Farm Forestry New Zealand

May, 2015

President's report to Annual Conference, Whangarei April 20th 2015

Ladies and gentlemen, 2014, the 58th year of the New Zealand Farm Forestry Association has been in many ways a momentous one for your organisation. It could be said that the Association has come of age this year and is now an important force within the New Zealand Forest industry. With the advent of the forest grower’s levy, members are now an important part of the decision making process for forest policy, strategy and lobbying, where we represent the wishes of all small scale forest growers. The NZFFA is the only organised group that can advocate on behalf of the large number of small scale forest growers, while we make continued efforts to contact and attract these unaffiliated growers to our association.

For the wider forest industry market, the year could best be described as one of two halves, with the first part seeing record export prices, due to an insatiable demand out of China, followed by an oversupply of the market that eventually tipped over and saw a marked correction in prices of some 30%. China now takes 35% of our total cut at around 11.5million cubic meters. The total forest harvest was at record levels during the year, at around 30m m3.  The oversupply during the autumn, in the end, did no one any good, with financial losses from many quarters, job losses, and contractors going out of business. Within our international markets many traders that purchased logs also suffered losses which do not help long term relations for anyone. At the New Zealand end there is a complete unwillingness on the part of growers to regulate the export volumes, and with the on again off again nature of the global competitors in the market place, the erratic swings in market returns are destined to continue. Although the small scale grower accounts for only 20% of the current cut it was from the increased cut from this area that contributed mostly to the oversupply at the beginning of the year. Even considering the market fluctuations of the year, the total harvest volumes have not been materially affected, conversely volumes continue to increase in line with long term projections.

The domestic market has remained firm with Christchurch and Auckland demanding increased volumes of construction lumber, this fact reinforces the need to have a strong processing sector within New Zealand, which is in line with the Woodco Council Strategy.

By year end there was a healthy increase in pruned log prices, generated out of China, with an increased demand and awareness for clear logs.  This wood is being used largely for making baby cots for sale within China and has been developing for a few years in a haphazard manner.  For a market that is so important to the forest industry, there is no clear marketing plan or strategy, with the major players wishing to do their own thing within the market, or even worse sell through intermediaries.

How much more wood could we sell with a coordinated marketing strategy that promotes the attributes and uses for Radiata pine.  The product is relatively unknown in China, apart from being a cheap lumber to be used to hold up concrete shutters in the construction industry; albeit this single use uses some 60,000 tons, of logs, per day.  Any coordinated product development is unlikely to happen any time soon, as even within the Forest Growers Levy agreement there is no provision for international market development, a feature I feel is a sad deficiency of the present arrangement and an indictment on the forest growing sector.

Association matters

The Association continues to be in good heart with the executive functioning well.  Membership remains static at around 1900 members, while finances are robust, thanks to the injection of funds from the forest grower’s levy, which has provided the scope to expand our activities while maintaining subs.

Your executive has a renewed emphasis with new roles being carried out as assigned under the Levy Services Agreement with the FGLT. We get involved in many aspects of the forest industry and alongside government. Many decisions on funding and policy are required of the team, while our support or backing is frequently requested from many quarters.  Each aspect is carefully considered and generally agreed upon by a consensus of the executive in a convivial manner.

A milestone and highlight of the year was when we established the new role of Association Manager and canvassed for applicants. It was heartening to get a good response to our advertisements with a high caliber field attracted. Ultimately we were thrilled to engage Glenn Tims in the new role. Glenn is a people person, an architect, and has a love of wood.  Glenn also has good all round clerical skills, all important for the new role. Glen has introduced to the Association a point of contact, who can act and interact with members and all the outside groups that we are involved with. The new role developed with the departure of the longtime employee Susan Tsang . We wish to record the executives and the whole associations’ heartfelt thanks for the contribution that Susan made to the FFA.
Bruce Bulloch continues to work tirelessly for the association showing no sign of slowing down. He has been vital in the smooth integration of Glenn into the new role.  Thank you Bruce, your contribution is invaluable.

Julian Bateson continues to produce the Treegrower magazine to a high standard, a publication which is universally well accepted by members.  The Treegrower magazine is our flagship publication and is one of the primary means of informing and educating members of levy activities, programmes, expenditure and outcomes. The levy now funds about 10% of the Treegrower budget.

The annual Conference was ably run by the Marlborough branch alongside The Marlborough Tree Growers Association.  The joint chairmen Paul Millen and Chris Dawkins led their team in a seamless 5 days of meetings and field days enjoyed by all attendees. The mix of venues gave a good insight into the region, while the involvement of Scion personnel provided a technical dimension to the field days, which needs to be encouraged.  The conference came in with a considerable profit of just over $40,000.  Late sponsorship of $20,000 and lots of donated items that had been expected to be paid for, gave rise to this result.

Awards

The FFA once again awarded its important and iconic farm forester awards that are made possible each year by our long time and cornerstone sponsors, Husqvarna NZ ltd and the Landcare Trust. The ongoing involvement of these two organisations with the FFA is much appreciated and invaluable.
Recipients of this year’s Husqvarna award where John and Diny Dermer in the North and Graeme and Christine McArthur in the South. The Landcare Trust Award for Innovation in Sustainable Farm Forestry went to Peter and Jane Evans from South Canterbury.

Trees on Farms Workshops

This successful series of field day/seminars concluded this year around the South Island and the far North, under the guidance of Harriet Palmer and Nick Ledgard.  Attendance was very good at all events with great publicity attained. All people attending thought the days had been very worthwhile. Harriet is now doing some editing work on the videos and uploading these to the website and therefore we will have a permanent record of this project as an ongoing resource.

Website

The website is seen as the FFA’s portal to the world and is overseen by Dean Satchel. Dean’s skills and work in this area are greatly appreciated. The website is one means whereby we may easily contact the small scale forest grower, supplying information and guidance which is one means we can fulfill our Forest grower levy obligations.

We now have a new conference extension which allows online registration for our annual conference and also facilitates organisation of conference and registrations. Organising and running future conferences will hopefully be less of a burden on the host branch.

There has been set up member’s blogs where members can write about issues that face us as farm foresters and engage in discussion on those issues.
Further improvements to "behind the scenes" administration that facilitates fast data entry of subscriptions and integrates these with membership access.
Our regular newsletters are emailed to all members who want these. We now have a "Levy" area where we post updates from what is happening in the levy space. We now have committee minutes and reports available in the member’s area, including executive minutes

Next up is the "forest safety page" and updating our past Treegrower articles on the website.

Identifying small scale forest growers (SSFO’s)

The project to establish the names and addresses of those unaffiliated small scale forest owners (SSFO’s), that being forests under 1000has, has progressed during the year, thanks to the efforts of Wellington member Howard Moore and funding from the levy trust. We now have the names of over 12,000 individual owners, with the next step being to contact these people and attempt to get as many email addresses as possible.  Once we have email addresses we can then inform and develop a relationship with the group. Ultimately it would be good if we could get as many new members as possible from this project. This is an important role for FFA if it is to advocate for all small scale growers and help fulfill some of its obligation, as the small scale owner representative, to the levy trust.

Special Council meeting

The Council is the governing body of the FFA.  It is this group that decides how the Association will run and the important matters of governance. However the Council only meets for a couple of hours once a year at the Annual Conference and it has been felt for many years to be an ineffectual and maybe uninformed meeting. There is never enough time to develop policy and consider structure, all important roles of the FFA Council. Many times we have had discussions on strategy and ways forward for the Association. Always because of limited time no decisions have been made. To improve the effectiveness of Council, a special Council meeting was called for November 5th at our office in Wellington. In advance of the meeting FFA executive members meticulously prepared a number of policies and strategic directions for consideration by the council.
The meeting was a resounding success with 20 branches being represented by councilors. The aim of the day was one of information transfer, discussion, debate and ultimately some decisions being made on structure and direction.

Major decisions of the day included:

1. That the council will remain as the FFA governance body in its current structure as per the constitution.
2. That special interest groups will have the same status as branches and so have a seat at the council table.
3. That a new group the “the forest Investment Group “be formed to cover the interests primarily of those people investing mostly in Radiata forests.
4. The meeting decided against splitting the sub up and not allowing members to pick and choose what they pay for in their FFA sub.
5. Branch boundary changes and amalgamations to be driven at branch level and at the speed desired by participating branches.
6. After much discussion the councilors decided convincingly against a name change. Farm Forestry is our brand and to establish another would take considerable time and money, for intangible benefits.
7. Councilors were luke warm about FFA offering commercial service’s to members.

Forest Growers Commodity levy

2014 was the first year of collection of the forest grower’s compulsory levy collected under The Commodities Levy Act. The establishment and functioning of the levy collection went very smoothly, thanks to the ground work laid down by the establishment board and the meticulous work of the levy Secretariat. Levy collections finished the year some 20% ahead of budget due to the increased forest harvest rate. This has put the Trust in a solid position to buffer against any downturn or unseen eventuality. Due to this surplus, by year end a further allocation of monies to research was being proposed.

Joint committees and FFA/FOA Partnership

The FGLT board is different than other commodity levy boards, in that it is a governance one only and does not make programme decisions, but only authorises funding for such programmes. The real work and decisions are made at the joint committee level. These committees are run under an agreed contract between FFA and FOA and the levy board to run the levy programme. FFA has representatives on each of these committees and these members are fully involved in the decision making and development process. The committees are Forest Research, Forest Resources and environment, Health safety and training, Forest biosecurity, Fire, Transportation and Logistics.

FFA’s interaction with the larger Forest Owners Association is a synergistic one and is now very important.  The two Associations are now very close and rely on a considerable level of good will. FFA is an important cog in the process representing the small scale forest grower.  Special thanks must go to Executive Officer David Rhodes and all the FOA board for making this relationship and interaction so beneficial for FFA.  As a result, the FFA profile in the forest industry has risen considerably.

Independent Forest Safety Review

Much has recently been written and said about the safety record of the forest industry, with the 9 tragic deaths during 2013 bringing matters to a head.  The Forest Owners Association took charge of this early in the year and commissioned a panel of independent experts to prepare a report on Health and Safety within the forest industry. The FFA came on board as co-sponsors of the report; as did the forest Industry Contractors Association (FICA). The FOA and the Forest Grower’s Levy contributed the vast majority of the funding, with FFA contributing initially $5000, which was also matched by FICA. At a later stage the FFA contributed, from branch contributions, a further $5000, a reflection of the real grass roots support for this review and the ownership that FFA takes in the improvement of safety within the wider industry.
The three member panel was a high power group consisting of Chair, George Adams an accountant and business leader, Hazel Armstrong specialist H&S lawyer, and Mike Cosman, H&S specialist. The panel conducted a wide spread consultation process and surveyed the industry, producing the extensive report within the six month time frame demanded.
The major recommendations of the report included:

1. The establishment of a forest leadership Action Group to implement the proposals within the review. By year end the name had settled on the Forest Industry Safety Council (FISC)
2. Develop an effective strategy within a time frame with an enhanced approach to data collection and information sharing.
3. To develop regulations that will clarify forest industry specific rules.
4. To ensure the present Approved Code of Forestry Practice is updated and adhered to, as well as the adoption of minimum employment standards.
5. Develop a work force strategy by attracting and training the right personnel.
6. Develop mandatory standards for safety critical roles, as well as enhanced training to improve safety within the forest.
7. The implementation of an industry-led forestry contractor certification scheme.
8. Enhanced Worksafe involvement in harvest inspections and investigations, along with effective communication.

The panel’s recommendations will initially take three years to implement, with the FFA being involved as the advocate for all small scale growers. The FISC will be the governing body at the head of the process, with the real work being done in the series of technical and advisory groups under the board. The whole thing will be jointly funded by the Levy as well as Government through ACC funding various programmes.

Forest Certification

The certification issue has been around for some time and has not come to fruition for the small scale grower.  All larger corporate growers, about 80% of the current harvest, are covered by FSC certification.  Another factor to consider is that there is no premium for certified wood, however certification does provide market access in a few cases and is likely to become a bigger issue in future. The certification project has been led by Patrick Milne with mid-Otago member and consultant Rhys Millar carrying out much of the work to develop a scheme.

Thanks to the previous considerable funding from the Sustainable Farming Fund and also from FFA, we do have a sophisticated computer based recording system that can be used to record the forest activities required. We have received this year further funding of 30,000 euros from FSC.  This money will be used to develop a manual for those that want to become certified and for guidance once certified. What is required is a workable group scheme; however this has not been developed at this stage. This would be based upon the newly approved National Plantation standard in which there is a “small and low intensity managed forests” (SLIMF) standard for forests under 1000 ha’s.

During the year the prospect of another system PEFC (Programme for the Endorsement of Forest Certification) became a reality in New Zealand when a regulatory authority was established. PEFC is an alternative to FSC which was set up initially for the small European grower, as it is less stringent in some areas than FSC, it may be more amenable for FFA members to attain the PEFC standard than FSC. Most of the larger New Zealand forest growers are considering dual certification. PEFC is widely accepted worldwide and is accepted in China, whereas FSC is not.

NES

Work on a National Environment Standard for forestry continues to be led by MPI.  Although FFA is not formally represented on this group we are kept informed of progress and have the opportunity to submit. Late in the year MPI representatives presented at a number of FFA run consultation seminars where a good attendance of members got the chance of voicing their particular concerns on the proposed standard.  Hopefully MPI have heard those concerns and will incorporate them in the finished standards.

Government Industry Agreement (GIA)

During the year the FFA signed an MOU with FOA to act jointly on behalf of the forest growing sector in case of any future biosecurity incursion. This collaboration would be under the GIA legislation laid down by Government, whereby any funding needed in such an event would be jointly funded by industry and the Government. Such grower funding would come from an emergency levy separate to the present forest grower’s levy.

ETS

The much maligned Emissions Trading Scheme didn’t get any better during the year with the April budget introducing legislation which banned foresters using the cheaper European credits to cover their positions when exiting the scheme or clearing land. All other emitters where allowed to continue using these type of credits for another year. This was completely contrary to earlier government statements saying the ERU’s may be used until May 2015. A number of growers were caught out by this U-turn in policy, who in turned suffered large losses. No amount of lobbying to Government has resulted in any change of direction.  Government simply refuses to accept that there is a problem and that the decision was unjust.
The real irony and tragedy is that a scheme that could have been a great promotor of new forest planting, has in fact blighted the industry with a dark cloud that detracts new investors.
During October I attended the Australian Forest Growers conference in Livermore NSW, where I presented a paper on the New Zealand experience with the ETS.  There was universal amazement amongst the conference attendees present that the New Zealand ETS had become so bad.

Woodco

FFA continues to be represented on the industry umbrella organisation of the Wood Council.  This group represents a united voice to government on all aspects of the New Zealand wood industry.  Major events this year included the setting up of a “forest sector strategic partnership” with government, in an attempt to establish priorities in Government policy. Woodco delivered its Policy manifesto “Prosperity from Forestry and Wood Products” which details the toolkit to deliver the aspirations in the Woodco Strategic plan of 2012. This details what industry would like government to focus on in policy initiatives.

The very successful Forestwood Conference was held in March, at Te Papa, and included an array of high quality speakers, from industry and Government. In conjunction with this event, the Resene Wood Design Awards were held and FFA sponsored a class centered on the use of indigenous timbers. For the next competition the aim will be to focus this more on the use of specialist alternative species.
Woodco established a Governing body and operational structure to setup and develop PEFC certification within New Zealand. NZ Wood still exists, but has little activity, while the website still functions and questions are responded to that appear there.

Looking to the future this Association has some significant issues to grapple with. Although the commodity levy has brought in much needed funding, it has meant that we have commitments to cover to justify that funding and also to represent and advocate for all small scale growers. By our very nature we are a volunteer based organisation where individuals give of their free time and now operate in what really are professional areas. We cannot afford to pay all the representatives in those various areas, at what would be market rates. Therein lays the problem, how long can we sustain this level of commitment and deliver the appropriate outcomes? The larger grower representatives act on committees and are paid by their employers, for the greater good of the entire industry. 

The Presidents role at times could be a full time one, while this is obviously not possible under present funding, the representation, contact with members, liaison with media, government personal, departments, research institutions and development of policy are all important roles. All these are essential roles to maintain our profile and service our member’s interests. At present this activity is constrained due to time and funding deficiencies.

I would like to thank all those members who have contributed to the smooth running of the association during the year, with the countless hours invested in running the branches and also at a national level. All those individuals who act on the various levy committees need a special mention and thanks. Also special thanks goes to my fellow Executive members, a great bunch of talented people who are a pleasure to work with.

Thank You
Ian Jackson, President NZFFA
April 2015