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Northland Region Success Stories

Success Story One - Henley forest

The Henley forest is 5 hectares comprising 3 stands of 19 to 26 year old partly-pruned forest on Gammons Road near Kaikohe. Malcolm Henley wanted to get the best returns from his forest, but wasn't sure how to go about it.

When PF Olsen was initially asked to estimate what net stumpage could be expected from this forest, we estimated a net return to the forest owner of $8.55/tonne (this was based on September 2008 prices). Because Malcolm was contemplating a graded-managed-sale method (as opposed to selling by fixed price stumpage) we cautioned him that the actual result would depend on how the market was at the time of harvesting, and whether we could place his volume into some highly favourable markets PF Olsen was developing.

The forest was readied for harvesting and harvesting commenced in November and operations and sales ran through to December.

To the forest owner's delight, the actual result was a much higher net stumpage of $18.94/tonne. The reasons for this much higher result were:

  • As part of its China-direct strategy, PF Olsen had established a much higher price for export pruned, S grade and other unpruned export grades.
  • A good domestic market was found for logs for poles and house piles.

This result was particularly pleasing and this is what Malcolm Henley has to say about the job: "When PF Olsen told me that their estimate was $8.55/tonne it was just above my expectations so I felt it was realistic. They said they believed there was considerable upside if market opportunities developed favourably and when you look at the result, they were right! The harvest crew (Tom Harrison & Sons Ltd) were excellent to deal with, efficient and they tidied up real well. All in all being Harvest-Ready as advised by PF Olsen has paid off for me and I am very happy with the result."

Clearly a pleasing result, Malcolm Henley has been able to enjoy excellent returns from a young, and relatively low quality stand.

Success Story Two - Winter Cable-Hauler Logging

Achieving continuous year-round harvesting in the Northland region is challenging due to the water sensitive clay soils. However, to maintain harvesting infrastructure and good market access, it is important to try to keep wood flowing through the winter months.

This resulted in PF Olsen initiating an innovative arrangement whereby our China-direct export log purchaser agreed to offer slightly higher prices to secure volume from a forest which would be cable-hauler logged through the winter months. The higher log prices recognised that there would be higher roading costs during the wetter winter months. In addition, fixed prices for June and July log supply were agreed in April. This gave the confidence to schedule a harvesting contractor and get the block Harvest-Ready.

This arrangement has been a win-win for all parties. The forest owner will achieve good secure stumpage returns, the log purchaser maintains good winter supply volumes, and the harvesting contractor keeps his operations going through the quieter winter months.

Success Story Three - Great Returns from 18-year old Forest

PF Olsen was approached in October 2008 by Wells Family Farms from Pakaraka. They wanted to remove some pines from their Dairy block. In six different blocks, the woodlots totalled about 4.5ha of untended 18 year old shelter belts and gully plantings.

Our initial impressions was that the owners would get a small bill from the removal of the trees and costs would exceed the revenue from marketing the wood from the young trees.

Some data was collected and a net stumpage estimation was undertaken. The export prices used were the best they had been for the previous 18 months, but the calculated stumpage return was only $3.75 per tonne.

From the time the estimate was done and when the logging started in early 2009 PF Olsen's market-direct export strategy was starting to pay dividends. The export prices we were able to achieve for the owners were significantly better than other options.

We also sonic tested the logs and the small suppressed trees on the inside of the blocks produced remarkably stiff wood, with sonic readings of over 3km/sec. So even though the wood was relatively young, the high stiffness enabled the sale of this type of wood into the domestic house pile market.

The final net stumpage was $11.75 per tonne, more than a 200 % increase from the estimated value.

Just to put the icing on the cake, the overall volume taken from the woodlots was greater than estimated.

This resulted in a $6,000 estimated net stumpage into a $33,000 actual net stumpage.