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Newsletter 57 January 2012

Newsletter 57 January 2012

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New Zealand Farm Forestry Association
P.O. Box 1122


Farm Forestry Newsletter
 January 2012 No. 57

In this issue

Costs of illegal logging

Editorial: Focussing on the ETS and forestry

Forest Owners Association Needle Cast – November 2011 Update

New Zealand Institute of Forestry Annual Conference 2012

Proposed commodity levy on logs

National Exotic Forest Description [NEFD] steering committee



John Dermer

Vice President
Ian Jackson
-South Canterbury
-North Otago
-Sthn High Country (north)

Newsletter editor
Dean Satchell

National Executive

Angus Gordon
-Taupo & Districts
-Middle Districts
-Hawkes Bay

Neil Cullen
-Mid Otago
-South Otago
-Men of Trees
-Sthn High Country (south)

Hamish Levack
-Bay of Plenty
-Gisborne East Coast

Dean Satchell
-Far North
-Mid North
-Lower North
-South Auckland


Resource Management and Environment Law

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We are substantial enough to have five offices and over 100 lawyers throughout New Zealand and in Sydney - but small enough to know our clients individually.

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The combination of general and multi-specialist legal services ensures our clients receive the very best legal advice available based on in-depth local knowledge with a trans-Tasman perspective.


Next NZFFA National Executive Meeting - 23 February 2012

Contact your branch officers or the National Executive member responsible for your area if you have matters you would like raised.
Note also that branches may propose notices of motion or agenda items for the meetings at the Balclutha Conference.

Nominations for National President and National Executive.
Nominations close on 20 January 2012.  Nominations are made by branches.  Elections will be held at the Council Meeting at the Balclutha Conference.
Current President John Dermer is retiring after his 2-year term but will remain on the Executive for a further year as Immediate Past President.  Nominees for President must have served at least one year on the National Executive.
Two National Executive Members are retiring by rotation but are available for re-election: Neil Cullen (South Island) and Angus Gordon (North Island).  A further vacancy is likely to result from the election of President.

Remits for the Council Meeting and AGM at the Balclutha Conference.
The National Executive is proposing the following remits:
  1. That the National President’s honorarium and the reimbursement for National Executive Members’ attendance at Conference be adjusted for inflation since they were set.  Both were set prior to 1998 and inflation since then has been more that 50%.
  2. That the NZFFA Constitution be amended so that as long as there is a minimum of two National Executive Members representing the North Island and two representing the South Island, two may be elected at large (instead of three from each island as at present - total = 6 in either case).
  3. That an additional Maori name be adopted for our association (see below)

  4. Additional Maori Name for NZFFA
    We have received only limited feedback on adopting an additional Maori name.
    To recap - names proposed so far are:
    1. Te Korowaitanga o te Whenua “Cloaking of the Land”.  This name did not find favour at the Masterton Conference because “Cloaking” did not convey the appropriate image and the National Executive (who proposed the motion) was deemed to have not consulted enough.
    2. Te Kãhui Mara Rãkau O Aotearoa a fairly literal translation of NZFFA, with Kãhui meaning united group, Mãra meaning land cultivated for food or trees or a farm, and Rãkau meaning tree.  It has also been suggested that “O Aoteraroa” could be omitted.
    3. Ngahere Whanau i.e. "family forestry".
    4. Te Herenga T?tui Rãkau.  Meaning “the gathering of people establishing (and linking together) trees”.  Linking together is intended to convey the notion that farm foresters work with all trees.It is possible that at its February meeting the National Executive may choose just one of these to recommend to the Conference, and so that is the deadline for any feedback you would like taken into account.

Costs of illegal logging

Note on meeting with Forestry Stakeholders to discuss the legality of NZ forestry exports by Hamish Levack.

Preamble: On 27 October I represented the NZFFA at a meeting in Wellington, chaired by Chris Carson, Director MAF International Policy, on the future ramifications of action against illegal logging.   WPA, PMA, NZFOA, TIF, WOODCO, and NZIF were represented also.  The meeting was not about proving which imported timber had been illegally obtained, but about proving that timber exported from New Zealand had been legally obtained

Definition: Illegal logging is the harvest, transportation, purchase or sale of timber in violation of laws.  It results in the loss of billions of dollars of assets and revenue annually, two of the more vulnerable regions being South East Asia and the Russian Federation which happen to be regions that are strong competitors with New Zealand in the provision of logs.  Theoretically, if illegal logging could be reduced, substantial gains to New Zealand forest growers and saw-millers should follow.

Australian, Chinese, European and USA responses: Currently, an Illegal Logging Prohibitions Bill is going through the Australian parliament.  Although this legislation is not specifically aimed at New Zealand, by 2014 it is probable that all exporters of wood and wood products from New Zealand will have to provide evidence that their products have been legally obtained and produced.  Australian importers will need to submit an annual report to their Department of Agriculture and Forestry which will need to include information on (a) what they have imported and where it has come from, (b) that they have a due diligence system in place, (c) that they have undertaken risk assessments, and (d) that these systems and assessments have been audited by a third party auditor.  This will add costs to the New Zealand grower.

MAF believes that China will not be far behind Australia in this regard, because the European Union is negotiating a LBA [legally binding agreement] that will take effect as early as next year.  For example, China will have to satisfy the EU that any New Zealand logs that China imports to produce, say, furniture for export to the EU, have been legally obtained.

Since 2008 the USA has had an Act in place, called the US Lacey Act, which parallels the one under way in Australia.

What this could mean for NZFFA members: MAF says it will explain NZ’s regulatory framework, including the Resource Management Act, and how this contributes to the likely legality of NZ produced timber, to Australian or Chinese importers, but unlike some other countries, NZ does not have legislation covering plantation forestry per se, and the Government does not regulate harvesting or processing either.  Ellie Avery, the MAF official who seems to be leading our reaction to this matter, assumed [wrongly] that woodlot owners were well on the way to being FSC certified, and expressed the view that FSC certification may be sufficient evidence of the legality of our exported timber. I expressed doubt. Although it is true that Sustainable Farming Fund money is financing Patrick Milne’s project to research ways of making it economic to FSC-certify woodlots, it is far from clear that the desired objective will be achieved or what it would eventually cost small scale forest owners to participate.

Conclusion: If not red, orange warning lights are shining! The NZFFA needs to keep a close watch on this developing issue, with the aim of resisting small scale forest owners being lumbered with undue expenses that outweigh any benefits.


Editorial: Focusing on ETS and Forestry

Geoff Thompson

The recent release of the Emissions Trading Scheme Review by the Minister for Climate Change, Hon. Dr Nick Smith, has generated a great deal of interest from the forestry sector. The Review covers forestry in detail, particularly with recommendations designed to encourage more new forest planting. The National Party has announced its policy for implementation if it is in charge after the General Election.

Those owners locked in with Pre-1990 forests are likely to be offered an alternative with the introduction of "off-set" forestry from 2013. Land areas of Pre-1990 forests, which could be put to higher or better use, will be allowed to plant on other land and free up the better existing forest land. Post-1989 foresters are likely to have a range of improvements to the present scheme to relieve long term liability issues and create greater certainty for new investment.

The Minister's response to the Review was positive but a Government position on the recommendations was not announced because of insufficient time before the General Election for Cabinet to deal with the detail. Officials are working on those now for submission to the new Cabinet in early 2012 but already a request for urgent action has seen results. Government agreed to a request for urgent
consultation on the banning of CERs (international carbon units) based on industrial gases - HFC23 & N2O. These gases are being banned in most markets and if New Zealand doesn't follow suit our carbon market could be swamped
and our "green units" from forestry undermined in value. This is a positive response to the Review.

Forestry is very important in the wider scheme of New Zealand's response to Green House Gases. Our large areas of exotic plantation forests sequester carbon and moderate the country's GHG emission profile. It is in New Zealand's
interest in the medium term to plant more forests and for foresters to gain the benefits of the carbon value of the trees. The current Government is a strong supporter of more forest planting.

Foresters slow to address carbon opportunities

Most should know by now that forests are classified as Pre- 1990 (exotic) forests which, until "off-setting" is introduced, must stay in trees or Post 1989 forests which from 1 January 2008 can earn carbon credits which can be sold, traded or
Pre-1990 foresters have been allocated free units as compensation for restrictions on land use. Owners with up to 50 hectares could apply for exemption and use the land as they wished but the final date for those applications passed on 30 September. The final date for applying for allocations is 30 November, but the uptake has been slow, which is hard to understand. The compensation for those who apply is up to 60 units per hectare issued in two tranches - 38% immediately and 62% in 2013. Even at the currently weaker price of $14 per unit (down from $20 in May), this "free money" is worth securing. The process is not difficult and can be done on-line through the Ministry of Agriculture & Fisheries website.

We urge pre-1990 owners to register, urgently.

The ETS Review recommendations for Post '89 forestry

The greater concern of owners of newer forests is how to address the obligation of surrendering units issued for carbon as the trees grow, when the trees are cut down or destroyed. The Panel made a number of recommendations to mitigate this liability.

The Scheme is attractive for farmers or forest owners with Post '89 trees because regular issues of units as the trees grow is like harvest returns in advance. There are cash flow advantages and time cost of money advantages. Measurement
of carbon will be more sophisticated and claims can be made annually if the forest size justifies the work in claiming.

Clearly not all units issued need to be sold so a reserve against surrender obligations could be built up. The Government will look at a system of "averaging" being available, which would allow the tree owner to register to receive regularly the long run average of carbon units sequestered and not follow the carbon curve, which builds up strongly from about year 10. This creates a reserve held by the Government and, if the forest is replanted, there would be no surrender obligations on harvesting the forest.

The current hesitancy among Post '89 foresters is that when the forest carbon account is in deficit, units must be surrendered to square off the account. The uncertainty around this obligation is being addressed by the Government.

Clearly harvest proceeds could be used to buy credits to be surrendered if the "averaging" scheme is not used, but because the carbon market is relatively unrestricted the price at surrender time could be considerably higher that the wood value taken out of the forest.

The Government is also looking at establishing a "pool" for making good losses from catastrophic events, and which are not covered by insurance.

This could be developed from skimming off, say, 5% of issued units and the pool is available for surrenders to be made.

Warning! Warning!

The present and likely future rules for Post'89 forestry are complex and careful analysis and judgement must be applied on a case by case basis. We are coming across many cases where land and forest owners are being pushed into propositions that are not well thought through or where the advice is simply inadequate. Second opinions are recommended and forestry advisers and professionals who really do know what the ETS is about should be used. Getting
it wrong could be a costly mistake.

Forestry is a long term proposition - is the ETS?

Sceptics have suggested that the ETS will not last and that afforestation plans based on its endurance could crumble. The Review Panel studied international developments very closely and noted the number of significant proposals in
major countries introducing or planning carbon trading schemes. New Zealand is neither far ahead or behind what is happening internationally in recognising that human behaviour has to change to reduce GHG over the long term and a carbon trading scheme is a sound way of achieving this whether there is a new Kyoto Protocol or not. The present Government is endorsing this policy.

There is a firm belief that our ETS is here to stay and that forestry will continue to play a key part in it being effective.

Note:  Geoff Thompson was a member of the ETS Review Panel.

Geoff Thompson
DuncanCotterill LAWYERS
Resource Management and Environment Law


Forest Owners Association Needle Cast – 7 November 2011 Update
To provide current information on Needle Cast being observed on radiata pine.
Note – detailed questions should be referred to the FOA office.

In autumn 2008 severe needle discolouration and cast was noted in radiata pine on the East Coast of the North Island with later reports from Central North Island and Northland. 
In severe cases all trees in a stand are affected with extensive needle cast following needle death (and red discolouration) This is being referred to as Red Needle Cast (RNC).  This includes planted trees, natural regeneration, pruned and unpruned, thinned and unthinned stands and trees from 1-2 years old through to trees over 20 years old.  These widespread symptoms were in part the reason that Scion experts felt this was not the usual expression of known disorders.
However, it is also recognised that this is a continuum of what has been observed in NZ radiata pine plantations since 1980, and earlier.

Current Situation
RNC has occurred to varying degrees around the North Island over the past few years.  It is now believed that some red discoloration observed in the CNI as far back as 2006 was RNC (see FH News 166). It is similar in appearance, but also different in several ways, to Cyclaneusma and physiological needle blight (PNB). In some years RNC is widespread throughout the North Island and it is generally most evident at higher elevations associated with misty and colder conditions
during late autumn and winter. Invariably higher elevation forests in the Gisborne Region are the first to develop symptoms. 
To date there has been no mortality directly attributable to RNC and no causal agent has been confirmed. Research is continuing in this area.


New Zealand Institute of Forestry Annual Conference 2012

Theme: "Engineering value: Growing & Harvesting Forests for Novel Wood Structures"
Dates: Sunday 1 July – Wednesday 4 July 2012
Venue: University of Canterbury -Ilam Campus
Description: New Zealand has a well earned reputation as a leader in growing sustainable plantation forests. In an increasingly competitive international market place it is important to take the next step and increase innovation within our timber related industries. Engineering solutions can drive improvements through the value chain from growing, harvesting, and use of timber products.
The sector faces predicted growth in harvest volumes, rising demand for structural logs, increasingly steep harvesting terrain, and growing national and international interest in wood buildings. Against this context, the 2012 NZIF Conference will discuss how engineering solutions can add value and improve performance within New Zealand ’s plantation forest, wood processing and building sectors.


Proposed commodity levy on logs

The FOA is developing a proposal for a levy under the Commodity Levies Act 1990 on logs from plantation forests. If approved, it will be on harvested logs of all species, including export logs and logs processed in New Zealand.

For plantation forestry to achieve its full potential, the industry needs the FOA to be truly representative of everyone in the sector. Hence the need for a levy paid by all and an organisation answerable to all.

An FOA project team is now working on the proposal. If it is supported by the FOA executive committee, forest owners will be consulted, followed by a referendum in mid-2012.

To be adopted, the levy must win the support of a majority of owners, both by number and by forested area. Levy payers will then be consulted each year on spending priorities. After six years the levy would need the support of a further referendum before being renewed.

The main drivers for the levy are growing demands on FOA resources and the need to make forward financial commitments, especially to fund research. This in turn reflects rapidly increasing log production and the growing expectations society has of land-based industries.

The FOA is expected by forest owners, industry stakeholders and government to drive co-operation within the sector and to represent the sector in its interactions with government and the wider community.

At the moment the FOA and Farm Forestry Association do this work, but although they are well supported by the subscriptions and levies of those who choose to become members, many non-members also benefit. In addition, the FOA relies heavily on the voluntary input of members via a strong committee structure.

The focus now is on developing the draft proposal to form the basis of the referendum. This in part involves meeting – in discussion with MAF – the statutory requirements for a commodity levy, including communications with all potential levy payers.

Source, Forest Owners Association
New Zealand Forestry Bulletin, 7 December 2011

Invitation to Forest Owners Association Commodity Levy Regional Workshops

The proposed Commodity levy will be on all harvested logs from plantation forests that are either exported in log form or processed in NZ. This includes all species and all production that leaves the forest in log or chip form. A referendum to obtain approval for the Commodity Levy from potential payers will commence on the 22nd February 2012.

The levy will be administered by New Zealand Forest Owners Association Incorporated with the funds used to address issues affecting plantation forest owners.

The reasons for moving to a Commodity Levy, and how levy payers can have their views listened to and incorporated into Association activities will be presented at regional workshops.

We want your feedback and views.  This is an opportunity that you can’t afford to miss!  Come along and be informed, and then tell us what you think.

Schedule for workshops:
Wellington:  Tues Feb 7th     6.00 – 7.00pm, Rutherford House

Balclutha:   Wed Feb 8th      6.00pm – 7.00pm, Rosebank Lodge Motor Hotel, 265 Rosebank, Balclutha

Christchurch:  Thurs Feb 9th     6.00pm – 7.00pm,  Christchurch Netball Centre, 455 Hagley Ave

Nelson:  Fri Feb 10th    6.00 – 7.00pm, Tahuna Conference centre, Tahunanui, Nelson

Napier:         Mon Feb 13th    6.00 – 7.00pm,  Napier War Memorial Hall, Marine Parade, Napier

Rotorua:      Tues Feb 14th    6.00 – 7.00pm,   Rimu Room, Scion, 49 Sala St, Rotorua

Gisborne:    Wed Feb 15th   6.00 – 7.00pm – To be confirmed

Auckland:     Thurs Feb 16th    6.00 – 7.00 pm  Rayonier NZ Boardroom, 32 – 34 Mahuhu Cres, Auckland

Whangarei:     Fri Feb 17th    6.00 – 7.00pm,  NZRC Lounge, Toll Stadium, Okara Dr, Whangarei

Please rsvp to Diane Davidson: by 3rd February if you are able to attend.


NZFFA on the National Exotic Forest Description [NEFD] steering committee

This committee also has representatives from NZFOA, MAF and the Department of Statistics. At our meeting of 30 November in Wellington several points of interest emerged.  These were

  1. New NEFD update available now.
  2. New Planting rate has more than doubled.  New planting for 2011 has been 12,000 ha.  This is a derived figure based on (a) surveys of seedlings sold by nurseries, (b) assumptions about average seedlings per hectare that are planted, and (c) assumptions about the areas of forest that were replanted, so there is quite a bit of uncertainty about it. Nevertheless, we can be sure that new planting rate is more than twice as much as it was last year, because the same method was used to derive the equivalent number. However, since carbon prices have dropped substantially, the ETS is now less of an incentive than it was.  Accordingly the increased new annual level may not last.
  3. Small scale forest data is less reliable than corporate forest data. Because much of it is derived indirectly, the area/yield data associated with small scale forests are much less reliable than data that has come from corporate forest owners.  Due to this, and the fact that it is small scale forestry that will cause the “wall of wood” in the 2020s, it was agreed that more attention needs to be given to increasing the reliability of small scale forests in future.
  4. Need for monitor forests. I also moved that the NEFD committee ask MAF to give consideration to the establishment of monitor forests along the lines of the monitor farm, orchard and vineyard data bases that MAF already maintains.  This motion was passed, but MAF has reservations. A review of funding might mean that the whole MAF  'monitoring' programme will be dispensed with.
  5. Access to NEFD address lists for the commodity levy referendum. Glen Mackie spoke about the NZFOA’s project to levy forest owners under the Commodity Levies Act 1990.  He asked that the NEFD steering committee recommend that MAF allow the use of the NEFD data base of forest owners to circulate information on the proposed Commodity Levy and send out voting papers for the referendum.  The steering committee agreed to this, but MAF has yet to decide.  The Statistics Act may prevent MAF from releasing the information.
Hamish Levack


Disclaimer: Personal views expressed in this newsletter are those of the writers and do not necessarily represent those of the NZ Farm Forestry Association.

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