Solid timber recovery and economics of short-rotation small-diameter eucalypt forestry

This report was prepared for Future Forests Research Ltd (FFR) by Scion.

Authors:

Dean Satchell, Sustainable Forest Solutions, R.D. 1 Kerikeri, Northland 0294. +64 9 4075525

James Turner, Scion, Private Bag 3020 Rotorua 3010. +64 7 3435899

Date: June 2010

Appendix 1: Assumptions in Discounted Cash Flow Analysis
Appendix 2: Prices and values of timber in New Zealand used for estimating board prices
Appendix 3: Timber grading
Appendix 4: Sawmilling methodology
Appendix 5: Glossary of terms
Spreadsheet 1: Kaingaroa Compartment 1194 E. regnans economic value (Microsoft Excel macro-enabled workbook 3.6 MB)
Spreadsheet 2: Optimal rotation and stocking for E. regnans (Microsoft Excel macro-enabled workbook 864 KB)

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Conclusions

Managing eucalypt stands for solid timber remains a tradeoff between adequate diameters and reasonable bole length with minimal branch-related defect. By demonstrating that a range of smaller diameters can be sawn cost-effectively and profitably, some flexibility is assured in the balance between maximising piece size and minimising rotation length. Logs greater than 25 cm diameter could potentially be diverted from low-value pulpwood to a considerably higher value sawlog. In addition, management regimes could target increasing the proportion of sawlogs in the log-mix to improve grower profitability. Eucalyptus regnans under the regime in this case study produced good recoveries of timber meeting grade specifications. This was the case even when grown in an unmanaged regime, with resulting good returns to the grower. The ability to achieve valuable timber recovery from logs of small diameters is an important contributor to this outcome. Standard forestry practice to improve stand value, such as early pruning to improve grade values and volumes, and thinning a stand to reduce the number of malformed trees and allow remaining tree-stock to increase in diameter, could improve returns from this benchmark. Care may be needed to ensure sufficiently high stocking in order to limit product degrade from branches. Production thinning of small diameter trees for higher-value sawlogs could also pave the way for permanent canopy plantation eucalypt forestry in New Zealand, though economics of this would need to be assessed.

The processing costs and timber recoveries from the sawmilling technique from this study show that there should be adequate returns to growers from plantation E. regnans sawlogs. However, given that estimated economic returns from E. regnans grown for sawlogs are sensitive to the sawn timber prices used, further market research will be helpful in understanding the potential returns from E. regnans.

There appears to be considerable scope for product development and niche marketing for ash eucalypt in New Zealand. The forest industry has the opportunity to generate additional value to the existing radiata estate, open new markets and profitably substitute imported timber with locally grown hardwood product. Wood density, hardness and strength should be measured from the E. regnans timber from this study. This will give a better indication of suitable product options for wood from young cold-climate eucalypts.

Timber prices are likely to change significantly over the length of a rotation and growers may need to consider likely future product options when selecting a timber species and regime. Dimensional stability may become a more important requisite to higher value than timber size in the future. It is conceiveable that products with inherent stability such as laminated panels and beams could capture a higher value market than traditional large-section timber of similar dimensions.

It is likely that similar sawn recoveries can be produced from other eucalypt species using the same diameter range sawn in this study. However grade recoveries are not likely to correspond with the E. regnans grade recoveries from this study, because of varying degrade associated with branch defects, kino, cell collapse, checking, shakes and growth stresses. This requires further study on a species by species basis.

Ideally, selection traits for a future E. regnans breeding programme should include wood quality issues; in particular collapse, wood density, end-splits and checks. This will, however, require significant more investment in breeding than is currently available for this species.

The Eucalyptus regnans growth model should be developed to include data from stands greater than 15 years old and a mortality function. This will enable more accurate economic analysis of the species for commercial plantings.

Acknowledgments

The authors thank the Neil Barr Farm Forestry Foundation, the MAF Sustainable Farming Fund, the University of Canterbury, the NZ Farm Forestry Association, the lower-north and south-Canterbury branches of NZFFA and the Eucalyptus Action Group for their financial contributions. We would also like to thank Woodmizer NZ, Paul Marshall, John Fairweather and Mike Davies for their in-kind contributions. A special thanks to the mid-north branch of NZFFA, and in particular Richard Davies-Colley, John Pedersen and Murray Hunter for their time and efforts in helping initial development of the sawmilling technique used in this study.

The authors would also like to acknowledge the invaluable input provided by Mina van der Colff to the economic analysis, providing information on growth models, and taper and volume equations used. We also thank Kevin Maloney for kindly making available a DOS based version of the Eucalyptus regnans growth model.

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