Drop in forestry replanting due to assorted factors

In May 2, 2017

(NZ) – A possible 5% reduction in forestry replanting could mostly be the result of owners of small woodlots (those smaller than 20ha) not replanting on cut-over sites.

Some of the blame also lies with corporate and large forest owners converting to other forms of land use, such as dairy, when irrigation has become available.

This is partly due to poor returns based on locality and size of areas planted under the post-1989 afforestation grant scheme.

There also appears to be some confusion with the Emissions Trading Scheme (ETS) carbon credits, introduced to supposedly encourage land owners to establish new woodlots.

There are several reasons for this. Dedicated farm foresters had been at it a lot longer, with established woodlots planted for commercial gain as part of farm income diversity, then there were those who cashed in under the post-1989 scheme to get trees into the ground.

It was a question of seeking out marginal low production areas of properties where trees could be established without drastically reducing stock numbers or cropping lands.

Another factor was the long-term wait for any substantial income, although NZ units under the ETS became available as an additional income during the growing stages.

Unfortunately, many areas chosen for planting tended to be at the back of properties, on steeper areas infested with weed growth or scrub covered, or plain bony sites with difficult access.

With recent health and safety legislation and consents required from local authorities, logging operations tend to get more expensive, particularly when mechanised harvest is involved using expensive plant.

The days when operators could assemble a semi-experienced crew without adequate drug testing, and shoddy second-hand gear appearing on skid-sites are over.

There is also the question of post-planting treatment, pruning and thinning regimes. Many of the later growers did not bother, resulting in low grade thin-stem woodlots with small volume and piece size trees.

Apart from limited size of areas planted, it did not entice contractors to take on these jobs yielding light volumes, resulting in high prices for logging operations.

This can explain many small woodlot owners not getting adequate returns. Other factors that should have been considered were distance to port or mill, price variations and availability through end buyers.

So can pruning and thinning improve returns for small-hectare plots? Excluding ground preparation and planting the costs (estimated by Steve Johnston Forestry) per hectare would vary from $3000 to $3500 for the full regime of selecting the most suitable trees over three lifts, thinning from 1200 stems per hectare (sph) to the final harvest of 360-400 sph pruned to 6.5m.

Current log prices list the three pruned grades averaging $150 to $170 per JAS m3 with top KA grades $130-$140 estimated at 400 sph on final thinning.

Left untreated the yield is likely to drop in volume (tonnage) with branchy suppressed thin-stemmed trees fetching low grade prices within the KI and pulp grades barely over the $100 JAS m3.

Calculated on the back of an envelope, the difference would be as much as plus $6500 p/ha for the treated plot.
The lifetime of a woodlot varies from 25-30 years. Properly managed with suitable access and area size (10ha plus) should exceed $1000 per ha/year over the period on final harvest.

If registered for carbon credits in NZ Units (currently $18 p/t CO2 sequestration) the grower should be earning interim returns during the growing period depending on unit value at the time. An older generation of farm foresters is well aware of these factors. Waihemo farmers Peter Noone and John Prebble estimate these figures are average for net returns.

Peter has just finished harvesting a 18ha block and was satisfied with the approximate $34 net return per JAS m3 for the partly treated block, but admits to being confused with ETS regulations. That is the replanting of the cut-over block and where, he as land owner stands, regarding extent of repayments of units post-harvest of a 27-year-old stand which was to be replanted.

John, soon to harvest a 5ha block, begs the question of why bother registering with ETS if much of it has to be paid back at harvest, including income tax, particularly having to wait nearly 30 years before the highly taxed lump sum is earned.

Some tax will have been refunded as part of farm operations as a result of pruning and thinning costs.
The main problem regarding minimal returns is mostly due to the location on a property where trees had been established, particularly in difficult-to-access sites, along with distance to mills and wharf.

Costs can escalate over $30,000 just to get to an access point. Setting up a skid site on steep contour or a nearby site adds up to considerably more and where only a few hectares are planted the net returns may only end up a shout at the local pub.

Distance to buyer (port or mill) can be a significant factor and getting a contractor to site with suitable gear will knock a percentage off returns.

Ideally smaller forest owners could be aggregated within close proximity in suitable age groups, cutting time and distance for contractors.

A contractor with over a million dollars of expensive plant cannot afford to waste time of travel from woodlot to woodlot.

Corporate buyers such as City Forests, Wenita Forest Products and Forest Management Ltd, are encouraging small woodlot owners to communicate in planning with planting in similar age groups.

Peter Noone suggests a simple, easy-to-understand booklet on the ETS should be available for land owners considering registering for NZ Units.

‘‘Even some solicitors and accountants have difficulty in understanding the set-up,’’ he says.

Drop in forestry replanting due to assorted factors by ODT. Available from <https://www.odt.co.nz/business/farming/drop-forestry-replanting-due-assorted-factors> Monday, 24 April 2017