Farm Forestry New Zealand

Some background to the Specialty Wood Products programme

Julian Bateson and Paul Millen, New Zealand Tree Grower February 2016.

The Specialty Wood Products programme has revitalised what Future Forests Research had been doing until recently and also supports the NZ Dryland Forests Initiative research programme. This new partnership is funded 50 per cent objective of export growth. Forest grower levy funds along with various industry investors and some NZFFA branches are matching governments funding. The total annual budget is $1.4 million for the next seven years with an additional $500,000 annually in core funding from Scion.

As mentioned, export growth is behind it all with sustainability not getting much support. Paul explained that there are significant market opportunities overseas and that New Zealand is ideally placed to supply specialty wood products.

Overseas supplies and requirements

China is the largest consumer of tropical timber and expected to import 170 million tonnes of timber a year over the next 30 years. For comparison, in 2012 they imported just 38 million tonnes. Their requirement is for naturally durable hardwoods for all uses as well as naturally durable softwoods. Hardwoods may be plentiful in Australia but there are strict limits on logging naturally grown eucalypts. Their eucalypt plantations are grown mainly for pulp. The durable softwood supply from the US is under increasing supply constraints. Allan Laurie, who has visited China on a number of occasions, has noted that there is massive hardwood potential in China, although there is currently not enough resource in New Zealand for regular supply.

However, there is a real opportunity for specialist timber, similar to the way the wine industry grew from zero exports 30 years ago to $1.3 billion a year today, by being specialised in a big market place. The plan for specialty timbers is by adding value and the research project mentioned above is looking to do this.

	Wood properties	Species	Market
High value indoor furniture, interior linings, floorings and ply or LVL	Stiffness, stability, appearance and some durability	Non-durable eucalypts	Australia and Asia
MGP 10 structural timber Fine chemicals from waste	Stiffness Alternative products	Douglas-fir	Australia Europe
Furniture, interior linings, outdoor cladding	Natural durability, appearance	Cypress species	Domestic with export opportunity
High stiffness pine and eucalypt LVL, sawn heartwood	High stiffness, natural durability, stability and colour	Naturally durable eucalypts on stream in 2026	Japan, China and India

The aim is to look at the wood properties of the various eucalypts, cypress and Douglas-fir and then get them into the overseas markets with the target of $200 million in exports in these products by 2030. The amount of blackwood and redwood is very modest and not part of the $200 million target. There are enough of the eucalypts, cypress and Douglas-fir already growing to produce 460,000 cubic metres a year, although as we know, the durable eucalypts are in the early stages.

The National Exotic Forest Description records the area and species of plantations in each local government district in five year age classes. However, the minimum area recorded is five hectares, so many smaller speciality species woodlots are not recorded. Nevertheless, it provides a good basis for a multi-regional review of the scope and opportunities each region has to speciality wood species.

The map shows the four Specialty Wood Products regions.. These are Central North Island, North Island East Coast with Hawkes Bay, the Southern North Island Region and Otago/Southland. The West Coast, Canterbury and Northland are not involved in this research project, but we will still need a strategy for all the regions not just those chosen for the project.

Milling and exporting

What are sawmillers and processors doing in New Zealand? In 1989 they produced two million cubic metres of sawn timber a year, a figure which has now doubled to four million cubic metres a year, of which half is exported. New Zealand also imports 48,000 cubic metres a year, a figure which has remained fairly static over the past five years. It is not a large figure but New Zealand grown specialty wood should take some of this market. As the graph shows sawn timber is mainly radiata pine, eucalypts do not even register on the scale of the graph.

When it comes to exports, in 1990, around 25 years ago, the export value of sawn radiata pine timber was $100 million a year. It is now $735 million a year, which is quite an achievement. However, in the same period the value of the minor species Douglas-fir sawn timber exports has hardly changed, staying at around $50 million a year.

The graph on the left shows how much New Zealand timber exporters receive per cubic metre of sawn timber. For radiata pine in 1980 it was $200 a cubic metre and by 1990 had reached $500. However, it has not risen since then and has even fallen now to about $400 a cubic metre. That figure leaves very little profit for the grower and producer once everything has been paid for.

Douglas-fir has followed a similar trend, partly due to the slow-down in the Australian economy meaning that fewer houses were being built. However, for plywood or LVL, the prices are all lumped together, the value has averaged $1,450 a cubic metre over the last five years, a figure which definitely shows someone is making a profit.

It is worth looking at the cost of treatment for radiata pine to make it ground durable. It adds around $200 a cubic metre, none of which goes back to the grower. This is a barrier to small portable millers, for example. It means that imported kwila in Mitre 10 at $1,600 a cubic metre can be competitive compared to treated pine, and does not have the problems associated with treated timber.

Regional opportunities

Investors	Climate and soil	Processing	Species	High value products
Otago and Southland Forest Growers Levy Trust, Ernslaw One and Blakely Pacific	Cold, prone to frost and snow	Sawmilling and manufacturing	Eucalyptus nitens	High quality joinery, panelling and flooring
		Sawmilling	Douglas-fir	Chemicals
North Island East Coast JNL, Forest Growers Levy Trust and NZ Drylands Initiative	Drought prone and fertile, erodible soils	Sawmilling, rotary peeled veneer	Durable and non- durable eucalypts	Class 1 and 2 durable hardwood High stiffness LVL
Marlborough and Nelson Forest Growers Levy Trust NZ Drylands Initiative and NZFFA	Drought prone and fertile soils Cold, prone to frost and snow	Sawmilling, rotary peeled veneer	Durable eucalypts	High stiffness LVL Class 1 and 2 durable hardwood
	High rainfall, cool sites and fertile soils
		Sawmilling	Douglas-fir	Structural
		Sawmilling and manufacturing	E. fastigata, E. regnans and cypress	High quality joinery, panelling and flooring timber
Central North Island Timberlands, Forest Growers Levy Trust and NZFFA	High rainfall, cool sites and fertile soils	Sawmilling and manufacturing	E. fastigata, E. regnans, Douglas- fir and cypress	High quality joinery, panelling and flooring timber High stiffness timber

Where does this leave specialist timber

The government is encouraging exports and they will only come if the market becomes more sustainable.

There is an opportunity for profit. The average difference in value between exported radiata pine and imported softwood for the past five years is around $800 a cubic metre.

Specialist timber has been grown around the country for many years with the frequent hope and expectation that the markets will develop. The Specialty Wood Products project is the opportunity everyone has been waiting for. It is still very early as the project is just getting off the ground. However, over the next few years let us hope that the plans and expectations become a reality.