SFF Project Summary

Project Title: Expanding Economic Viability and Sustainably Managed Indigenous Beech Forests & Industry
Grant No.: 05/048
   

Contact Details

Name of Applicant Group: Indigenous Forestry Section (NZFFA) and SILNA Community Forest Owners
Contact Person: Mike Halliday
Address: Chariman IFS
Raumati
RD4
Napier
Telephone 1: 06 839 8819
Telephone 2:
Facsimile:
Email: mm.hr@xtra.co.nz

Project Details

Status: finished
SFF Funding: 270,000
Total Project Funding: 496,250
Proposed Start Date: 2005-09
Proposed Finish Date: 2008-09
Region: Canterbury, Southland
Sector: Forestry
Sub-sector:
Topic: Links to Policy
Decision management and support


Last updated: December 2011

Final report

Final report: Expanding Economic Viability for Sustainably Managed Indigenous Beech Forests

Final report: Expanding Economic Viability for Sustainably Managed Indigenous Beech Forests (Abridged)

Latest update

The Furniture Sector - An Overview
Sustainable Forest Management – What has it Meant to Forest Owners to Date, and What of the Future
Perception is everything and New Zealand southern beeches are no exception
Gregory presentation

Project description

The research will support existing beech management guidelines for indigenous beech forest landowners and the manufacturing industry including clients with information on the best economic return possible from these forests and forest products. It is an innovative approach that starts with economic viability and then balances biological sustainability within existing supply-demand constraints. It will improve land-owner and government decision-making regarding sustainable beech forestry. With this research funding and stakeholder community input, we intend to provide concrete recommendations for improved decision making across the entire industry sector with three specific results:

The issue/opportunity

The research will provide management guidelines for indigenous beech forest landowners and the manufacturing industry including clients with information on the best economic return possible from these forests and forest products. It is an innovative approach that starts with economic viability and then balances biological sustainability within existing supply-demand constraints. It will improve land-owner and government decision-making regarding sustainable beech forestry. With this research funding and stakeholder community input, we intend to provide concrete recommendations for improved decision making across the entire industry sector with three specific results:

1. Furthering the economic return from New Zealand beech management and processing through identifying the main domestic product/ market value propositions for the primary beech species (market survey/definition component), with a follow-on evaluation for exports (year 2) and a final year monitoring review (year 3).

2. Evaluating the resource, initially by estimating volumes and product classes potentially available across the 3 working circles (using IFU data base), with a more detailed GIS-based evaluation component to follow, as the market survey/definition work gets underway (resource evaluation component).

3. Furthering the understanding of the biological systems related to the economics, and sustainability of managing beech forests is a secondary lower-priority task and only a concluding reporting task at the end of the project to evaluate the economic impacts (components 1 & 2) on beech management guidelines (biological management component). For the forest land owner community, increased demand for sustainable operations will provide business opportunities in both forestry and downstream processing/marketing. Sustainable management of the IFS and Maori/ SILNA lands, with landowner empowerment, will enable long-term asset management and capture long-term economic benefits from forest ownership. It will also demonstrate social responsibility and provide broad ecological benefits. Increased product demand, at acceptable returns, will encourage indigenous forest landowners and manufacturers in New Zealand to support a viable and self-supporting industry.

The context/background

The research will support management guidelines for indigenous beech forest landowners and the manufacturing industry including clients with information on the best economic return possible from these forests and forest products. It is an innovative approach that starts with economic viability and then balances biological sustainability within existing supply-demand constraints. It will improve land-owner and government decision-making regarding sustainable beech forestry. With this research funding and stakeholder community input, we intend to provide concrete recommendations for improved decision making across the entire industry sector with three specific results:

1. Furthering the economic return from New Zealand beech management and processing through identifying the main domestic product/ market value propositions for the primary beech species (market survey/definition component), with a follow-on evaluation for exports (year 2) and a final year monitoring review (year 3).

2. Evaluating the resource, initially by estimating volumes and product classes potentially available across the 3 working circles (using IFU data base), with a more detailed GIS-based evaluation component to follow, as the market survey/definition work gets underway (resource evaluation component).

3. Furthering the understanding of the biological systems related to the economics, and sustainability of managing beech forests is a secondary lower-priority task and only a concluding reporting task at the end of the project to evaluate the economic impacts (components 1 & 2) on beech management guidelines (biological management component). For the forest land owner community, increased demand for sustainable operations will provide business opportunities in both forestry and downstream processing/marketing. Sustainable management of the IFS and Maori/ SILNA lands, with landowner empowerment, will enable long-term asset management and capture long-term economic benefits from forest ownership. It will also demonstrate social responsibility and provide broad ecological benefits. Increased product demand, at acceptable returns, will encourage indigenous forest landowners and manufacturers in New Zealand to support a viable and self-supporting industry.

Methods

In year 1 this objective, will identify the New Zealand beech (both North and South Island) product-market applications and the potential domestic market demand that is available to support good forest management and appropriate processing technology. The first step will involve a domestic market survey to identify the strongest market/product candidates (i.e.., high-end builders' joinery, furniture, flooring and novelties plus veneer). This will include an assessment of the current and projected indigenous timber imports, both raw stock and finished wooden products. Opportunities for communication of results to date and feedback will be possible through a full range of meetings / workshops with the relevant parties plus a concluding seminar. A summary of the results will be posted on a recreated form of the existing web-site which will be modified to meet project requirements and updated periodically.

In year 2, a second 6-month survey will involve the potential to develop export product-market applications. This research will follow from the initial year survey and the prior FRST studies involving international market-related activities (2002 - 2004). It will include following up on the excellent market-entry research undertaken in the EU by Masters student Karl Thompson (2002 - 2003) - co-funded by industry -- plus the FRST co-funded market access research of Iain Macdonald in the USA(2002 - 2004). The intent is to review both the market and supply potential to enter high-end markets that have already been identified with the concept of using the web-site (www.nativehardwoods.co.nz) to carry this message overseas. There is space for this type of generic product promotion on a start-up basis in that overseas market entry to high-end applications requires several qualified suppliers and broader industry support. Once again the rationale is to support New Zealand manufacturing and remanufactured products, including products as flooring, furniture, furniture components and other high end joinery. A summary of the study results will be posted on the web-site.

In year 3, it is important to monitor the marketing activities of the two prior years and provide an industry update, which would be included on the web-site and be included in the final year seminar. . Objective 2 Secondly, evaluating beech resource availability of principal species in the 3 working circles (Southland, Central Westland/.Tasman and Central & Eastern North Island) as to product classes, ownership, status and other factors, as accessibility/cost. Both an initial assessment (year 1) and a more detailed GIS evaluation (years 2-3)are proposed.

In year 1, following from the organisation of the market survey, a proposed process will be agreed upon with IFU for determining the supply availability initially using the IFU MAF data-base. This first step will provide initial supply estimates by product classes (areas) and various levels of primary product/log costs, serving as a background for the market survey. As a second follow-up stage, a GIS study is proposed in year 2 to expand and intensify the resource evaluation on a national basis (by area, broad cover classes, and volume estimates) as this information does not exist currently. It might be possible to utilise a prior GIS study undertaken in 2001 for the North Island forests, subject to further review. The estimated cost of this GIS evaluation is $ 50,000. and would be undertaken by a qualified sub-contractor. A scoping paper on the GIS proposal is attached.) The timing of the GIS would be coordinated with the funding surplus which is now in the second part of year 2 and in year 3.

The resource availability data will be further refined for primary beech species (silver and red) through MAF and other yield/recovery studies, as Sam Zirnhelt's MSc thesis (2002) on beech forest evaluation to classify primary Southland beech species availability by accessibility, quality and logging cost to determine availability for stratified log classes/areas. The commercial supply availability forecast in year 2 - 3 will help further forest management investigations to match wood quality to market requirements for the future. In addition, it will assist in reviewing future manufacturing and marketing investments. A summary of the Objective 2 results will be posted on the web-site

Latest update

To repeat the prior 2010 project summaries, the SFF Beech project has been delayed but is project timing. The original expectation was that the beech forest classification (milestones 2 and 6) and the product market research would proceed in tandem. This proved impossible, due to the timing of her classification study, in particular for the second stage of the forest classification but the decision to use the CMS grid proposed by Alan Griffiths (IFU) and Landcare has been supported by he project sponsors and has been completed. However, the final report was delayed until June 2010 according to Alan Griffiths, a copy of his summary status report was attached to the June project report. This is viewed to be a very important development and achievement for the industry and MAF. There isno equivalent resource availab ility of temperate hardwoods of equivalent quality and as a sustainable supply. The summary synopsis of this research prepared by Alan Griffiths which was attached to the June report and will be presented by Alan and Sussan Wiser at the closing seminr. in March 2011 In conclusion, there is a substantial privately owned beech resource available that subject to a range of factors is available for sustainable management, in total an estimated 174,000 – 185,000 ha depending upon classification. This is an interim evaluation as forest classification and mapping will be improved over time. No attempt has been made to exclude small forest ownerships with limited management potential or has the IFS model for small business development been applied. These estimates are based upon stand averages with a significant degree of local variation and influence the potential for sustainable forest management. Lastly, district and regional plan rules will strongly influence the proportion of his area available for management. Overall it appears that the beech potential harvest under SFM Plans and Permits could twice the current potential harvest, other things equal.

The principal activity during the period included revising the brochure to incorporate the sponsors’ suggestions and updating the final report draft for editing; again incorporating sponsors editing with a final draft submitted to Julian Bateson for editing to be completed in October. This included the selection of Bateson Publishing editor /publisher of Indigena and Tree Grower magazines plus other publications to do the final editing.

Other activities included a Governance committee meetings 22 June 2010 plus informal review at John Wardle’s on 31 May 2010. Two trips were undertaken during the period. The first trip involved a visit to John Wardle’s forestry and timber processing operation in Oxford (31 May) plus bio-fuel harvesting and preparation. A quick 5 day visit to the US West Coast (27 June - 01 July) was promoted by Daniel Tung (NZSFP) who shared in the travel costs and is pleased to share the product-market information we collected. The results of the trip were very positive and we anticipate some orders, with veneer likely pulling in timber products.

The reported product-market interviews are up-to- date and export markets are pending completion (trip report 08 July 2010). Reporting for the industry is underway on the interviews to date has been completed and discussed at a committee review meeting, and is summarised for the final report.

It is important to note that total expenditures are under budget which is good in terms of funding but requires readjustment to reflect the project requirements, with some travel budget reallocated to consulting services to support hosting the final seminar plus administrative expenditures.


Update

In summary, the SFF Beech project has been delayed but is on target in terms of achieving the revised milestones, which have been adjusted for the revised project timing. The expectation has been that the beech forest classification (milestones 2 and 6) and the product market research would proceed in tandem. This has not been possible and it has taken some time to undertake the second stage of the forest classification but the decision to use the CMS grid proposed by Alan Griffiths (IFU) and Landcare has been supported by the project sponsors and is virtually completed. However, the final report has been delayed until May 2010.We need these results to roughly calibrate the supply demand baseline but likely some additional research will be required to confirm the forest classification viability by region (la Sam Zifrnhelt, 2001 REPORTA0.

Two trips were undertaken to Australia, to evaluate product-market opportunities there (11- 18 November, 2009 and 01- 04 February 2010) at the same time completing the forest classification under milestone 6 will provide an updated assessment of the overall supply availability and help define the export requirements. The reported product-market interviews are up-to- date and export markets are pending completion. Reporting for the industry is underway and the interviews to date has been completed and discussed at a committee review meeting, The product–market research will be completed when the CMS classification is completed by May 2010 and for the end of project seminar/ report in June 2010, plus the final report.

The governance committee will meet in the next period 30 March to review project completion. It is important to note that total expenditures are under budget which is good in terms of funding but requires extra effort over the next 6 months to catch up with the revised project terms of reference. The in-kind contribution continues based upon prior estimates of the community sponsors on normal activities that required management / staff participation on the SFF beech project plus related administrative expenditures.

A watching brief has been maintained on industry developments, reported herein. The product-market field interviews were assisted by advisory committee members and in particular benefited during his last period from the participation of Daniel Tung (NZSFP) Jon Dronfield (NZSFP) and Jeremy Scott (Forest Holdings) in the last Australia visit.

The results of the Australian visits were positive and indicated the potential for further contacts plus market trials. China trip through the research of Ms. Wendy Xian appears to have provided some future opportunities.


Update

This progress report includes milestones for the period from February 2008 through June 2008. Most importantly the IFU team have been reviewing and updating their GIS Phase 2 proposal and have provided an update submitted to the Governance Committee in July /August 2008. This development is outlined in the reporting as well as the proposed work over the next 3-6 months. It is reported that an up-front SFF cost of $5,000 has been incurred and a further $ 1,800 (approved by Governance Committee) has been expended to date for the IFU third party consultant (Steve Thompson) to refine the proposal and define a proposed research approach.

An appropriate strategy will be submitted and approved by the Governance Committee before submission to SFF. So far we are awaiting their confirmation and an updated proposal. It could be, according to Alan Griffiths (IFU), that an extension of the carbon credit grid (CSM) would substitute for further GIS work at this point. A final Terms of Reference will be submitted y by the IFU for the next Governance Committee meeting for final approval and budget spending proposal. A listing of the current active Advisory and Governance Committee members is appended and the Milestone Table has been updated.

The re-created project web site is functioning and being updated (http://www.nativehardwood.com) by industry participants, which despite our encouragement goes slowly. Forever Beech has been helpful in providing updated information. Lindsay and Dixon also have an updated web site which is very market oriented. Others will be assisted over the next 3-4 months, by an SFF website consultant (likely a student) hired to update the website. Unfortunately, Lee Ewing who developed the original website is devoting her time to her young family and unavailable for the current updating. She will continue to advise and mentor the new consultant. Our assessment supported by Lee and others is that the existing website structure is adequate and only requires updating until, or when we are ready to expand the website objectives/format.

In summary, the SFF Beech project is on average on target. Some aspects as the product-market interviews are up to date and pending completion. Reporting for the industry is underway on these interviews and will be discussed at he view meeting in early 2009. In addition an exploratory visit to the U.S. market has indicated positive results and regional market support for NZ beech. An export market interview programme is under review and various NZ industry firms have indicated their intention to join the next U.S. visit, likely in early September 2008 Most importantly, total expenditures are under budget which is good in terms of funding but requires extra effort over the next 6 - 12 months to catch up with the project terms of reference.

A watching brief has been maintained on industry developments, reported herein. The product-market field interviews were assisted by advisory committee members and in particular benefited from the participation of Allan Sayer, Jon Dronfield and Iain Macdonald. The results of the US visit were very positive and indicated the potential for further research and possible graduate student assistance.

A serious deficiency currently for the product?market research and the furniture segment is timber supply availability. Most furniture firms are concerned about the adequacy of their supply. The problem is more acute for red beech than silver beech where Lindsay and Dixon is a major supplier with additional capacity. However, the curtailment of the Allan Johnston sawmill in Tuatapere, as reported earlier, is unfortunate from a supply perspective as there are only 2 other small saw millers remaining in Southland. Today there is an appreciation that international market terms and conditions should prevail. This understanding should help stabilize the domestic market.

Processing shortfall currently for Nothofagus industry development and RMA delay

The timber supply problems are serious, in particular for red beech where the supply is limited to one South Island supplier, Forever Beech. They have upgraded their finishing capacity and expanded their drying with a vacuum kiln but are still far short of being able to process all of their allowable harvest.. Rod Scott and Dave MacFarlane are initiating a large production complex in Tauranga to process an anticipated 14,000-16,000 m3 per year of mainly red beech (25% silver). For the past 10-12 months this project has been imminent with only a 2-3 month delay. There have been other interruptions as Design Mobel expands overseas and their recently purchased Eco-Wood kiln and remanufacturing facility is integrated into a hardwood operation. However, the commitment to a significant expansion for red beech timber production is still to be determined. The latest delay is that the RMA approval which was in the penultimate stage of approval was contested by a local environmentalist and referred the project to the Environmental Court which will delay the project until 2009.

The reality is that the government should prevent accepted projects being high-jacked by a single minority interest. This suggests again allocating effort and resources to resolving/expediting the RMA process. The problem is that the product- market research assumes timber availability. We identify this problem precedes implementing the research results. The reality is that two basic production units are required to commercialize the remaining beech forests (largely red beech). Based upon international and domestic experience, the unit size is capable of producing 400-450m3/month, with a conventional band headrig/edger combination and sufficient kiln capacity to adequately dry the timber, likely a combination of conventional and vacuum kiln capacity. The project view is that the markets exist and are waiting for further processing commitments, as have been undertaken by Lindsay and Dixon for silver beech. Also, Forever Beech owners seemingly have taken the initial steps toward an appropriate scale of output.