Harvesting Strong in Mid-North

At the start of 2009 PF Olsen warned all their contractors supplying engineering, harvesting and trucking services that harvesting activity could be very subdued in the coming year. This proved to be the case in January and into February based on weak demand from China and a soft domestic market. However, by mid February China log demand had picked up and in combination with PF Olsen's China-direct export initiative harvesting activity has increased dramatically since then.

The graph below shows the growth in harvesting activity.

PF Olsen harvest crews Keefe Logging, Paniora Logging (2 crews), Tom Harrison & Sons and Phil Sadler have been fully extended and are working six day weeks to meet demand. Cartage contractor Marsden Transport Solutions has also been maxing out their logbook hours to get the logs to market. PF Olsen would like to acknowledge the tremendous effort being put in by these contractors to ensure that our commitments to our forest owner clients and log purchasers are being met.

While the PF Olsen market-direct export initiative is leading to improved forest owner returns (see below) and been instrumental to clients to saying "yes" to harvesting, there have been three other factors at work -

    1. Being Harvest-Ready: The upturn in pricing and demand in mid February was a dramatic reversal of market conditions in late 2008 and early 2009. Only clients that were Harvest-Ready could leverage off this sharp upturn to appreciate the improved returns. Being Harvest-Ready in this case meant harvest infrastructure (roads and skids) were in place and harvest management contracts were signed. By Harvest-Ready forest owners could say "Yes, go for it" when presented with this opportunity to harvest.
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Harvest-Ready flier

  1. Forward Pricing: PF Olsen has been able to obtain pricing for the following month much earlier than has been experienced in the past. In special cases this pricing has been able to be fixed for a two-month period which is important if you are Harvest-Ready, want to harvest but a hauler crew does not become available for a month or so.
  2. Terms of supply: Very favourable and secure payment terms have been arranged with the export log purchasers which all but completely eliminates payment risk. This peace of mind is very welcome in the current difficult trading environment.

Whilst PF Olsen is committed to supporting the domestic log processing market, we are pleased to bring an export option that greatly reduces the risk of not being paid.

Logan Negus, PF Olsen's Mid-North Harvesting Manager inspects logs delivered to Marsden Point prior to shipment.