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Wood Matters

Introduction

Welcome to another edition of Wood Matters. With the hurly burly of other business within PF Olsen, this edition is slimmer than usual. However, we have our usual insights from our CEO, Peter Clark, who puts a strong case that innovation is the only enduring competitive advantage.

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Russians Announce Log Tariff Delay and Log Market Comment

An important announcement in early September was Russia planning to delay the imposition of its final and steepest export log tariff increase until 2011. The threefold tariff increase was originally planned to be imposed in 2009, then later deferred until 2010.

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Can an Understanding of the Global Commodity Market and International Trends Assist us in Timing our Harvesting Better?

From time to time, when clients are searching for the elusive answer to what is the best time to harvest, we get into some pretty detailed discussions about global trade, commodities and economic cycles. For those of you interested in such matters, we are going to venture (briefly) into this esoteric world and see what wisdom we glean to make us better decision-makers.

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PF Olsen Nursery Wins Innovation Award

PF Olsen picked up the Innovation of the Year Award at the recent Nursery and Growers Association Annual conference in Palmerston North. The award was for the design, construction and application of a new machine to top containerised Radiata pine tree-stocks growing in our nursery at Waiuku.

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Log Market - August 2009

The announced closure of Prime Sawmills in Gisborne was another blow for domestic processing and particularly serious for the East Coast region which has limited processing capacity as it is. Within a week, however, there was a further announcement that the operation would continue, albeit, at a much lower level of activity.

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Recent Large Sale of AAUs

A European buyer has purchased approximately 520,000 forestry generated AAUs from Ernslaw One, a large NZ forestry company. (AAUs are assigned amount units - these are the units allocated to governments as part of the Kyoto Protocol) The process involved obtaining NZUs (NZ units) under the NZ Emissions Trading Scheme for carbon sequestration in post-1989 forests during 2008.

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Clarky's Comment - July 2009, Selling All our Wood

The New Zealand pine log availability is set to rise from the current 20 million to 30 million m³ between now and 2020. Currently we process about 13 million m³ in NZ domestic mills, and export about 7 million m³, although in the first half of 2009 exports have increased while domestic mill processing has declined.

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Improvements in Trucking Efficiency Provides Win-Win for Forest Owner and Contractors

Crown Forestry's and Maori land owners' forests in the Far North (such as Parengarenga, adjacent to 90 Mile Beach, face the "tyranny of distance" more than most forests. During the peak of the diesel price last year, the cost of transporting logs to Marsden Point rose to just under $50/tonne (a distance of 261km). This sort of cost means the forest owner is left with little in the form of net stumpage revenue.

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Collaborative Research Holds Promise of Higher Value Wood Products

For the past six years PF Olsen has been a shareholder in the research company WQI Limited. What's more, WQI has been a tenant in our office here in Rotorua over that period giving us a great opportunity to learn about and apply their leading-edge research results in our forest and harvesting management.

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Log Market - July 2009

The pruned log market has started to show some strength with the rather over-used "green shoots" metaphor seeming (reluctantly) an apt description.

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Update on Emissions Trading Scheme

There has been a general hiatus in news regarding the review of the ETS since our last issue of Wood Matters in which we covered the (then) recently announced amendment Bill.

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Introduction

Breaking news (received Friday 19 June 2009)… Legislation to amend parts of the NZ Emissions Trading Scheme (NZ ETS) relating to forestry has been introduced and is expected to pass into law by 30 June 2009 - they all relate to pre-1990 forest land.

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Clarky's Comment - June 2009, Korea Free Trade Agreement

During the week commencing 8th June, I joined 32 other Kiwis in Seoul for the Korea New Zealand Business Round Table. Organised by the NZ International Business Forum www.nzibf.co.nz and the Korea International Trade Association www.kita.org this event had the objective of engaging with senior Korean business leaders in support of the Free Trade negotiations that were taking place in the same week in Seoul.

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