Solid timber recovery and economics of short-rotation small-diameter eucalypt forestry
This report was prepared for Future Forests Research Ltd (FFR) by Scion.
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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Grade-sawing younger, smaller-diameter plantation ash eucalypt logs in New Zealand is considered to be difficult below 40 cm small end diameter (SED), primarily because of growth stresses (Haslett 1984). Traditional sawmilling techniques used on older-growth eucalypts have produced poor results when applied to younger and smaller diameter plantation material in Australia (Washusen et al. 2009). Seasoning of cold-climate eucalypt timber is problematic, and issues such as collapse
Appearance products attract high prices (Washusen and Clark 2005). However, for appearance products ash eucalypts should be quarter-sawn, requiring log SED of at least 40 cm and preferably 75 cm or more to reduce the effect of growth stresses (Haslett 1988). Larger diameter logs fetch a premium to growers in New Zealand, but logs of less than 45 cm diameter are often rejected as sawlogs (Table 1), leading to the recommendation of final crop stockings of 100 stems per hectare (sph) (Deadman and Hay 1987). However low stocking density has been shown to negatively influence clear bole length in eucalypts and is likely to increase product degrade resulting from branch defect (Brown 1997). Knotty headlogs are likely to be of very low value as sawlogs, regardless of diameter (Table 1).
Table 1: Eucalypt sawlog prices 2008 (less harvest and freight; Northland Kauri Timber Ltd.)
|Minimum SED (cm)||Grade||Price ($/m3)|
Low estimated IRR's have been reported for eucalypt grown on a 35-year rotation for sawlogs (Maclaren 2005). Producing larger diameter logs usually requires thinning to lower stockings or extending rotation lengths. Large pruned buttlogs may have high value as sawlogs, but corresponding returns from the stand may not be high when discounted to a present value, because of rotation length. Furthermore, large sawlog yield as a percentage of total stand volume is also likely to be low. On shorter rotations, large logs are likely to be a small proportion of the total log yield (Washusen and Innes 2008). Another Australian study found they comprised only 20% of the stand volume in 32-year-old E. globulus thinned to 200 sph at age 18 (Washusen et al. 2004), with a larger proportion of lower value pulp-logs representing lower returns for growers.
Processing costs are a major consideration influencing grower's profitability. At an estimated cost of A$650/ m3 for sawmilling, kiln-drying and grading in Australia, potential stumpages were only A$90/ m3 for B grade1 pruned plantation eucalypt logs and A$25/ m3 for B grade1 unpruned logs (Washusen et al. 2004).
There remains insufficient research and data on which to base profitability of growing eucalypts in New Zealand (Maclaren 2005). Adequate projected returns are necessary to provide stimulus to plant eucalypts in an appropriate scale for efficient solid-timber production and market development. As a result, eucalypt forestry has never reached a sufficient volume threshold necessary to establish specialised processing facilities and firm markets in NZ. During 2008, NZ imported 20,000 m3 of sawn hardwood timber at a cost of over $28 million, while a further $241 million was spent on importing wooden furniture (MAF 2008). Only 725 m3 of eucalyptus was sawn in NZ for the year ended 31 March 2009 (MAF 2009). There remains an opportunity and challenge to meet the needs of this market.
In order to estimate real-world values for sawlogs within a mature industry and market, this study has simulated a vertically-integrated enterprise growing and processing small-diameter short rotation eucalypt. The resulting economic analysis is aimed at providing growers with accurate information about real-world returns for growing eucalypts for timber in New Zealand. If sufficient incentives exist then it may be possible for a viable eucalypt processing industry to develop.
1 Victorian log grades.
Release of growth stress during sawing is one of the most important issues to consider when processing eucalypt (Haslett 1988). Quarter-sawing of large logs is recommended, but for small diameter logs can produce high levels of spring (Jones et al. 2010). In traditional quarter-sawing, to avoid spring, additional cuts need to be made to straighten the sawn face (Washusen et al.2009). This lowers recoveries and also slows volume throughput (Washusen and Innes 2008). Quarter-sawn boards from smaller diameter logs can also produce high levels of thickness shrinkage (Jones et al. 2010) and green-sawn thickness may need to be increased to avoid skip, which can lower nominal sawn recovery.
Back-sawing (or flat-sawing), on the other hand, is generally more cost efficient because:
- Green conversion can be higher.
- Wider boards can be sawn from smaller logs and with fewer cuts.
- The logs are regularly rotated, and thus growth stress is released as bow rather than spring, which can be more easily controlled in seasoning.
Back-sawn boards saw well but unfortunately encounter several issues:
- Back-sawn boards can have lower dimensional stability (Haslett 1988, Vermaas 1995, Washusen et al. 2008). This is because tangential shrinkage is usually higher than radial shrinkage in eucalypts (Washusen and Innes 2008). This high tangential shrinkage can translate into high movement in service (Bootle 1983, p. 70) which is further compounded by wider boards.
- Back-sawn boards are often more subject to seasoning degrade such as warping, cupping and surface checking (Washusen and Innes 2008, Vermaas 1995 and Bootle 1983, p. 70). Surface checking was found to be the most important grade limiting defect in young plantation E. nitens (Washusen et al. 2009) and was more prevalent in back-sawn than quarter-sawn timber.
- Quarter-sawn boards can be reconditioned more successfully than back-sawn boards because they are less prone to surface checking in the reconditioning process (Bootle 1983, p. 70).
- Wider back-sawn boards are subject to higher levels of cupping. Thickness of boards may need to be increased when back-sawing wide boards to reduce the incidence of planer skip, a serious grade limiting defect. This will reduce nominal recovery.
- Back-sawing small diameter logs usually produces boards containing the pith (or centre-line), and the resulting end-splits, warp and heart-checks are likely to exclude these boards from decorative end-uses.
These issues can lead to a lower proportion of acceptable grades.
Sawing methods have a major bearing on processing efficiency and end product recovery and performance (Washusen and Clark 2005, Jones et al. 2010). The sawing equipment and sawing strategies typically applied for native forest eucalypts in Australia have been shown to be unsuitable for the plantation resource (Haslett 1988, Washusen et al. 2009). In the green-sawn state timber may appear to be of the highest quality but it can then suffer significant degrade upon seasoning and processing, yielding a low product recovery. An emerging industry must be confident that processing methodology allows for adequate volume recoveries of a product which meets market quality standards, and which can be produced relatively cost-efficiently.
This study does not compare sawmilling techniques, but quantifies grade recoveries and cost-efficiency per cubic metre of log input for a novel hybrid slabbing/ quarter-sawing strategy developed for small-diameter plantation cold-climate eucalypt sawlogs. Product value is estimated and log values are assessed based on these product values.
A sample of 91 small diameter 18-year-old E. regnans logs was milled to cover a diameter range of between 25 cm and 43 cm, with the purpose of determining reasonably accurate recovery means for the diameter range. Nominal sawn timber and grade recoveries were recorded from each log, along with milling costs.
The sawmilling strategy includes:
- milling to end-use sizes;
- selecting end-use sizes not just by maximising board width (the traditional strategy used for adding value) but targeting smaller dimensions for contemporary and potential end-use markets requiring small-dimension timber;
- Using one piece of equipment, a horizontal bandsaw (Woodmizer LT 28 with electric assist).
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