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Could wooden buildings be a solution to climate change?

July 2019

Timber structures would allow us to draw carbon from the air and store it in our homes and offices – leading some to believe that wooden buildings are the future of architecture. 

 

Click on the link below to read the report from the BBC

Could wooden buildings be a solution to climate change?

 


Rogers' China Trip Report - Log Markets and Chinese Demand

In May Roger travelled to China with one of our log exporting companies - Summit Forestry - to gain a better understanding of how well our logs are received. Roger was standing on the port with logs harvested from our first syndicated forest 28 years ago. A significant milestone for the company.  Read his full report here, and note his comments on the Health and Safety standards...


Government’s Priorities for the New Zealand Forestry Sector

Speech to ForestWood Conference 2016

Government’s Priorities for the New Zealand Forestry Sector [Slide 1 – title slide]

E āku rangatira, tēnā koutou katoa. Ka nui te honore ki te mihi ki a koutou.

Good morning. Thank you to (Dr) James (Buwalda) for the introduction, I am delighted to be here today.

I would also like to thank the New Zealand Forest Owners Association (FOA) for the invitation to present, as well as to the other conference organisers:

  • Woodco
  • Wood Processors and Manufacturers Association (WPMA)
  • Forest Industry Contractors Association (FICA).

I would also like to acknowledge the international speakers:

  • Russell Taylor
  • Doug McKalip
  • Annette Cotter
  • Ben Gunneberg
  • Adam Beaumont

It is wonderful to see such excellent industry-wide attendance at this conference. The ForestWood conference is an important event for the forestry and wood processing sectors. During this address I would like to briefly outline some of my priorities in my capacity as the Associate Minister for Primary Industries with responsibility for forestry, and highlight how the Government is working to accelerate growth within the forestry sector.

The Government is focused on meeting its key economic growth objectives [Slide 2]

The focus of today’s conference is how our forestry and wood processing sectors can be successful and resilient in the future. The Government values a close relationship with both sectors in order to achieve these goals.

In 2015, a refresh of the Government’s Business Growth Agenda (BGA) was launched with the Towards 2025 Report. This report outlined the future direction of the BGA. In 2015/16 our focus is on investing for growth and further building business confidence.

Although our economy slowed over the last year, it does continue to grow and primary sector exports are forecast to grow by $1.9 billion to $37.6 billion in the 2015/16 year.

Our economy is highly dependent on international trade. Free trade agreements enhance our competiveness, and the Trans-Pacific Partnership (TPP) is an excellent example of that.

The TPP will give New Zealand better access to a number of globally significant markets. This is a good news story, particularly for forestry. In 2014 New Zealand exported NZ$1.5 billion in forestry products to these markets. Under the TPP, tariffs on all forestry products will be eliminated – an estimated saving of $11 million per year.

Of course, it would be remiss of me not to mention the issues raised by industry around non-tariff barriers, in the report launched this morning. While it is an extremely complex area, and one which the Government has little direct control over, it is certainly right for you to bring your concerns to Government. Non-tariff barriers are an issue which will need to be worked on over time, through both multilateral and bilateral talks with the relevant countries. Breaking down those barriers will not happen overnight, but as a free-trading nation, we are committed to ensuring our products have access to overseas markets.

To meet the BGA’s goal of lifting the value of our exports from 30 to 40 per cent of GDP by 2025, we collectively need to do more.

The forestry industry, our third largest export earner, will need to increase both the volume and the value of exports.

As far as volume is concerned, New Zealand is well-positioned to increase returns from log exports and processed timber exports. Wood availability is increasing in most regions, with the national annual harvest of 27 million cubic metres a year. Over the next ten years this is forecast to rise to 35 million cubic metres.

There is also great potential for increasing the value of our forestry exports. A critical part of this is growing the level of processed wood products that we export overseas. Good progress has been made lately, with export volumes of timber, pulp and panels all forecast to increase over the next few years. 

We need to increase exports of higher value wood products [Slide 3]

Woodco’s vision of increasing forestry export earnings to $12 billion by 2022 is a great aspirational target. Along with Woodco’s Strategic Action Plan, this target helps direct and motivate the industry towards potential areas of growth. It is now four years since the launch of the Strategic Action Plan and a good time for industry to review where it needs to focus its attention in the future.

The Government is working with industry to ensure its programmes and policies are aligned with Woodco’s target of $12 billion by 2022.

First, we are providing the conditions needed to support and encourage higher levels of investment in more processing capability and capacity.

The statistics from the forest growers levy on harvested wood show that there is an increasing proportion of harvest going into domestic processing. In 2014 the share of total harvest going into domestic processing was 49 percent. In 2015 the share rose to 51.2 percent.

There has been significant onshore investment, which indicates strong business confidence in New Zealand processors – some really good examples are $60 million into Red Stag in Rotorua, the sale of the Kinleith pulp and paper mill, the Tasman pulp mill, and the Penrose paper mill to Oji Fibre Solutions, PanPac’s $23 million investment to upgrade its sawmilling and drying facilities in Otago, and Lumbercube, the Pedersen Group’s new mill in Rotorua.

The Government is supporting industry investments by reducing potential regulatory barriers and improving efficiencies across the value chain. A great recent example is the Lumbercube mill that processes logs into squares prior to export.

The Ministry for Primary Industries has approved Lumbercube to undertake phytosanitary inspections of their own products. This means Lumbercube can export to China without fumigation, reducing costs and speeding up the export process. This has flow on effects down the value chain. Once Lumbercube is fully operational, it will be one of the largest domestic suppliers of wood pulp and residues - addressing a previously unfulfilled demand. 

Second, Government and industry need to work together to focus on specific opportunities for market development, including further developing export markets for engineered timber products. This will allow us to realise more value from our logs.

On this point I would like to make some comments in response to recent calls for direct Government intervention in the export of unprocessed logs.

We want to ensure that domestic wood processors can also secure ongoing supply of logs. They should be able to access logs on similar terms to offshore buyers. But this must not happen at the expense of others in the sector who have invested with the expectation of being able to get the best return for their efforts. 

Like all business owners, the owners of New Zealand forests, which includes foreign, corporate and private companies, iwi, farmers, and Kiwi mums and dads, look for the best prices for their logs. All of these forest owners have an interest in getting the most value out of their logs and have a commitment to New Zealand’s economy. Any restrictions on the ability of forest owners to get the best return on investment risks eroding confidence of investors looking at future investment.

Many large forest owners in New Zealand deliberately ensure that there is a supply of wood for local processors and make long term commitments to ensure their supply. Hancock Forest Management is one such company, where around 70 percent of their volume is sold domestically.

However, this can’t be the case for all logs. Many modern mills have tight specifications for log supply. Logs that do not meet those specifications are usually exported, ensuring there is a market for the lower grade logs.

What is important is making sure that the sector is well-positioned and enabled to get the greatest value from its products because this benefits all New Zealanders.

Which brings me back to what’s happening with engineered timber and how developments in this area are helping address some of the major economic growth challenges in other areas of our economy – like affordable housing.

New timber technologies, systems and products offer opportunities for reducing construction costs and timeframes and contributing to the Government’s goals for housing affordability [Slide 4]

New technologies will provide new opportunities for the forestry industry to diversify and become more sustainable, in both senses of the word. Recently I visited Concision Engineering in Christchurch, a company using offsite panel manufacturing technology, I saw firsthand the precision and efficiency of prefabrication.

My intention is to work with my colleagues the Ministers of Housing and Economic Development, to improve housing production capability in New Zealand. These approaches include highlighting the opportunities to use more prefabricated timber building systems in New Zealand.

I will also continue work on normalising the use of engineered timber in residential and commercial construction and ensuring timber standards, such as 3603 and 3602, are not a barrier to the uptake to engineered wood products.

Last year I worked with some very motivated stakeholders to understand better about the use of engineered timber. This included engaging with engineers, architects and end‑users to identify their design and project needs. In 2016 I will continue this work through conferences, such as Grow Rotorua’s engineered timber conference in May, and by encouraging collaboration within the sector.

We are further improving the operating environment for the sector [Slide 5]

The Government is focused on supporting the forestry sector through forestry projects that encourage the planting of trees, improve land production and reduce erosion.

Last year I relaunched the Afforestation Grant Scheme to plant an additional 15,000 hectares of new forest at a cost of $22.5 million. Afforestation contributes to erosion control, water quality, carbon sequestration and marginal land utilisation.

This year:

  • I will coordinate with the Minister for the Environment to complete the National Environmental Standard for Plantation Forestry. This will streamline processes and increase efficiencies by providing forest growers with the same set of planning rules throughout the country; and
  • I will continue to work alongside the Minister for Climate Change Issues and other Cabinet colleagues in the Review of the Emissions Trading Scheme. I will work to make sure that opportunities for forestry are realised.

All of these matters will be discussed in more detail in the presentation by MPI Deputy Director-General, Scott Gallacher, shortly.

We need to ensure that small and medium forest owners are well-positioned for the future [Slide 6]

Over the coming decade up to 30 percent of wood available for harvest is expected to come from forest owners who have forests that are less than 1,000 hectares in size.

In order to deliver the best environmental and economic benefits from this resource, these forest owners need to be well-positioned to manage the additional challenges and costs associated with their lack of scale.

Developing skills and capability is key to sector growth [Slide 7]

To support growth in the regions the forestry sector needs a more highly skilled and educated workforce.

With the Minister for Primary Industries I will support initiatives to develop the skill base and encourage higher education in the regions. These include piloting and developing programmes to increase productivity and create employment opportunities for sustainable rural communities.

The forestry sector plays a crucial role in the growth of the New Zealand Economy[Slide 8]

The strategic priorities I have outlined this morning will contribute to our national economic goals as well as Woodco’s Strategic Action Plan.

We aim for, what must be seen as joint goals, it will be important for the Government to work closely with industry, but also important for the industry to create connections throughout the value chain.

Thank you very much for your time.

Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.


Moody's gives NZ big tick

Moody's Investors Service is comfortable with its Aaa credit rating on New Zealand with a stable outlook, as it anticipates the impact from lower commodity prices will be offset by strength in areas of the economy such as tourism and education services.
"Despite the problems we see in the rest of the global economy, particularly problems for commodity exporters, New Zealand is doing quite well, the economy is very resilient to the global environment right now and we see there is a lot of activity in the service sector that is offsetting whatever negatives there are in the dairy industry at the present time.
Overall the economy is doing very well and financial markets are viewing New Zealand very favourably," Steven Hess, Moody's senior vice president, sovereign risk group, told a media briefing in Wellington.
"It (low dairy prices) is a negative for the economy, definitely, no doubt about it, it's a price adjustment but it's not so large though that we think it's going to cause some sort of crisis," he said, adding that dairy debt made up only a small part of bank assets.
"New Zealand has strengths that I think make it resilient to the global economy at the present time," Hess said, citing falling government debt that is below other similarly rated countries, improving prospects for service exports such as tourism and education, and booming immigration.
"These are all these positive aspects that are offsetting any negatives that are coming from the farm sector," he said.
Should the economy weaken, government finances are strong and it could use its balance sheet to offset any potential shocks, while the Reserve Bank also had the ability to lower interest rates if needed, he said.
"We are not seeing big risks," Hess said.
A correction in the housing market, particularly in Auckland, remained a risk although Moody's didn't rate that risk very high, given prices were underpinned by demand from strong immigration, he said.

Source: Herald Business Desk


Summit Forest Export Report - January

To read the Summit Forests Export Report for Jan 2016 click here


Chinas Black Monday is New Zealand's Green Tuesday
August 2015 Update
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** Chinas Black Monday is New Zealand's Green Tuesday
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** Why is Agriculture becoming so popular with investors
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Hello!

The news of Chinas Black Monday might have been more abrupt than most commentators had predicted - however it certainly wasn't something they didn't see coming. As the Chinese Stock exchange dropped 9% it sent reverberations around the world - nearly all markets were effected. Its seems in the most part that the markets recovered as the day went on, but it reiterated why Agricultural based investments are becoming so popular.

In the current investing climate, defined largely by economic uncertainty, low interest rates and volatile equity markets; investors are seeking out assets and sectors that display certain characteristics.

Of particular interest are assets supported by solid, long-term fundamentals. Assets that offer preservation of capital, low volatility and an opportunity to generate income, mark the highest. Throw in an investment performance that is not correlated to the performance of traditional financial markets and most boxes are easily ticked. From investing in shares to investing in farmland, agriculture investments tick many boxes for today’s investors looking to the future, and remain high on the agenda of both institutions and private individuals alike.


** Rising Demand and Diminishing Supply - the Basis for Agriculture Investments
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If the goal is to acquire assets that are non-correlated and inflation-linked, and which retain value throughout all economic cycles, then the best bet is of course well-managed,productive agricultural land.
For many investors, the ‘Real Asset’ approach is preferred as it means the investment is secured by land ownership giving not only capital appreciation, but also capital preservation and income in perpetuity for generations to come. And by investing in productive farming in another country / economy e.g. New Zealand it gives further diversification to the portfolio.

Prospective forest farmland investors should understand however, that specific expertise is required during the acquisition and due diligence process in order to identify and manage suitable assets.


** New Zealand's Green Tuesday?
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To find out how we can help you take advantage of our favourable exchange rate with land ownership in New Zealand please get in touch.

Agricultural assets have outperformed the vast majority of traditional asset classes over most timelines, delivering highly favourable risk-adjusted returns for those with well managed exposure to the asset class. Well managed agricultural land is an asset which remains productive in perpetuity.

Regards,

Will Dickie

IKEA and Apple are buying up Forests
Future looks bright for those with foresight as IKEA and Apple are buying up whole forests. 
IKEA bought 83,000 acres of forest last month. In April, Apple bought 36,000 acres. What’s the
reasoning behind these retail giants buying their own forests? To manage them. 

Last year, we saw major technology and retail companies buying up wind and solar farms. Walmart,
Facebook, Apple, IKEA, Google — all decided to either build or buy renewable energy farms. Nearly
as many made pledges to start using fully renewable energy sources: IKEA said it would become
“energy independent”. Facebook is already using all-renewables-powered data centres to manage all
your likes. Now, some of them are going further down the supply chain to manage the provenance
of their materials — by buying up the forests that source their paper and wood. 

Last week, The Wall Street Journal reported that IKEA had bought up almost one hundred thousand
acres of forest in Romania and the Baltic — this, after the company had been accused of “brutal”
logging practices in Russia and cutting “old forests that have high conservation value,” according to
the WSJ. The company doesn’t log in Russia anymore, and instead will focus on farming its Romanian
forests, managing its purchase to create a renewable source for its operations. After all, IKEA uses
one per cent of the world’s wood supply, a number it’s trying to scale back by half. It’s all part of the
company’s plan to become “forest positive” in the next five years, growing more wood than it uses. 

Similarly, Apple recently bought up a 36,000 acres of forest in Maine and North Carolina. These
areas are “working forests,” or regions that act as renewable sources of wood and paper pulp for
industry. Apple and the Conservation Fund, which is collaborating on the project, says that these
“working forests” are increasingly being developed. That’s not only bad news for them commercially,
but bad news for forests that were once outside the scope of industry — as Apple’s Lisa Jackson
explained in a post about the purchase: 

We are in the midst of one of the greatest land transfers in history. In the last 15 years, we’ve
already lost 23 million acres of forestland that provided the pulp, paper, and solid wood material for
products we all use. That’s roughly an area the size of Maine. As land continues to be sold and
change hands at an alarming rate, an estimated 45 million more acres are currently in the crosshairs
of development. 

The goal of the Conservation Fund’s work is to create limits on how those working forests can be
used beyond producing paper products. These are designed to “ensure sustainable harvests and
restrict the subdivision or conversion of land to non-forest uses,” the group writes. 
 

Source:FridayOffcuts and Gizmodo  

Log prices up after 3 months of falls
The export market for New Zealand forestry products is stabilising.

It has been helped by the weakening kiwi dollar, reduced inventories in China and increased domestic housing demand in the US, say industry analysts.

Meanwhile, domestic demand was strong, fuelled by buoyant housing markets in Auckland, growth in the Tauranga housing market, and the continuing Canterbury rebuild, they said.

Export log prices rose in June after three months of significant falls, said Peter Weblin, Rotorua-based chief marketing manager for forestry management company PF Olsen.

Most at-wharf-gate dollar June pricing appeared to be based on A-grade at about US$100 ($147), up from a low of US$95 in May, he said. Log stocks in China continued to fall steadily through May, reducing by nearly 200,000cu m to an estimated 3.87 million cubic metres. That was down from the peak of 4.27 million cu m at the start of April.

But Mr Weblin said stocks needed to get under 3 million cu m to bring confidence back, while the main driver of log imports - the Chinese construction market - was still slow.


The dollar was definitely helping, especially for processors meeting strong demand for processed clear boards in the US and Europe.

"The depreciating kiwi really helps the finished product guys because it works on a much bigger value."

Dennis Neilson, director /founder of Rotorua-based forestry consultants DANA, said despite the doom and gloom stories about the Chinese economy beginning to melt down, New Zealand was again the biggest exporter into China, with about 1 million cu m of logs each month. "That is as much as last year," said Mr Neilson. "And while prices have declined for some grades, they've held up for others. Our exchange rate and low shipping costs means the net return to many forest owners - particularly in the Central North Island within reasonable transport distance of Port of Tauranga - remains attractive, so harvesting continues."

Mr Neilson said there were a number of factors including increased US housing starts, which were slowing US exports to China, and attracting imports from Canada.

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Forestry Investment

With the world population increasing at an alarming rate, global demand for timber products is also increasing. However the global supply of millable timber is falling. Investing in New Zealand forestry is a secure and sustainable way to grow your wealth.
New Zealand’s competitive advantage is we have some of the world’s fastest growth rates with forests growing 750 tonnes of harvestable logs per hectare in just 26 years.
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Blessed with the ideal climate, New Zealand is perfect for pastoral farming, growing healthy livestock for the production of dairy products and meat.
New Zealand farmers are among the most efficient in the world and there are no Government subsidies for agriculture. Our grass based animal production systems, combined with the use of world leading technology, minimises labour inputs and generates maximum productivity.
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