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Eucalyptus nitens, recovery and economics of processing 15 year old trees for solid timber


Report Date: May 2015
Author: Dean Satchell, Sustainable Forest Solutions, R.D. 1 Kerikeri, Northland 0294
+64 9 4075525

Special thanks and acknowledgement go to:

  • MPI Sustainable Farming Fund
  • Neil Barr Farm Forestry Foundation
  • John Fairweather Specialty Timbers
  • North Canterbury, South Canterbury, South Otago and Southland branches of NZFFA
  • NZFFA Eucalyptus Action Group
  • NZFFA Research committee
Appendix 1: Assumptions in Discounted Cash Flow Analysis
Appendix 2: Sawn timber price estimates
Appendix 3: Literature review - Value-based survey pricing methods
Appendix 4: Literature review - Estimating profitability of growing E. nitens for solid timber production
Appendix 5: Sawmilling method
Appendix 6: Flooring price survey instrument
Appendix 7: Survey results table
Appendix 8: Survey analysis
Appendix 9: Wood physical properties, test results
Appendix 10: Glossary of terms
Appendix 11: Case study stand plot
Appendix 12: Comparison between levels of internal and surface checking
Appendix 13: Air drying experiment
Appendix 14: Sensitivity analysis


Introduction

Why Eucalyptus nitens?

The case study block of 15 year old E. nitens

Eucalyptus nitens is a fast growing hardwood timber species with good, straight form. In Canterbury, along with other cooler regions in New Zealand, E. nitens produces high volumes of sawlog sized material in relatively short rotations. This is demonstrated by a small pruned and thinned stand on a typical Canterbury plains site (the case study stand). At age 15 this stand had a stocking of approximately 450 stems per hectare (sph), was pruned to 6.5m and had an average dbh of 43cm. These buttlog sizes were therefore within the optimal range for sawmilling on woodmizer bandsaw machinery (Satchell and Turner, 2010).

There is an existing resource of unpruned E. nitens in Canterbury, planted for firewood and shelter. However, pruned E. nitens remains a very limited resource primarily because of uncertainty around its potential for solid timber production. Growers would only consider pruning the species if sawlog production was the aim and there were an indication it could profitably be sawn for lumber.

Why Canterbury?

Currently in Canterbury the only market option for E. nitens logs is firewood. Logs on average gross $50 per tonne, from which harvesting and transport costs are deducted for a net return to the grower currently of between $10 and $20 per tonne (J. Fairweather pers. comm.). E. nitens is also a preferred species in New Zealand for short-fibre pulpwood (Nicholas & Hall, 2011) but currently is not chipped, pulped or exported on a commercial scale within Canterbury.

Sawn timber?

There is anecdotal evidence from N.Z. processors who have attempted to produce sawn timber that the species is too difficult to saw and dry, primarily because of excessive degrade in drying. This has been confirmed by contemporary Australian research (Innes, Greaves, Nolan, & Washusen, 2008; Washusen et al., 2008; Washusen, 2011). Consequently there is no current demand for sawlogs.

Market value for sawn E. nitens timber has not been established because the timber is not available commercially and thus sale prices are not available. Defect-free Canterbury timber is likely to have value in the market because it is sufficiently hard for flooring (J. Fairweather, pers. Comm.), strong (Haslett & Young, 1992) and like other eucalypts has an attractive appearance. These properties may provide opportunities to develop structural, flooring and appearance markets for the timber.

Because E. nitens timber is not available commercially, a market survey of merchants, retailers and floor layers was undertaken as part of this study to establish price estimates for the timber products, from which a residual value estimate for logs was produced.

Quantifying grade recoveries of boards as a case study

By using cost-efficient contemporary industry practices that minimise sawing and drying defect, this study offers some insight into the potential viability of growing pruned E. nitens for solid timber production on short rotations offers in cooler regions of New Zealand, on a farm-forestry scale. We can expect further improvements as methods are refined, but the recoveries and values of sawn timber products from this study provide a benchmark from which the forest industry can evaluate profitability of growing E. nitens. However, a word of caution - because of cost constraints the sample size used in this study was small as was the stand of trees from which logs were harvested, thus the results do not necessarly reflect what can be expected by growers - they are indicative only.

The case study stand is a single 0.2 ha block of Canterbury plains E. nitens, containing 55 trees. A sample of 8 trees (32 logs) were harvested and milled. The sawmill is a small commercial operation with a woodmizer LT 40 super hydraulic bandsaw and Woodmizer twin-blade edger. Other equipment includes a drying shed, a solarola solar kiln and a logosol 4 side profiler. This equipment has been set up for small scale eucalypt processing.

Residual value

This study applied the residual value method for estimating E. nitens log values. The residual value method requires prices for final products and deducts processing costs and required profits to leave the residual log price. This price represents the maximum amount the sawmill would pay for the log (D. K. Mbugua, 2003, p. 24).

Price is one of the main determinants of profitability in an investment analysis. However, because E. nitens is not sawn commercially in New Zealand, market transaction data for sawn timber is not available. In the absence of available market price data for E. nitens timber, product value estimates from a market survey were the proxy for market prices in this case study. Survey respondents estimated the impact on price that variations in quality characteristics had for hardwood flooring. Prices were produced for the width, length and grade combinations recorded for each case-study board, and according to the physical and appearance characteristics of this 15-year-old case study E. nitens timber.

Quality characteristics influence price of solid timber flooring product. Between-species characteristics include appearance, hardness and movement in service. Within-species characteristics include board width, board length and board grade. Levels of these were categorised and recorded for the case study boards and prices produced for board profiles according to levels of these characteristics.


Disclaimer: The opinions and information provided in this report have been provided in good faith and on the basis that every endeavour has been made to be accurate and not misleading and to exercise reasonable care, skill and judgement in providing such opinions and information. The Author and NZFFA will not be responsible if information is inaccurate or not up to date, nor will we be responsible if you use or rely on the information in any way.

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