Friday Offcuts – 3 August 2012

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Recently forest products industry representatives met at a Forest & Wood Products Australia investment review in Melbourne. FWPA, coming to the end of its first five year plan was looking to develop a business case for funding priorities over the next five years. Details from the meeting along with a summary of discussions can be found from the link supplied in this week’s lead story.

There was clear support at the forum for the excellent progress being made and continued role of FWPA. As well, the majority of those attending voted to continue with the current levies. The proposal though for a levy increase was put on hold until market conditions improve. It was agreed that an increase of AU$2.0 million in funding would be targeted for FWPA to maintain the 2011/12 level of activity (with some adjustment of priorities) with an equitable levy increase across all sectors. This is going to be followed up with a series of meetings over the coming months to determine if any additional industry specific programs wish to be funded.

Like other Australian research and development corporations, FWPA is able to access Federal Government funding for R&D if matched by industry. It’s interesting to see that in comparison with other rural industries, FWPA levies have been generally less than 0.2% of end product selling price while in other rural industries these are higher, ranging from 0.49% to over 1% with some as high as 10%. In the meantime, the kiwis are still progressing with the NZ Forest Owners Association proposal for a compulsory commodity levy on harvested logs drawn from plantation forests. The concept was rolled out and discussed extensively in February and the referendum on the levy is still being planned for October.

In this week’s issue we also have a couple of stories on tropical forestry. The first appeared in the Brisbane Times and details how potentially $23 billion in carbon-trading rights from PNG forests could have been given to foreign interests and the second, an opinion piece from Jeff Bennett from ANU on the growth and impact of forestry certification schemes. His view is that the anti-trade coalition between the timber industry and environmentalist groups is reminiscent of the prohibition period in the US, when the anti-alcohol movement was effectively supported by those who made fortunes from the sale of illegal liquor. Now that's got you thinking. Enjoy.


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FWPA future program focus

In response to the outcomes of February’s forest industry summit, Australia’s Forest and Wood Products Australia Limited (FWPA), developed a business case for new industry programs to present to the members and levy payers, which was presented at a follow-up forum earlier in July. More than 45 industry CEOs and senior decision makers attended.

Ric Sinclair, FWPA managing director provided an overview of the business case and participants were charged with the key tasks of determining the appropriate level and time of investment for industry collaborative activities as well as the appropriate split between programs and how should the benefit allocations be shared across the industry.

While there was strong support for FWPA, there was no consensus to endorse the business case in its entirety due to the current economic conditions impacting the industry. However, there was majority in principle support for a levy increase to cover current shortfall of AU$2 million to ensure the current FWPA programs can continue. There was also support for follow up meetings with the separate sectors to determine the level of interest in supporting some of the proposed programs on a sector basis only.

The official summary is available online now.

Source: ForWood July 2012


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High Productivity Motor Vehicles – 2 years on

NZTA says that they have certainly come a long way since the amended Vehicle Dimensions and Mass (VDM) Rule came into effect and introduced HPMVs in May 2010. Here are some statistics and a few highlights over that time:

• 1876 HPMV applications have been received since1 May 2010 – 782 permits were issued for higher mass and 1094 were issued for over-length HPMVs.

• They have investigated 4500kms of potential routes that will make up the strategic HPMV freight network.

• Approximately 2900 kms has been approved for HPMV access.

• Productivity gains in the first year showed a 20% reduction in trips for the same freight task under higher mass permits and a 14% reduction in trips for over length. Benefits to the economy were estimated at $9 million with no capital investment.

• The NZTA has produced an HPMV manual setting out the current policy, standards, processes and procedures for the permitting of HPMVs.

• We have started a project to simplify and integrate processes for permitting heavy transport vehicles as a means of improving customer service and freight productivity.

For more information visit www.nzta.govt.nz/HPMV .

Some of the issues around working with NZTA and local councils on opening up HPMV routes will be covered by leading transport and forest products companies in the upcoming ForestTECH - Improving Wood Transport & Logistics event being planned for Rotorua on 4-5 December. Details will follow shortly.

Source: NZ Transport Agency


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New investors for Green Triangle's 46,000-ha estate

New Forests announced that it has introduced new investors to make an investment in the Green Triangle Forest Trust. GTFT was established in March 2012 via the acquisition of the plantation assets of Auspine Ltd by New Forests Australia, New Zealand Forest Fund and a co-investor. The AU$80 million transaction will be used to reduce debt and redeem units owned by Gunns Ltd. Gunns will continue to retain a minority interest in the GTFT after this transaction is completed.

The 46,000 hectare radiata pine estate is located in the Green Triangle – the border region of south-eastern South Australia and western Victoria. Under New Forests’ management, the estate will continue to supply the processing mill in Tarpeena for domestic structural timbers through long-term agreements, as well as support local businesses providing property management, harvest, and transport activities.

New Forests manages approximately 375,000 hectares of plantation land and timber plantations across Australia, and the company has over $1.25 billion in assets under management in Australasia, tropical Asia Pacific, and the United States.

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Thermally modified timber sales on the rise

Members of the Helsinki-based International ThermoWood Assn. (ITWA) sold 19.2% more product by volume in 2011 than the year before, following on from a year-over-year upswing of 24% in 2010, Euwid reported on 11 July. The total volume sold in 2011 was 109,757 m³.

Thermally modified wood sales have been on an upward trend for several years, with volumes sold by the association’s membership of primarily Nordic companies having risen more than five-fold since 2001, Euwid noted.

Wood modification, including thermal modification treatments will be one of the key areas being addressed by European technology providers who will be presenting at the upcoming Wood Innovations 2012 series scheduled for both Australia and New Zealand in mid-October. Full details on this new programme can be found on the event website, www.woodinnovationsevents.com




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Promising results from forwarding optimisation study

Skogforsk, Sweden, has developed a model for optimising forest transport, presenting the machine operator with the shortest, most e?cient routes and showing in detail how timber and logging residues should be loaded and transported.

The model can be implemented in existing systems to help new forwarder operators plan their work, but experienced operators also bene?t from this type of system, according to Skogforsk’s Karin Westlund, who is leading the study.

"Fuel consumption is reduced and quality is improved by using a transport plan where timber volumes can be seen on the map on the operator’s screen," she explains. "There is less risk, for example, of timber being forgotten in the forest."

The study shows that there is great potential for reducing forest transport costs. "We could be talking about quite a few percent," says Petrus Jönsson, who has worked with the analyses in the project."
Source: R&D Works Newsletter




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The environmental threat to free trade

This article on the growth and impact of forestry certification schemes presents an unorthodox view but one which has more than a few elements of truth in it. Read on.

It is a well-established fact that trade makes the people involved better off, as willing buyers and sellers come together with the goal of improving their well-being. Yet the process of trade — particularly international trade — is increasingly challenged by environmental interests. Green group lobbying and protests consistently hamper efforts to reduce impediments to trade in forums such as the WTO.

The two primary concerns of environmental interests are that: first, as the volume of trade grows, more scarce natural resources are being used. And, second, that with more trade and its associated increases in economic growth and wealth comes increased environmental harm.
One example of environmental interests challenging the expansion of trade involves timber harvested from tropical forests in Indonesia and the Amazon. The main concern is deforestation, which is associated with environmental degradation, including biodiversity loss and waterway siltation.

In response to political pressure exerted by environmental groups such as Greenpeace, developed countries have introduced policies to restrict trade in timber, for example by requiring timber to be ‘certified’ as being produced ‘sustainably’ before it can be offered for sale. Though these certification schemes may be intuitively appealing, deeper analysis reveals that their application may be inherently damaging to society’s well-being.

More >>


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Pledge for Australian recycled paper

AFPA is strongly endorsing recent plans by Australian Paper to build a major paper recycling facility at Maryvale to more than triple the volume of Australian made recycled paper. As part of the project, Australian Paper is calling for public support by signing or sharing their online pledge.

Thousands of people have already taken a stand for Australian made recycled paper but more ‘signatures’ would help. Public support for Australian made recycled paper will help secure this positive investment. Australian Paper is recording the total number of signatures as part of their feasibility study to demonstrate that Australians want this investment to happen. This study is part of the company’s Future Fibre Strategy.

If the Maryvale plant goes ahead it would more than triple Australian Paper's use of de-inked recycled fibre and divert up to 80 000 tonnes of waste paper from local landfill every year. It would also support up to 20 jobs and 60 in supply chain and collection. A further 60 jobs would be created during the construction phase.

Given the importance of this project to the future of development in the paper manufacturing industry in Australia, AFPA is encouraging all industry members to member communities to get online and sign the pledge.





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Australian lumber market quiet for NZ lumber

The Australian lumber market remains subdued due to limited building activity. This market is not expected to rebound in the short-term, therefore should not be relied upon by NZ lumber exporters. Lumber imports into Australia picked up a little in May 2012 but still remain well below year ago levels. Imports of sawn timber (exceeding 6mm thick) in the 5 months to May 2012 were down 24%. However the volume imported from New Zealand actually increased whilst the volume of timber imported from Europe dropped dramatically to 60% below year ago levels. Australian demand for imported moldings has increased significantly with the majority of this grade of timber being supplied by European countries. Source: www.nzxagri.co.nz/agrifax



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Elworthy-managed fund builds up 9,200ha of forests

Craigmore Forestry Fund, which is managed by Forbes Elworthy's Craigmore Sustainables, paid NZ$2 million for 511 hectares land it wants to convert into forestry, as it looks to build plantations down the east coast of the North Island in New Zealand.

The fund has built up 9,200 hectares of land running from the East Cape to Riversdale, where it plans to either manage existing forestry operations or plant trees on farming land, according to summary decisions from the Overseas Investment Office.

Sales of forestry land through real estate agents went for an average $4,121 per hectare last month, down from $7,762 per hectare, according to figures from the Real Estate Institute of New Zealand.

The fund needed OIO approval as only 40 percent of its investors are New Zealanders, with the remainder made up of British, Americans, Dutch and other foreigners. More >>


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Damning forest study to hit PNG

A political time bomb awaits Papua New Guinea's new government in a completed report into an alleged giveaway of the country's tropical forests and potentially $23 billion in carbon-trading rights to foreign interests reports the Brisbane Times.

Immediately after he ousted predecessor Sir Michael Somare from the prime ministership last August, the present caretaker prime minister, Peter O'Neill, initiated a commission of inquiry into controversial forestry concessions granted over the previous decade when Sir Michael held power.

The commission's report was completed in May, just before the recent elections, and will be tabled in the new Parliament. It is believed to include damning criticisms of the granting of a new form of lease over more than 5 million hectares of customary-owned forest. More >>
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Harvard shows excellent returns on plantation forests

Harvard University is reaping the rewards of investing in plantation forests in New Zealand when forestry investments were unfashionable reports the Australian. Harvard's latest results showed an 18.8 per cent return from its natural resources portfolio in the previous year and a 12.8 per cent annual return over a 10-year period.
More >>


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The beauty and impact of a wooden skyscraper

Michael Green is Vancouver-based wood architect with his own architecture and interior design studio. He created a tall wooden tower for Vancouver along with an instruction manual for building wooden skyscrapers. Check out this presentation recently given at a TED event.


Source: TED 2013


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The future of B.C.’s forests?

Timber harvests in British Columbia plunged by over 40 percent between 2005 and 2009, but have since recovered and were close to the 25-year average in 2011. As a consequence of the infestation of the mountain pine beetle, long-term log supply is estimated to be about 20 percent below historical levels unless different management regimes are implemented.

Timber harvest in British Columbia reached a record 90 million m3 in
2005 but fell dramatically the following four years to a 25-year low of just over 52 million m3 in 2009. Since the bottom in 2009, harvests have gone up thanks to a substantial increase in exports of logs and lumber China, reports the Wood Resource Quarterly. In 2011, harvested volumes reached 70 million m3 or close the average annual harvest before the forests in the Interior of the province were hit by the mountain pine beetle infestation.

The beetle has infected just over 18 million hectares of forests and an estimated 710 million m3 of pine trees (53 percent of all pine volume in the province) are dead or dying. Over the next 3-5 years, it is possible for harvest levels to increase in the Interior of the province because of the availability of beetled-killed trees that need to be utilized before the quality has deteriorated to the point when it can be used only for making pulp or for energy generation, including the manufacturing of wood pellets.

Long-term, harvest levels are likely to be approximately 20 percent below historical levels. In a recent study by the BC government, it was noted that the Annual Allowable Cut (AAC) in four Timber Supply Areas (TSA) in the Interior of the province could be reduced by almost 40 percent by 2020 as compared to the pre-beetle AAC. However, the report also discusses opportunities to mitigate the sharp reduction in available supply by:

A. Investing in harvesting and mill equipment able to harvest small-diameter trees in
stands that are currently considered being uneconomical.

B. Intensifying silviculture management and increasing stand fertilization.

C. Harvesting in areas currently managed for non-timber values such as biodiversity and wildlife habitat.

The report predicts that by utilizing smaller trees, investing in intensive forest management and harvesting stands managed for non-timber values, future “mitigated- AAC” may be only 10 percent lower than the pre-beetle AAC. This may of course never happen, since the public will see the suggested changes in forest management regime as quite controversial.

Source: Wood Resources International LLC, www.woodprices.com


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NZ Wood Processors appoint interim Chair

The Wood Processors Association (WPA) of NZ announced that its Chief Executive Officer, Jon Tanner, is taking on the role of Interim Chair, following the resignation of Chairman Mark Hansen. Jon Ryder will act in the role of Deputy Chair, while continuing as Chief Executive Officer of Carter Holt Harvey Pulp and Paper.

Dr Tanner said “WPA thanks Mark for the enormous amount of time and energy he put into helping the development of our organization, and the wood processing sector”. “We wish Mark well, as he leaves the WPA Board to spend more time focusing on his business – Rosvall Sawmill in Whangarei.”

In line with its policy of revolving leadership, the WPA Board will work towards the appointment of a new Chair from within the industry.

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Jobs


Buy and Sell


...and one to end the week on...Men who lack female supervision

Firstly, for all of our younger readers who were struggling with the age test - Pencil + Cassette Tape - from last week. As one reader points out, the answer of course was that you could use a pencil to forward or rewind or take up any slack in the tape by inserting it into the spindle of the cassette. As another reader suggests, both are also of course rewritable. And now onto some images of some blokes who require no supervision.




And on that blokey note, have a great weekend. Lets hope we can secure a few more medals over the weekend. Cheers.

Brent Apthorp
Editor, Friday Offcuts
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page: www.fridayoffcuts.com


This week's extended issue, along with back issues, can be viewed at www.fridayoffcuts.com

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