Forestry

Overview

New Zealand is home to 1.7 million hectares of managed exotic plantation forestry, of which around 90 percent is planted in radiata pine. Nearly all of New Zealand’s industrial usage comes from this exotic forest resource. Forestry employs around 20,000 people throughout the country and accounts for over $5 billion in export earnings.

It is important to understand the timeframe for most forestry crops, with most trees needing at least 30 years before maturity. During this time, they will need inputs of labour, with very little potential for any return. Plantation forestry crops work well on a mixed-style property. They suit marginal land such as hillsides and gullies, leaving the more productive flat land available for conventional farming or other crop options.

Radiata pine is an excellent exotic plantation species that can usually be harvested after 28 years. The timber has a straight grain and is relatively knot free. Radiata pine is used for a range of industrial purposes including logs and chips, paper and paperboard, lumber for building, and wood pulp. New Zealand has strong export markets for these products in China, Australia, South Korea and Japan.

As at 1 April 2016, there were 1.53 million hectares[1] planted in radiata pine in New Zealand, or around 90 percent of the total 1.70 million hectares planted in exotic forest.

The annual harvest reached a new record in 2016 of 30 million cubic metres – an increase of 5.4 percent from the previous year – and this is set to climb further, driven by high log prices. Wood availability will increase over the next five years due to the high rate of planting in the early 1990s.

[1] National Exotic Forest Description, April 2016

 

Markets

Radiata pine has several growing regimes to produce different types of timber which can have a number of uses, including:

  • knot-free clearwood, the highest-value timber, used for finishing, mouldings, furniture, plywood, etc;
  • structural-grade timber, with small knots and preferably higher-density wood;
  • roundwood (posts and poles);
  • lower-value boxing and packaging timber, for logs with large knots;
  • pulp wood, the lower-value market for the roughest logs.

Each forestry regime produces several, possibly all grades of logs and timber, but in differing proportions. A clearwood regime gives the highest returns per hectare, but requires significant investment in pruning. A framing (structural) grade regime needs higher stocking rates to control branch size, but avoids pruning, and can be quite profitable. Roundwood (posts and poles) regimes are shorter, with high stocking rates.

Harvested logs are either sent for export or utilised at domestic sawmills.

Indicative average log prices as at May 2017 are outlined in the table below:

Table courtesy PF Olsen. Actual prices will vary according to regional supply/demand balances, varying cost structures and grade variation. These prices should be used as a guide only and specific advice sought for individual forests.

JAS (Japan Agricultural Standard) is a Japanese method of calculating the volume of logs, which has been widely adopted.

Export

Logs provided the largest portion (43 percent) of forestry export revenue 2016 at $2.224 billion. This is forecast to increase to $2.640 billion in 2017. Other key forestry products included sawn timber and sleepers (17 percent), pulp (14 percent), paper and paperboard (11 percent) and panels (10 percent).

Over 70 percent of New Zealand’s log exports were sent to China in the 2016 calendar year. This market has been extremely volatile in the past, with import demand being driven by fluctuations in the housing market.

Domestic demand

Locally, recent sawn timber production increases have been driven by the domestic market. Increased building activity in Auckland and Canterbury has driven domestic consumption of sawn timber up 7 percent in the year to September 2016. This has affected the export market, with companies redirecting product towards the domestic construction market where possible. Growth in residential building is forecast to slow, but remain at high rates over the next five years. This means that a large proportion of sawn timber consumption will continue to be consumed in the domestic market.

 

Production

The best sites for growing good-quality trees are lower fertility, well-drained sites, without full exposure to wind. Tree form will be better on moderately sheltered and somewhat shady sites, than sites exposed to full wind and sun.

Stocking rates

Typical stocking rates are around 1000 per hectare, but depending on a number of factors could range from 600–1500 seedlings per hectare. Initial stocking needs to be between two and three times the final crop stocking, to allow for adequate selection of final crop trees. A planting at 3.3 x 3.3 m spacing will give 1000 trees per hectare (1 tree per 10 square metres).

Releasing or spot-spraying is normally done a short time after planting to prevent seedlings being smothered or killed by vegetation competing for moisture and nutrients.

Pruning (for clearwood regime)

The objective of pruning is to remove the branches from the trunk when it is 10–20 cm in diameter, and then grow a thick sheath of high value knot-free clearwood around this knotty core.

Normally pruning is carried out in three lifts, but sometimes in two or four, to a final height of 6.5 m. This allows for 6.1 m pruned butt log, the maximum length commonly traded. Logs of 4–6 m long are all tradable.

A typical clearwood pruning regime is as follows:

  • Age 2–3 years. Do sail pruning if toppling is a threat. (Toppling is when young trees are blown over due to a combination of heavy or wet soils and windy or exposed sites.) Removal of double leaders is optional.
  • Age 3–4 years. When trees are about 5 m high, clear lift prune to a trunk diameter of about 10 cm, rather than a constant height. Leave about 2.5–3 m of green crown. Note that trunk diameter correlates strongly with the crown height above.
  • Aged 4–6 years (or 8–18 months after the first lift, depending on growth rate). When the tree height is about 8 m, prune to a trunk diameter of 10–11 cm, leaving 3–4 m of green growth. Average pruned height should be about 4 m.
  • Aged 6–8 years (8–18 months after second lift, depending on growth rates). Prune to a 6.5-m target height. Prune to 10–11 cm trunk diameter leaving 3–4 m of green crown.
  • If necessary, return in about 12 months to prune smaller trees to 6.5 m target height.

The number of trees pruned per hectare will depend on the site, objectives and costs. Typically, 400–600 stems per hectare will be pruned on the first lift, decreasing to about 200–400 per hectare on the final lift. To ensure an adequate sheath of clearwood (15 cm) trees must be grown to a DBH (diameter at breast height – 1.4 m) of at least 55 cm and preferably to 60 cm. Fewer trees can be grown to such diameters on lower-fertility sites than on higher-fertility sites. Typically, hill country sites will not be able to grow more than 300 trees per hectare to adequate diameters.

Thinning

Thinning is the removal of trees not selected for the final crop. Do not leave unpruned trees competing with pruned trees for too long, because they may suppress them. However, thinning too early encourages excessively rapid early diameter growth of low quality juvenile wood and heavy branching of final crop trees.

Early thinning is normally to waste, but from about year ten, production thinning for roundwood and later for low-grade sawlogs may be an option on accessible sites. There are a number of factors to consider here, and it is best to discuss options with local operators.

Rotation

The desire to fell trees early for financial reasons is understandable. However, younger trees will produce a high proportion of low-quality wood, so foresters ideally should aim for rotations of around 30 years to maximise the quality of the wood.

 

Infrastructure

No infrastructure is required, assuming a forestry company will be managing the forest.

 

Nitrogen Leaching: Low

Environment

Radiata pine is a very site-tolerant species, but limitations include:

  • Wet feet and fluctuating water tables can lead to toppling and root rot. This is the most common limitation for radiata pine.
  • On high fertility sites, especially high N (nitrogen) sites, trees will have poorer form, larger branches, and lower-density wood.
  • Humid sheltered inland sites can have problems with fungal disease, particularly dothistroma and cyclaneusma.
  • Consolidated and impervious subsoils, e.g. papa, can cause rooting problems on some skeletal hill country soils.

 

Returns

Investment costs will depend on a number of factors including the area to be planted, the site, the number of seedlings required, the regime undertaken (and therefore the quantity of pruning and thinning needed).

Returns will also depend on the regime undertaken, the quality of road access to the forest, the distance to the nearest sawmill or port and the market pricing at the time of harvest.

A website tool, dNITRO, has been developed, which gives a more detailed picture of investment costs and return for radiata pine. The tool was designed to provide land owners within the Lake Rotorua catchment an indication of the financial implications of changing land use to either radiata pine commercial harvesting land use, or a mānuka honey land use.

dNITRO estimates returns for growing either a mānuka or commercial pine crop to maturity using default variables, or allowing users to input values for each variable of their own choosing. dNITRO can either provide a ball park average figure for landowners, or users can develop a tailored cashflow projection based on their view of where log prices or honey prices, or a host of other variables, best sit.

Income from the potential purchase of nitrogen allowances by the Lake Rotorua Incentives Board, carbon credits and afforestation grants are included within the dNITRO analysis.

dNITRO can be found at http://www.dnitro.co.nz.

For more information on the establishment of farm woodlots, see Bay of Plenty Regional Council fact sheet 16 ‘Planning Farm Woodlots’.[1]

[1] https://www.boprc.govt.nz/media/29161/LandManagement-090526-Factsheet16.pdf

 

Useful Links

New Zealand Farm Forestry Association

Tony van Veen, Bay of Plenty branch
9 Taupo Ave, Mt Maunganui 3116
T: 07 575 8235
E: aval.vanveen@xtra.co.nz
Website: http://www.nzffa.org.nz

Information sources:

Situation and Outlook for Primary Industries, Ministry of Primary Industries (https://www.mpi.govt.nz/news-and-resources/open-data-and-forecasting/situation-and-outlook-for-primary-industries-data/)