Friday Offcuts 24 September 2021
Roll on just a few more weeks. As reported, carbon prices jumped in September. This week units were over $64. Futures contracts for 2026 are available above $71 and there’s also talk that, given current settings within the ETS, that the price could soon climb to more than $100. So, what’s this then do to some of those earlier land-use cost comparisons. With some reworking of the figures, in the author’s own words, if using the financials as the key criteria for land use comparisons, carbon farming just “blows away sheep and beef farming”. He also suggests that foresters are beginning to recognise that carbon farming has the potential to outperform production forestry for first-rotation forests. As part of an informed debate about land use options, you can check out the details in the story below and the link to learn more. Comments?
From Australia this week, other than construction workers in Melbourne flexing their collective muscle with riot police, earthquakes and ongoing COVID outbreaks, forestry announcements have also been coming in thick and fast. With log exports still impacted by the China trade embargo, FCNSW has been directed to divert softwood logs that had been destined for export back onto the domestic market (an extra 270,000 tonnes over 3 years). The Federal Government has set aside AU$15.1 million to ensure that the bush fire affected trees on Kangaroo Island can now be transported and processed by mills on the mainland. Also, after close to eighty years of operation and having being held by the McDonnell family for four generations, N.F. McDonnell & Sons softwood timber processing business in Mt Gambier has been sold to the AAM Investment Group.
And finally, Regional Council’s in New Zealand responsible for environmental monitoring and protection have been working collectively on developing new tools to better enable them to monitor changes in vegetation cover. Indufor’s resource monitoring team, led by Dr Pete Watt has developed a forest and land-use change module to streamline existing land cover monitoring across the country. Further information is contained in the link in the story below. For forestry and resource managers, options for running these new tools at scale will be outlined in more detail at this year’s ForestTECH 2021 event. Remember, the event this year is being run live in Rotorua on 23-24 November and that virtual registrations for those outside New Zealand can also be booked. And on this note, stay safe and enjoy this week’s read.
This week we have for you:
AU$15.1m funding for bushfire affected logsThe Australian Forest Products Association (AFPA) and South Australian Forest Products Association (SAFPA) have welcomed the AU$15.1 million announcement by the Federal Government of further support to move additional bushfire affected construction timber to sawmills.
This will help meet the strong timber demand, and especially the opening of the program to the timber currently economically stranded on Kangaroo Island in South Australia.
Chief Executive officer of AFPA, Ross Hampton said, “We thank the Federal Government for this announcement. Without this sensible investment up to 10,000 house frames of timber would have had to be bulldozed and burnt after the South Australian Government ruled out the building of a seaport on Kangaroo Island. At a time when our builders and home owners are desperate for timber this would have been an extremely poor outcome”.
“It is a great thing that that timber will be put to good use, however it can’t go unsaid that the Kangaroo Island trees will not be replanted which means we are losing another 18,000 hectares from our national plantation estate which continues to shrink – especially in South Australia. We desperately need to commence expanding the estate if we are to meet the housing needs of our children. Industry stands ready but we need the federal and state policies to be aligned to make it happen.”
Chief Executive Officer of the SAFPA Nathan Paine said, “Today’s announcement builds on the SA State Government’s recent AU$3 million package of measures designed to ease some of the timber supply problems in our state. SAFPA has worked closely with the Marshall Government and especially Primary Industries Minister David Basham who has shown he understands the vital need to ensure this valuable Kangaroo Island resource is not lost.”
“This is one critical barrier removed and SAFPA will continue to work with the State Government to remove other blockages mainly around the short, medium and long-term transport options to ensure the volume of log can be moved to the mainland with the least disruption to the community and in the shortest time possible,” Mr Paine concluded.
Source: AFPA, SAFPA
Mt Gambier sawmill to be soldThe AAM Investment Group has agreed to terms for the purchase of the Mount Gambier based N.F. McDonnell & Sons softwood timber processing business, with finalisation of the sale scheduled to be completed before the end of November 2021.
Established in 1944 by Newman McDonnell, the company has been owned by the McDonnell family for four generations. The business employs around 125 people at its Suttontown mill and processes just over 400,000 tonnes of softwood logs per annum.
AAM Investment Group General Manager of Innovation and Sustainability, Ben Edser, said AAM was looking forward to upholding the legacy of N.F. McDonnell & Sons. “With more than 530 people already employed across 31 sites in five states, one of AAM’s most important priorities is investing in a way that has real and positive outcomes for rural and regional communities,” he said. AAM is an Australian investment and management group with a focus on primary industries.
The Australian Forest Products Association (AFPA) and South Australian Forest Products Association (SAFPA) have both congratulated the McDonnell family on the sale and contribution that has been made to the wider industry. “Ian McDonnell has been a stalwart of the industry and has driven not just the growth of his business but also the broader industry through his role as Chair of the Green Triangle Forest Industry Hub and on the inaugural Governing Council of the South Australian Forest Products Association,” AFPA CEO Ross Hampton said.
SAFPA CEO Nathan Paine recognised the indelible legacy that Ian McDonnell has left on the industry. “Ian’s contribution has been broad and deep, and the industry has very much benefited from his passion and his dedication. Moving forward, SAFPA is looking forward to continuing to work with NF McDonnell operations under AAM and will partner with them to ensure this business continues to thrive, providing critical building products and employment in south-east South Australia”.
Source: BorderWatch, AFPA, SAFPA
The impact of carbon prices on land use decisionsThe carbon price is now high enough to change land-use sufficiently to blow away, sheep and beef, but too low to significantly influence emission behaviours elsewhere.
The concept of ‘carbon farming’ has been around for a long time. I recall carbon farming discussions with my colleagues at University of Queensland back in the early 1990s, but the industry has taken a long time to finally arrive. Well, it is now here. And it has the potential to overwhelm not only the sheep and beef industries, but also have big impacts on the timber industry.
It is only six weeks since I wrote an article setting out that carbon farming is now considerably more attractive than sheep and beef on the hard North Island hill country in New Zealand. Then two weeks later I extended that analysis to the easier hill country.
In a more recent article focusing on the Emission Trading Scheme (ETS), I mentioned that the same conclusion could be drawn for considerable parts of the South Island. All of those can be found archived here.
I undertook those analyses using a carbon price of $48 which was then the market price. As I now write this article on 8 September, the price is $62 and has been moving up each day. Futures contracts for 2026 are now available above $71. That means that anyone who knows they will have carbon NZUs available to sell at that time can right now lock in a price above $71.
There is talk that, given current settings within the ETS, the price could soon rise to more than $100. The Government’s current advice is that a price as high as $110.15 would be acceptable in 2026, with the Government’s cost-containment reserve only being activated at that point.
Given that this year’s cost-containment reserve is already exhausted, there is considerable speculation as to what will happen as soon as the next auction on 1 December. The Government will need to find some more firepower if it wants to put a lid on current prices. At last week’s auction, they were totally outgunned by the commercial investors, who sucked up all of the 2021 reserve and still the Government could not hold the supposed maximum price to $50.
I have just rerun some forestry calculations using $60 as the carbon price. At that price, and if financial returns are to be the key criteria, I can confirm that carbon farming is clearly the highest and best use across most of the existing sheep and beef land. However, note the caveat about financial returns being the criteria for that finding.
There is also no doubt that if financial returns are the criteria, then it has to be exotic forests. Natives grow much more slowly and are more challenging to establish. In contrast, if amenity values and perhaps biological diversity are the criteria, then native forests can indeed be the solution in some specific situations. But if the criterion is either dollars or carbon sequestration, then it has to be exotics.
Keith Woodford. Keith is an independent consultant who holds honorary positions as Professor of Agri-Food Systems at Lincoln University and Senior Research Fellow at the Contemporary China Research Centre at Victoria University.
Bioenergy Wood Energy Knowledge Centre expandsWith the increased interest in transitioning heat boilers from using fossil fuels to wood fuel the Bioenergy Association of NZ has been receiving a significant increase in enquiries. To help answer questions about technology, fuel availability and consenting, the Association has expanded the Wood Energy Knowledge Centre which is hosted on the UsewoodfuelNZ portal www.usewoodfuel.org.nz.
This website is a portal to information on the use of solid biofuels to produce heat. It is hosted by the Bioenergy Association. Brian Cox, executive officer of the Bioenergy Association said that “the big increase in enquiries is from the forestry sector who are seeing the opportunities for making money from the biomass which currently they are leaving on the ground when they harvest trees.”
The association has been collecting questions arising from enquiries from the public, consultants and potential heat plant owners and has collected the answers into Technical Notes which are accessed by rollover of key words on the website. EECA has been funding the development of additional Technical Notes.
EECA has also been funding the extension of the Wood Energy Knowledge Centre which is a catalogued and searchable library of reports, documents, webinar presentations and workshop proceedings that have been produced or sourced by the association over the last 20 years. New material is added every week.
Source: Bioenergy Association
Extra sawlogs in NSW for domestic processingThe domestic softwood timber industry in NSW has received a significant boost with the government directing Forestry Corporation to divert selected softwood log exports impacted by the China trade embargo, to domestic markets. Deputy Premier and Minister responsible for Forestry John Barilaro said this will see at least an additional 270,000 tonnes of logs enter the domestic supply chain over the next three years.
"This additional timber will help to meet the current increased local demand and mitigate against looming supply challenges in the wake of the 2019/20 bushfires," Mr Barilaro said. Mr Barilaro highlighted the range of important public interest considerations underpinning this decision, including safeguarding vital timber processing jobs in regional NSW, while bolstering the benefits to the construction sector where demand for locally produced and processed timber remains high.
Source: begadistrictnews, nswnationals
Largest vessel to load logs from New ZealandA deal has been finalised that will soon see the largest vessel to ever call at New Zealand for the loading of logs.
The deal between South Pacific Shipping (SPS) and Oldendorff Carriers was brokered by Braemar ACM’s Bruce McFarlane, a Mount Maunganui local. Braemar also negotiated the deal with ISO Stevedoring that delivered the mobile cranes from the manufacturer in Germany, to the port of Tauranga, New Zealand last year.
Mr Bruce McFarlane commented, “We saw an opportunity to bring together two major players from the logs trade and dry bulk shipping to create new economies of scale through the utilisation of the new mobile shore cranes and larger vessels at Tauranga.”
Mr. Cameron Mackenzie from South Pacific Shipping commented, “We’re excited to be a part of this Post Panamax fixture with Oldendorff Carriers. Not only will this be the biggest vessel to load logs from New Zealand, loading a gearless ship is also a first for the New Zealand log export industry. Our objective is to make the supply chain as efficient as possible while maximising port throughput, as well as minimising the environmental footprint from the transportation of logs. Plus, as market leaders, we wanted to be the first to participate in something that has not been achieved before.”
Oldendorff Carriers has been part of the New Zealand log trade for decades. The opportunity to partake in the first Post-Panamax to load logs from New Zealand suited Oldendorff’s flexibility and diversity. With over 700 vessels in their operating fleet that range from 11,000 mt deadweight through to 210,000 mt deadweight, Oldendorff has been able to draw from its extensive fleet to quickly adjust to SPS’s developing shipping requirements.
Mr. Peter Twiss, CEO of Oldendorff Carriers said, “We are extremely pleased to have been able to combine our commercial, operational and technical expertise from our Melbourne office, with our large fleet, to bring new economies of scale to our clients”. Oldendorff Carriers has now concluded two deals that will bring Post-Panamax vessels to load logs from Tauranga. Both fixtures will see Oldendorff provide ships that will be over 30,000mt deadweight more than the current largest vessel to have loaded logs from New Zealand.
Good for the Environment and Safety
Mr. Cameron Mackenzie from SPS further commented “A Post-Panamax will carry underdeck twice the volume of a conventional logger, but will not require any fumigation by Methyl Bromide as no logs will be carried on deck. This deal is also good for the environment.” The logs are sourced from Pacific Forest Products (PFP) and supplied entirely from sustainable plantation forests. The bigger vessels will allow ISO Stevedoring to utilise their new high-capacity shore cranes, improving both loading speeds and stevedore safety.
The vessel will transport the logs from the Port of Tauranga with no deck cargo fumigation or lashing required, which will mean faster and more efficient loading that increases berth utilisation. Moving to the larger “Post Panamax” vessel will allow the logs to be transported with a lower carbon output per CBM, compared to shipping on a regular handysize logger.”
If the Post Panamax loading goes to plan, and freight rates remain proportionate to current levels, SPS will look to charter further Panamax vessels to capture ongoing gains obtained from supply chain efficiency and safety. The first vessel to load is scheduled to be the MV Clemens Oldendorff 92,759 mt deadweight, which is due to load from Tauranga at the end of October, or early November 2021.
Source: Braemar ACM Shipbroking Pty Ltd
EnviroSatTools: A collaborative satellite data workspaceThe past 50 years have seen rapid changes across landscapes, with forests and wetlands alike converted for agricultural use or, conversely, re-afforested due to policy or economic drivers. While official land use maps often exist, they only provide a static, point in time snapshot that quickly becomes dated. This limits their use for agencies responsible for environmental monitoring and protection in near real-time applications.
The recently completed EnviroSatTools project filled this gap by developing a collaborative satellite data workspace with New Zealand regional councils. Over two years, the project consortium led by Dr Rogier Westerhoff of GNS Science developed targeted modules to support regional councils in monitoring processes, including land-use change, wetland and flood plain dynamics. See below to hear Dr Westerhoff discussing the project outcomes with the council’s scientists.
As a collaborative project, importance was placed on data accessibility, processing capacity and ease of data sharing and knowledge. The project adopted Google’s open access cloud-computing platform Google Earth Engine (GEE). The GEE framework stores satellite data in the cloud and creates an environment that allows the joint development of processing routines (scripts) and applications accessed through a web browser.
Indufor’s resource monitoring team, led by Dr Pete Watt, was responsible for developing the forest and land-use change module. Andrew Holdaway, Indufor’s Geospatial Application Developer comments, “when we started developing the applications, we took care to understand how regional council experts would like to interact with satellite data and how best to support its use”.
As an introduction, Indufor developed and released several demonstration applications. The first, a simple satellite image viewer to allow users to view and compare satellite images across landscapes.
Building from this point, Indufor released a land cover tracking application called Stand Tracker. The application analyses satellite images captured every five days in near real-time. Users can query these images over any location or time period to visualise changes in vegetation cover.
Stephen Macaulay appointed new WPMA CEOThe Wood Processors and Manufacturers Association is delighted to announce the appointment of Stephen Macaulay as WPMA’s new Chief Executive, replacing Dr Jon Tanner who has taken up a new role as Chief Executive of a larger entity.
Stephen joins WPMA having been the Chief Executive of the New Zealand Institute of Primary Industry Management (NZIPIM) - the peak industry body representing over 1,100 farm advisers and rural professionals that provide advice and services to the farming community.
Stephen has developed an impressive record in building and developing high performing organisations within the primary industry. During his time with NZIPIM, Stephen was instrumental in establishing and implementing the strategy, drive and enthusiasm that transformed the organisation into becoming a highly recognised and influential body representing the interests of its members.
Stephen will be starting his role as WPMA’s Chief Executive in January 2022 and is looking forward to meeting the membership in the early part of his tenure to develop a more in depth understanding of our industry. On behalf of the Board, I would like to welcome Stephen to our industry and build on the strong platform created by our past Chief Executive Jon Tanner.
Brian Stanley, WPMA Chairman
11% drop in emissions by switching to biomassFonterra says it has reduced its greehouse gas emissions from coal by 11 per cent in a year, primarily due to the conversation of its Te Awamutu site to using renewable wood pellets.
The reduction was reported as part of its yearly sustainability scorecard, which shows progress towards environmental and human resources targets. The 11 per cent reduction in emissions from coal was a big contributor to Fonterra’s global greenhouse gas reduction of 6.5 per cent from manufacturing emissions, chief operations officer Fraser Whineray said.
“Having committed to get out of coal by 2037 from the nine remaining sites, Te Awamutu provided material GHG reductions and further confidence to undertake our next project at our Stirling cheese site in the South Island. Stirling will become our first 100 per cent renewable thermal energy site,” Whineray said.
The Te Awamutu project was the biggest decarbonisation project in the country last year, he said. Fonterra’s scorecard and sustainability reporting was independently audited by Bureau Veritas.
Photo: Fonterra: Back row from left: Christian Jirkowsky General Manager Polytechnik, Fraser Jonker CEO Pioneer Energy, Richard Ireland Pioneer Energy, Fonterra Employees: Todd Downie, Ian Hall and Craig Sneddon.
Front row from left: Ingrid Leary MP for Taieri, Bryan Cadogan Clutha District Mayor, Richard Gray Fonterra General Manager Operations Lower South Island and Hannah Furze, Stirling Senior Environmental Manager.
Latest quarterly Australian timber report outSoftwood products
Prices for untreated structural MGP products increased sharply over the June quarter 2021. Price movements for MGP10 products ranged between 9.7% and 13.1% higher, while prices for MGP12 products increased by up to 13.2%. Prices for treated sleeper and decking products increased by 5.6% and 9.4%, respectively.
Price movements for plywood products ranged between 5.7% and 12.6% higher, while price increases for MDF and particleboard T&G products were relatively more moderate, ranging between 1.3% and 5.3% higher.
The June quarter TMS results showed extraordinarily high price movements for LVL and I-joist/I-beam engineered wood products, ranging between 11.4% and 27.1% higher over the quarter.
Strong price increases were seen across the hardwood product range over the six months to the end of June 2021. Prices for kiln dried structural hardwood products increased between 6.9% and 10.2%, while prices for green sawn structural products increased between 4.2% and 9.3%.
Price movements for hardwood flooring products ranged between 4.0% and 9.4% higher, with Victorian ash flooring products recording the largest price movements.
The TMS collects price data through quarterly surveys of a representative sample of timber market participants in eastern Australia. All quarterly TMS reports contain price movement information for softwood timber, panels and engineered wood products. The June and December quarter editions also include price movement information for hardwood timber products surveyed over a six-month period.
The TMS is prepared by Indufor and funded by nine major Australian forestry organisations: Forestry Corporation of NSW; VicForests; Hancock Victorian Plantations; HQPlantations; OneFortyOne Plantations; Queensland Government Department of Agriculture and Fisheries; Green Triangle Forest Products; AKD Softwoods; and Sustainable Timber Tasmania.
Further information and the latest Timber Market Survey report can be read here.
Machinery options for small woodlot harvestingA NIFPI project has been running for the last two years in Tasmania aimed at increasing the knowledge of machinery options for the harvesting of small woodlots. This project will provide guidelines and a decision support tool (WATAS) to effectively select and compare harvesting equipment configurations for smaller, more dispersed woodlots. This may improve profitability for landowners, contractors, consultants, forest companies and potential machinery co-operatives.
The final workshop for this project is scheduled to run as an on-line webinar next Friday, Friday 1 October. All interested parties are welcome to join. Further information and the links to join the on-line workshop can be found here.
Safe Use of Agrichemicals manual updatedDisease and pest free animals and crops rely on agrichemical use. Pesticides, detergents and sanitisers are a critical component of New Zealand’s NZ$48 billion agricultural sector.
The recently released and updated ‘NZS 8409:2021 Management of agrichemicals’ provides guidance for spray operators, farmers, growers and other users to manage a range of chemicals safely, responsibly and effectively. Having undergone its first review in 17 years, the widely-used Standard brings agrichemical use into the 21st century. The review has left no page unturned in offering good practice advice.
Specifically targeted for addressing New Zealand’s distinct climate, environment and legislation, the Standard helps exporters to comply with quality assurance programmes such as New Zealand Good Agricultural Practice (NZGAP) – allowing them to sell produce in overseas markets.
The Standard has been reviewed to ensure that it remains relevant for new technologies such as automated sprayers, unmanned aerial vehicles and drones. Recent regulatory changes and measures to protect the environment are also included.
A collaboration between 17 committee representatives - users, central and local government, and industry (including Agcarm) - as well as a public consultation, ensured the voice of all parties was heard.
As well as conventional and organic agriculture, the Standard applies to park rangers, council workers and the Department of Conservation in managing biosecurity. Growsafe training of agrichemical users is also based on the standard.
“Much of New Zealand’s economy and environment rely on good responsible agrichemical use, and through setting and communicating clear standards we can make sure we’re all doing our part to grow New Zealand, responsibly and safely,” says Agcarm Chief Executive Mark Ross.
NZS 8409:2021 Management of agrichemicals is available on the Standards NZ website.
VicForests’ amended timber plan approvedVicForests has released their amended Timber Release Plan (TRP). The amendments to the TRP include:
• 369 new coupes
• 23 amended coupes
• 9 amended access requirements
• 123 removed coupes that have been successfully regenerated
• 145 removed coupes that are no longer planned to be harvested.
VicForests’ Board has approved the amendments to the TRP, in accordance with the requirements of the Sustainable Forests (Timber) Act 2004, and a notice in relation to the amended TRP was published in the Victoria Government Gazette S 506 on Wednesday 15 September 2021.
The approved TRP supports ongoing responsible timber supply to local customers in accordance with the Victorian Forestry Plan. It provides industry with certainty and helps communities to understand where timber harvesting may take place. All timber harvesting and regeneration operations are conducted in accordance with Victoria’s strict environmental regulations and the State’s Forest Management Zoning scheme.
A schedule of the approved timber harvesting areas as well as location maps are available on the VicForests website. All feedback on the approved TRP should be directed to email@example.com.
Shipping industry proposes carbon levyLeading shipping associations have proposed creating a global levy on carbon emissions from ships.
Leading shipping associations have proposed creating a global levy on carbon emissions from ships to help speed up the industry's efforts to go greener. With about 90 per cent of world trade transported by sea, global shipping accounts for nearly 3 per cent of the world's CO2 emissions and the sector is under growing pressure to get cleaner.
For the first time, the International Chamber of Shipping (ICS) and Intercargo jointly proposed a levy based on mandatory contributions for each tonne of CO2 emitted from ships exceeding 5000 gross tonnes and trading globally. The money collected would go into a climate fund that would be used to deploy bunkering infrastructure in ports around the world to supply cleaner fuels such as hydrogen and ammonia, according to the proposal.
"What shipping needs is a truly global market-based measure like this that will reduce the price gap between zero-carbon fuels and conventional fuels," ICS Secretary General Guy Platten said. The proposal has been submitted to the UN's shipping agency, the International Maritime Organisation (IMO).
An IMO spokesperson said all proposals were welcome and would be up for discussion later this year, adding that "proposals on market-based measures (MBM) are in line with the initial IMO GHG (greenhouse gas) strategy".
The IMO will hold an intersessional working group meeting scheduled for late October, ahead of a late-November session of the Marine Environment Protection Committee, to address issues including carbon-reduction efforts.
The European Commission in July proposed adding shipping to the bloc's carbon market, targeting an industry that had for more than a decade avoided the EU's system of pollution charges. An IMO-driven carbon levy will enable more industry input at the global level as concerns grow at regulation by separate jurisdictions such as the EU.
The ICS said "piecemeal" approaches such as the EU's proposal would significantly complicate "the conduct of maritime trade". "ICS believes that a mandatory global levy-based MBM is strongly preferable over any unilateral, regional application of MBMs to international shipping, such as that proposed by the European Commission," it said.
Buy and Sell
… and one to end the week on … a turbine driven chainsaw?
And for all of you petrol heads out there. Stihl have built the world’s only chain saw driven by a turbine!! A one-off design challenge proof of concept that’s been worked on by the Stihl engineers ...just because they can.
And one more for you. A golfer is cupping his hand to scoop water from a Highland burn on the St Andrews course.
A green keeper shouts, 'Dinnae drink tha waater! Et's foo ae coo's shite an pish!'
The golfer replies: 'My Good fellow, I'm from England. Could you repeat that for me, in English!?'
The keeper replies: 'I said, use two hands - you'll spill less that way!
And on that note, enjoy your weekend. Cheers.
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