Clarky's Comment – October 2012 - Research Matters

Over the past two decades New Zealand forest owners have witnessed costs of growing, harvesting and selling logs rise faster than prices received. Continuation of this trend will result in a slow but certain loss of profitability and eventual exit from forest investments. At the same time the government has set a target to increase all exports from 30% to 40% of GDP, and the forestry sector has produced a Strategic Action Plan that has a goal of increasing exports from the current $4.5 billion to $12 billion within 10 years.

The Woodco Strategic Action Plan places heavy emphasis on improved revenues from investments in wood processing that will generate more processed and higher value wood products for export, rather than unprocessed logs.

Forest owners can help themselves by improving forest yields and reducing costs. Improving yields is mostly a long-term game around genetics, establishment practices and silviculture. While we will not reap the benefits for many years, the case for research into disease resistance and improved wood quality and growth is compelling for the new crops we plant. For the logs that will be harvested in the next 10 years, we have what we have.

Reducing costs is a here and now challenge. To make material cost improvements we need some breakthrough technologies in forest inventory and in the harvesting/transport supply chain. The High Productivity Motor Vehicle (HPMV) permits programme is such a step-change that is gathering momentum thanks to strong central government support.

Other initiatives at various stages of development require on-going industry support to further research:

  • Use of satellite and LiDAR imagery for low-cost but accurate resource assessment and monitoring.
  • Improved scaling methods and use of cameras and/or scanners for log measurement and counting.
  • RFID tags for log traceability and error-free matching to sales manifests.
  • Hauler cab video and remote control of motorised grapple carriages.
  • LiDAR for improved road layout and skid planning, and for de-risking contractor pricing of road construction.
  • Improved tools to assist truck utilisation and loaded running, including regional forest owner cooperation in this regard.

The second role of forest owners is to deliver logs to processors that:

  • are free of internal wood defects
  • are of high density
  • produce timber that is stable in end-use, and
  • are consistent (low variability of properties).

Delivering on that requirement needs better scientific knowledge of the causes of between-tree and within-tree wood variability, causes and solutions to internal wood defects and tools to measure and segregate logs and lumber to achieve consistent lines of raw material for further processing. Success is a key enabler to investment in wood processing to increase exports of high value wood products.

On 10th October the leaders of the New Zealand plantation forest growing sector met for a full day in Rotorua to consider our collective approach to improving the profitability of our sector through research. It was pleasing to have these leaders commit to some key decisions in principle. Some will need endorsement from investment funds and boards. Key decisions were:

  1. Endorsement of the NZFOA Science and Innovation Plan.
  2. Commitment to fund the implementation of that Plan. The exact level of collective funding commitment is subject to individual firms until we have a commodity levy endorsed by a majority of forest owners – but the leaders committed to a sum that is materially greater than the current level of industry collective R&D funding.
  3. Set up a Research Committee whose first function will be to formalise communications between the various forest growing research organisations and providers to ensure that the industry spend on R&D is well aligned with the priorities set out in the NZFOA Science and Innovation Plan and that there is no duplication or gaps. Should a commodity levy be endorsed, the Committee will also have the roles of:
    1. recommending and facilitating the industry structure needed to effectively manage R&D funding
    2. the allocation of research funding raised via the levy to forestry research and technology activities
    3. the quality and relevance of the science performed
    4. forestry science issues, science and technology trends, challenges and opportunities in the national and global context.

The future will be shaped by the decisions we make today.

Commodity Levy Update

The Executive Board of NZFOA has determined that it must defer a referendum on a commodity levy to apply to all logs as we sort through two final issues. These are the collection method and the quantum of the provision for pan-industry research. The research quantum is critical as it will determine the first year and maximum levy rate per tonne of log over the next five years. Expect more information prior to the referendum now expected to be run in March or April 2013.