation. Sometimes you have to watch what you wish for. MARCUS MUSSON Director – Forest360
Price Increase
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24 FEATURE SUPPLEMENT
Thursday, March 18, 2021 Wairarapa Times-Age
FEATURE SUPPLEMENT 25
www.age.co.nz Thursday, March 18, 2021
FORESTRY IN WAIRARAPA 9.1 million dollars for Forestry Rail Hub in Marton The large future contribution of forestry to the economy in the Rangitikei district is being recognized by the development of the Marton Rail Hub. This Hub is the cumulation of 3 years of work between Rangitikei District Council, Te Runanga O Nga Wairiki Ngati, Ministry of Business, Innovation and
Employment and Rangitikei Forestry Holdings. Marton is central to signiÿ cant forests in Rangitikei, Manawatu and Horowhenua that are set to mature and will continue to produce increased and signiÿ cant volumes for the next 15 years at least. Rangitikei Mayor, Andy Watson welcomed last year’s announcement, and says that appointment of a governance board and planning consultant mark exciting milestones in the project moving forward. Up to 80 full time jobs are expected to be created directly by the hub, but it is expected more commercial developments will be attracted
Forestry Futures Strengthened Through Training And Jobs
to the area. Many of the jobs and industries associated with forestry are high paying and there are hopes this infrastructure will attract many more people to the district.
The forestry sector continues to provide career opportunities for New Zealanders, with Te Uru R˝k au delivering $1.5 million into training and employment projects to help the sector meet labour and skills gaps.
Forestry company John Turkington Ltd has their main o° ce in Marton employing 22 people and are substantial contributors in their community including sponsoring part of the 1.3-million-dollar playground currently under construction in Marton.
Acting Deputy Director General Henry Weston says the Forestry and Wood Processing Workforce Action Plan, developed in partnership with the sector, identiÿ ed up to 5000 more forestry and wood processing workers would be required by 2025.
Rangitikei District Council has committed $225,000 to a District Plan Change process, which will allow the industrial build to take place on former farm land.
Rathkeale College completes Tree ID Quiz at the Rural Games. Do you know your trees?
Ag Classes from across the lower North Island competed in the ‘Clash of the Colleges’ at the Rural Games in Palmerston North on Friday. Tasks such as throwing fence posts and milking a fake cow were completed by teams from each college. Southern North Island Wood Council contributed with our Tree ID quiz, and we managed to confuse quite a few students who didn’t know the di˛ erence between a Totara, Rimu or Pittosporum. Congratulations to New Plymouth Boys High School who won the ‘Clash of the Colleges’ competition on the day with Wairarapa College second.
“The food and ÿ bre sectors are a key driver for the New Zealand economy and it’s a priority for the Ministry of Primary Industries to invest in projects that attract people to the sector. “As New Zealand continues to recover from the economic impacts of Covid-19, we need people taking up careers in this important sector. The forestry
and wood processing sectors already bring in between $6 and $7 billion each year, employ 35,000 people, and we want to keep helping New Zealanders ÿ nd exciting and rewarding training and career opportunities. “It was great to see ten trainees graduate from a 17-week Taranaki-based course at the end of 2020 and go straight into jobs. The training built the silviculture skills of young people, enabling them to work within the iwi land development program and within the wider Taranaki region.” The course, run by Treemachine Services for rangatahi from Ng˝ ti Maru and other Taranaki iwi, was funded by Te Uru R˝k au with support from North Tec, Taranaki Regional Council, Department of Conservation and Ministry of Social Development and forestry
companies. In Masterton, KTM Silviculture Limited ran a programme for 24 trainees to gain Level 3 NZQA silviculture training qualiÿ cations. “This will help address a labour/ skills gap in Wairarapa, which is currently holding back forestry activities in the region,” Mr Weston says. “Funding provided to T˝ne Mahuta in the Bay of Plenty enables 20 tairua (students) to do an eight-week Te Whakat˙ R˝k au training programme, and we are also supporting a programme for 12 local rangitahi aged 18-29 run by Mohaka Kingz Contracting Ltd for their E Tu Kahikatoa project in Wairoa.
• Harves�ng • Log Marke�ng
• Forest Management • Silviculture • Forest Valua�on • Establishment
SOUTHERN NORTH ISLAND WOOD COUNCIL
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NOMINATIONS OPEN Forms and more information can be found online at awards.sniwoodcouncil.co.nz
Contact event organiser Jo Higgins-Ware E: jo.publicimpressions.co.nz
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. 0273 290 498
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Te Uru R˝k au is also supporting the education of younger students and a grant has been
provided to the Southern North Island Wood Council to deliver the Wood is Good education programme. This programme teaches rural primary school students about logging truck safety and introduces aspects of the forestry through in class activities.
“The students will not only gain NZQA Level 2 and Level 3 forestry credits, they will get work experience
sniwoodcouncil@gmail.com
OFFICE 06 377 4443 GUY FARMAN 0274 488 810 EMAIL Guy@�f.co.nz WEBSITE www.FTF.co.nz
in a commercial planting environment, nutrition advice and kaihautˆ men tor support within a kaupapa M˝or i framework.”
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