Some background to the Specialty Wood Products programme
Julian Bateson and Paul Millen, New Zealand Tree Grower February 2016.
At the beginning of the Action Group weekend Paul Millen spent an hour updating us on the purpose of the Specialty Wood Products research partnership that started from 1 July 2015. Paul gave us some of the background and potential for the future. More of the details of how this special purpose timbers research project has progressed are outlined in the next article by Peter Berg.
The Specialty Wood Products programme has revitalised what Future Forests Research had been doing until recently and also supports the NZ Dryland Forests Initiative research programme. This new partnership is funded 50 per cent objective of export growth. Forest grower levy funds along with various industry investors and some NZFFA branches are matching governments funding. The total annual budget is $1.4 million for the next seven years with an additional $500,000 annually in core funding from Scion.
As mentioned, export growth is behind it all with sustainability not getting much support. Paul explained that there are significant market opportunities overseas and that New Zealand is ideally placed to supply specialty wood products.
Overseas supplies and requirements
China is the largest consumer of tropical timber and expected to import 170 million tonnes of timber a year over the next 30 years. For comparison, in 2012 they imported just 38 million tonnes. Their requirement is for naturally durable hardwoods for all uses as well as naturally durable softwoods. Hardwoods may be plentiful in Australia but there are strict limits on logging naturally grown eucalypts. Their eucalypt plantations are grown mainly for pulp. The durable softwood supply from the US is under increasing supply constraints. Allan Laurie, who has visited China on a number of occasions, has noted that there is massive hardwood potential in China, although there is currently not enough resource in New Zealand for regular supply.
However, there is a real opportunity for specialist timber, similar to the way the wine industry grew from zero exports 30 years ago to $1.3 billion a year today, by being specialised in a big market place. The plan for specialty timbers is by adding value and the research project mentioned above is looking to do this.
|High value indoor furniture, interior linings, floorings and ply or LVL||Stiffness, stability, appearance and some durability||Non-durable eucalypts||Australia and Asia|
|MGP 10 structural timber Fine chemicals from waste||Stiffness Alternative products||Douglas-fir||Australia Europe|
|Furniture, interior linings, outdoor cladding||Natural durability, appearance||Cypress species||Domestic with export opportunity|
|High stiffness pine and eucalypt LVL, sawn heartwood||High stiffness, natural durability, stability and colour||Naturally durable eucalypts on stream in 2026||Japan, China and India|
The aim is to look at the wood properties of the various eucalypts, cypress and Douglas-fir and then get them into the overseas markets with the target of $200 million in exports in these products by 2030. The amount of blackwood and redwood is very modest and not part of the $200 million target. There are enough of the eucalypts, cypress and Douglas-fir already growing to produce 460,000 cubic metres a year, although as we know, the durable eucalypts are in the early stages.
The National Exotic Forest Description records the area and species of plantations in each local government district in five year age classes. However, the minimum area recorded is five hectares, so many smaller speciality species woodlots are not recorded. Nevertheless, it provides a good basis for a multi-regional review of the scope and opportunities each region has to speciality wood species.
The map shows the four Specialty Wood Products regions.. These are Central North Island, North Island East Coast with Hawkes Bay, the Southern North Island Region and Otago/Southland. The West Coast, Canterbury and Northland are not involved in this research project, but we will still need a strategy for all the regions not just those chosen for the project.
Milling and exporting
What are sawmillers and processors doing in New Zealand? In 1989 they produced two million cubic metres of sawn timber a year, a figure which has now doubled to four million cubic metres a year, of which half is exported. New Zealand also imports 48,000 cubic metres a year, a figure which has remained fairly static over the past five years. It is not a large figure but New Zealand grown specialty wood should take some of this market. As the graph shows sawn timber is mainly radiata pine, eucalypts do not even register on the scale of the graph.
When it comes to exports, in 1990, around 25 years ago, the export value of sawn radiata pine timber was $100 million a year. It is now $735 million a year, which is quite an achievement. However, in the same period the value of the minor species Douglas-fir sawn timber exports has hardly changed, staying at around $50 million a year.
The graph on the left shows how much New Zealand timber exporters receive per cubic metre of sawn timber. For radiata pine in 1980 it was $200 a cubic metre and by 1990 had reached $500. However, it has not risen since then and has even fallen now to about $400 a cubic metre. That figure leaves very little profit for the grower and producer once everything has been paid for.
Douglas-fir has followed a similar trend, partly due to the slow-down in the Australian economy meaning that fewer houses were being built. However, for plywood or LVL, the prices are all lumped together, the value has averaged $1,450 a cubic metre over the last five years, a figure which definitely shows someone is making a profit.
It is worth looking at the cost of treatment for radiata pine to make it ground durable. It adds around $200 a cubic metre, none of which goes back to the grower. This is a barrier to small portable millers, for example. It means that imported kwila in Mitre 10 at $1,600 a cubic metre can be competitive compared to treated pine, and does not have the problems associated with treated timber.
|Investors||Climate and soil||Processing||Species||High value products|
|Otago and Southland Forest Growers Levy Trust, Ernslaw One and Blakely Pacific||Cold, prone to frost and snow||Sawmilling and manufacturing||Eucalyptus nitens||High quality joinery, panelling and flooring|
|North Island East Coast JNL, Forest Growers Levy Trust and NZ Drylands Initiative||Drought prone and fertile, erodible soils||Sawmilling, rotary peeled veneer||Durable and non- durable eucalypts||Class 1 and 2 durable hardwood
High stiffness LVL
|Marlborough and Nelson Forest Growers Levy Trust NZ Drylands Initiative and NZFFA||Drought prone and fertile soils
Cold, prone to frost and snow
|Sawmilling, rotary peeled veneer
||Durable eucalypts||High stiffness LVL
Class 1 and 2 durable hardwood
|High rainfall, cool sites and fertile soils|
|Sawmilling and manufacturing||E. fastigata, E. regnans and cypress||High quality joinery, panelling and flooring timber|
|Central North Island Timberlands, Forest Growers Levy Trust and NZFFA||High rainfall, cool sites and fertile soils||Sawmilling and manufacturing||E. fastigata, E. regnans, Douglas- fir and cypress||High quality joinery, panelling and flooring timber
High stiffness timber
Where does this leave specialist timber
The government is encouraging exports and they will only come if the market becomes more sustainable.
There is an opportunity for profit. The average difference in value between exported radiata pine and imported softwood for the past five years is around $800 a cubic metre.
Specialist timber has been grown around the country for many years with the frequent hope and expectation that the markets will develop. The Specialty Wood Products project is the opportunity everyone has been waiting for. It is still very early as the project is just getting off the ground. However, over the next few years let us hope that the plans and expectations become a reality.