Forestry in Wairarapa - June

FORESTRY IN WAIRARAPA

Mystery Creek Fieldays Welcomes the Forestry Hub

For the second year the combined Forestry Hub has been a great success for the forest sector at the national Fieldays. Thousands of visitors came through the hub over the 4 days, completing forestry quizzes, visiting with the 20 businesses that participated, and taking home free books, wooden toys, or venison sausages o˜ the Red Stag BBQ.

A new part of the Hub activities this year were speaking sessions held with many listening to a debate between Beef + Lamb NZ CEO Sam McIvor and Forest Owners Association Promotions Manager, Don Caron on the merits of carbon farming and the ETS. Another crowd favourite was the Farm Forestry debate “Exotic vs Indigenous plantings”, with a panel discussion of farm foresters

providing hilarious views on both sides. The ÿ nal answer seemed to be you can have both. Native seedlings were part of the giveaways to visitors, and these were much appreciated with many New Zealanders looking to incorporate native trees into both urban and rural environments.

The Hub has proven to be a useful outlet to provide the correct information to members of the public around the beneÿ ts of commercial forestry for our economy and uses of wood in our everyday lives. Many people did not believe you needed pine trees at all, until it was pointed out that they live in a wooden house and use wood every day in their packaging, toilet paper and fencing. Sometimes, you can’t see the wood for the trees!

Discover Forestry is a new forest education provider that launched at Fieldays and provides careers information and hands on forestry

school experiences for students across New Zealand. Funded by industry and linked by the eight Wood Councils, this new organisation will be expanding their team in the coming year and linking local companies with schools and students to provide inspiration for the next generation of foresters.

Farm Foresters Sick of Negative ETS signals

Farm foresters are asking the government how it plans to get enough exotic trees planted to store su˛ cient atmospheric carbon for New Zealand to achieve its greenhouse gas targets.

New Zealand Farm Forestry Association president, Neil Cullen, says the government has stated at least another 0.9 million hectares of forest will need to be planted out to meet its current reduction settings.

“Though there does seem to be such a target at the moment, we have no idea whether the government really intends to stick to it, and what the planting timetable is between now and the zero-carbon date of 2050.”

“There are currently about 300,000 hectares of exotic plantation trees on farms. But I can’t see how that is going to increase much, if at all, when the government continues to send negative messages about forestry in the Emissions Trading Scheme,” Neil Cullen says. Besides carbon o˜ sets, Neil says there is an urgent need to plant

about a million hectares of steep North Island hill country in trees to protect against erosion when intense storms strike.

“About 100 million tonnes of soil slid o˜ the hills along the East Coast when Cyclone Gabrielle struck in February. Without a continuous canopy this will happen again in the most erodible areas.”

“If the carbon credits dry up then this steep country is not likely to be planted at all, either in quick growing pines or in native trees.”

Neil Cullen says it is far better for the government to support a˜ orestation in New Zealand, rather than be forced to buy billions of dollars in overseas carbon credits to stop New Zealand missing its 2030 reduction target.

“There are thousands of hill country farmers who want to do the right thing by the environment by planting trees. We all beneÿ t if that happens. We all lose if they don’t.”

ABOVE: Forestry Minister Peeni Henere and Wood Council CEO’s launch Discover Forestry.

NZFFA President, Neil Cullen cullen@farmside.co.nz

FORESTRY IN WAIRARAPA

Log Market Update

By Marcus Musson –Director Forest360

Global economics is a very interesting topic at present and for those industries heavily invested in exportbased commodity trades, there’s much negative sentiment. Commoditybased industries, such as forestry, rely on strong construction stats, both domestically and in countries we export to, so that we can return the primary producers a return that is higher than the costs of production. Once supply exceeds demand it becomes increasingly harder to ensure that returns are acceptable. Forests are great primary assets as, unlike crops, animals or milk, if the market isn’t at a point that can provide a return acceptable to the owner, they can be left in the ground and will continue to grow volume and hence value.

While larger forest owners will continue to harvest through all market ˜ uctuations and rely on managing the harvest levels to improve the average return, small owners generally have a small harvest window, so favourable market conditions are pivotal to providing and acceptable return.

Unfortunately, as a˛ ectionately purported by some forestry opponents, we can’t eat wood – yet. Luckily though, you conversely can’t build a house out of sheep, so we have a solid domestic sawmill industry that converts a chunk of this available forest harvest to products that are

either used in domestic construction or exported in a processed form. This domestic market chews through around a third of the total harvest volume (12Mm3) and is reasonably well balanced with demand and supply. Like it or lump it, we have to deal with the other two-thirds (23Mm3) of the harvest outside of our

borders, and there lies the problem.

So here we are with an available harvest level that we have not been able to fully o˛ set with demand, which has led to a period of volatile log prices. This has started to manifest itself in the availability of work for harvest contractors with several high-proÿ le operators leaving the industry either voluntarily or involuntarily. June export prices are expected to be back around $10/m3 from May which puts A grade logs into the mid $90’s/ m3 and will close the gates on many forests, especially those a reasonable distance to the port. A quick scan of history shows a historic quick market rebound once this mid $90’s level is met but the overwhelming view is that this rebound may be softer than previous bounces.

Forestry investors in good company

At Fieldays Forestry Hub, we talked to a lot of people learning about forestry. Did you know, thousands of Kiwis have invested in forestry?!

Forest Enterprises has 6,500 investors, everyday New Zealanders who collectively own the forests we manage for them. We’ve welcomed even more new investors recently with the release of our latest investments. There will be thousands more invested with companies like us, plus around 14,500 small forest owners who are mostly farmers.

People invest in forestry because…

 It’s real – Forests are a land-based, real asset, and a vital primary sector earner for New Zealand’s economy

 We’re reputable – Forest Enterprises is an expert manager with 50 years’ experience managing sustainable forestry

 It’s responsible – We meet high international standards for responsible forest management, upholding economic, social and environmental values

 Solid returns – Forestry helps diversify an investment portfolio towards sustainability and helps hedge against in˜ ation

 For retirement – Income from forestry is in the longer term so it’s a good superannuation top-up or ÿ rst home or education fund for younger family members

Here’s what two of our newest investors have to say:

“When I learned about Forest Enterprises, was very interested. It was something tangible and wholesome. The idea that trees are being grown and we can actually see our trees in the years to come feels like a meaningful investment.” Patrick –investor in Bideford Forest

“I liked the idea of the Bideford Forest, with the carbon credits giving a smaller distribution over several years rather than a big lump sum that a˜ ects my tax position more. The returns are still alright even if the carbon scheme gets scrapped and the trees have to be harvested. Other family members invested in trees with Forest Enterprises, before carbon credits were a thing.” Lee – investor in Bideford Forest. Contact Forest Enterprises for more information about investing in forestry and the Bideford Forest Investment www.forestenterprises.co.nz/bideford 0800 746 346

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.

Photo/Supplied: Te Uru Rakau – New Zealand Forest Service