Farm Forestry New Zealand

Durable hardwood peeler pole plantations - A new growing regime for eucalypts

Paul Millen, Clemens Altaner and Harriet Palmer, New Zealand Tree Grower May 2020.

In this article we describe a novel regime for New Zealand growers to consider − peeler pole plantations. The NZ Dryland Forests Initiative’s strategy identifies a number of focus areas for work from 2020 to 2030.
This includes research and development to support four possible growing regimes for durable eucalypts −

• Peeler pole plantations on 15 to 20-year rotation
• Sawlog and peeler log plantations on 30 to 40-year rotation
• Permanent forests
• Continuous cover forests.

The management required by growers for each of these regimes to work in practice is becoming clearer as a result of data collection and analysis continuing within our trials. Knowledge of the trees’ growth characteristics and response to site conditions, wood properties and potential products and markets is accumulating steadily.

The peeler pole regime

The most intensive of the four regimes – the peeler pole − is a new concept for New Zealand forest growers.  Our confidence that it will succeed is based on what has been learned from our research into durable eucalypts in New Zealand over the past 11 years and is backed by international research.

On optimal sites, durable eucalypts are capable of very rapid early growth. This high productivity can be combined with selecting the genetics of elite trees which also start producing durable heartwood at a young age. The proposed short rotation peeler pole regime is based on growing trees that will maximise production of straight peeler length of 2.7 metre logs with durable heartwood and small branches. These logs will be peeled for two products −

• Engineered wood products where logs can be processed by rotary peeling to produce high-stiffness veneer which is dried and glued into laminated veneer lumber or plywood
• Preservative-free posts and poles from the cores.

The proportion of the two products will vary with log diameter and market value of each one. Markets for engineered wood products, including high stiffness veneers, are increasing worldwide, especially as more
high-rise buildings are built using engineered wood.

The New Zealand roundwood industry should continue to experience strong demand, including preference for naturally durable posts and poles to meet a wide range of applications once a regular supply of a consistent quality becomes available.

Evidence includes recent data from Organics Aotearoa NZ showing a growth in the organics sector, which needs an alternative to copper-chromearsenic treated pine. There is also a review of wooden post production and markets for the Specialty Wood Products Research Partnership. The indications are of a growing international market for naturally durable posts including in the European Union, Australia and the US, as more restrictions on the use of copper-chromearsenic are imposed.

Grower consideration

Many land owners are keen to explore durable eucalypts as an alternative tree crop to radiata pine and want to know what the potential financial return from growing eucalypts could be. As with many species, income is possible from timber and carbon along with other benefits such as increased biodiversity. Different land owners will have different site and environmental conditions and the scale of forest area they can plant and manage will vary. The choice of a durable species and regime needs to match these factors.

NZ Dryland Forests Initiative’s selected durable eucalypt species are adapted to cover the wide range of hill country with differing soils and climate found within the very diverse geography of New Zealand’s north-east regions. The main practical aspects influencing the choice of regime by any land owner will include −

• Soils, climate and land class. Site conditions, soils and climate combined with aspect and drainage will influence the choice of species and regime for any given site.
• Topography including internal access for regime management and harvest. The topography of a possible forestry site may limit the regime that can be chosen, particularly on steep hill country where harvesting options are generally limited to cable systems.
• Property location including transport options and sustainable log markets. The location of a property and scale of planting could also influence a grower’s regime options. Distance to markets and economies of scale at harvest will be key factors influencing financial returns to the grower.

Short rotation peeler pole

The short rotation peeler pole regime is relatively intensive. It will involve growers planting trees as improved seedlings or select clonal stock with similar rapid growth and form as well as similar wood properties on high-productivity sites. The initial stocking recommended, based on trials, would be 1,100 seedlings a hectare. Some low pruning to three metres of 600 to 800 stems a hectare at about age four or five may be needed, followed by thinning to waste.

Most trees will probably self-prune at the relatively high stocking densities, but another pruning to six metres could then be undertaken to produce a second pruned log. It is envisaged that trees will be harvested
mechanically by ground-based machines moving rapidly through the crop.

The best sites will be easy slopes which can be harvested with feller-bunchers which fell, delimb, debark and cut the entire stem to length. The upper crown and leaves may also be harvested if research into foliar
extracts demonstrates these could produce valuable eucalypt oil.  Plantations will need good road access and to be located within economic transport distance of a regional peeling plant. An alternative may be that a portable postwood plant can be brought on to the site. Being close to domestic markets and ports will be important, although some growers may plan to use the posts on their own property.

The trees will coppice. That means they grow back from the cut stump after harvest, so there will be rapid re-establishment at no cost. However, growers will need to prune the coppice back to a single leader to produce another straight single tree. Growers may want to kill the coppicing stumps to replace old trees with improved genetics and this will be necessary anyway after two or three coppice rotations when the cut stumps lose their vigour. Other secondary benefits will include pollen and nectar production, along with landscape diversity.

Modelling harvest yield

We have developed early growth models from permanent sample plot data at two of the oldest trial sites located in Marlborough. One of these, Cravens Road, is proving to be very productive. The other, Lawsons, is one of our less productive trial sites due to very low rainfall and poor soils. Using the data collected in these trials we have developed models to enable an estimate of potential growth rates and yields for different regimes at high and low ends of productivity.

The table on the following page shows the modelled growth rates and volumes of timber produced from contrasting sites. It assumes that, for high productivity sites, harvest will be completed after 20 years. For a low productivity sites, the trees might be left to grow for longer increasing the harvest volume and the available carbon if registered in the Emissions Trading Scheme.  In the table the total recoverable volume is the total amount of wood able to be harvested from the site and sold to markets. The mean annual increment is the volume of growth in one year.

Peeler pole regime

	Total recoverable volume in cubic metres per hectare		Mean annual increment in cubic metres per hectare per year
Rotation length in years	High productivity site	Low productivity site	High productivity site	Low productivity site
15	344	114	23	8
20	601	219	30	11
25	Not applicable	349	Not applicable	14

Selected species

Eucalyptus bosistoana

The original focus for the research programme was to exploit the genetic potential of young eucalypts to produce Class 1 ground-durable timber. This has an expected service life in the ground of over 25 years, making them suitable for agricultural poles and posts.  Eucalyptus bosistoana was selected as one of a few Class 1 timber-producing species that in many trials has demonstrated its ability to grow well in some of New Zealand’s moderate east coast environments.

Timber posts sawn from 60-year old New Zealand grown E. bosistoana are providing excellent service in Marlborough vineyards. However, unimproved E. bosistoana is very variable and the focus is on identifying
and selecting elite trees which have the right genetics to produce straight fast-growing trees with durable wood.  The timber from E. bosistoana is very strong with average stiffness of 21 GPa for old growth timber from Australian native forest sources. This high strength, which is two-and-a-half times that of pine, has motivated research into the potential to peel young trees to produce high-strength veneer for laminated veneer lumber of 16 GPa or higher for which there is a premium international market.

In collaboration with Nelson Pine Industries, a small peeling trial was undertaken in 2018 which demonstrated that 15-year-old trees can be rotary peeled and dried to produce acceptable veneer with average stiffness of 16.6 GPa. Gluing tests have now been completed and the results are promising.

Eucalyptus globoidea

Our second key species is Eucalyptus globoidea, which is versatile and well suited to many northern environments as shown by a number of well-known mature farm forestry stands. We have planted it extensively across the trial network where on most sites it has grown rapidly with generally good form and demonstrated self-pruning ability. Its timber qualities are described as good rather than exceptional. E. globoidea timber has Class 2 ground durable heartwood with an expected service life in the ground of 15 to 25 years. Veneer produced in another peeling trial by Nelson Pine Industries of 30-year-old New Zealand grown trees had an average stiffness of around 15GPa, with some sheets over 19.5 GPa.

E. globoidea families in the breeding populations with high extractive content − the key component affecting durability − and high stiffness have recently been identified and can now be selected for the next phase of our breeding programme. The posts sawn from older trees performed well after 10 years in service. The good growth characteristics, high heritability of heartwood extractives and good performance of New Zealand grown posts is very encouraging.

The E. globoidea peeling and gluing trials undertaken with the assistance of Nelson Pine Industries Ltd. have produced promising results. This indicates that it also has potential to be a component of high stiffness laminated veneer lumber.

Seed orchard development and clonal propagation

By core sampling in extensive breeding populations and wood sampling of two-year-old trees grown in nursery conditions, we have identified and selected many elite E. bosistoana and E. globoidea trees which can
produce quality timber at a young age. Using traditional propagation for these trees in the breeding programme, Proseed NZ Ltd has established a grafted seed orchard with the first improved seed to be available in 2020 along with collections planned from two breeding populations, one of each species.

In addition, Proseed has developed techniques to produce clonal E. bosistoana plants. Clonal plant production offers the potential to scale up the production of large numbers of elite nursery stock which will have good growth and form and produce very durable timber. Our research has proved that there is a significant site effect on the production and durability of heartwood, although this effect has yet to be explained. One of our long-term research aims is to supply growers with clonal planting stock of select genotypes which can be matched to particular site-types to ensure the optimal production of highly durable timber.

We are also focusing on selecting and cloning trees which are self-pruning. In future, forest growers could plant these trees at final spacing and eliminate the cost of thinning. In addition, research is being carried out on the potential biomass values of the tree’s top logs and branches as well as of foliage for production of pharmaceutical oils.

Peeling technology

We have also identified the potential for the introduction of spindle-less lathes to New Zealand. Australian researchers have demonstrated that these lathes can produce log-to-veneer recovery of between 70 and 80 per cent, peeling young high-density eucalypts. Spindleless lathes are widely used in China to peel veneer for plywood manufacture.

In Australia, one specialist hardwood plantation company has recently purchased and commissioned a spindle-less lathe at a total cost of approximately AU$300,000, and is already producing durable poles.  The waste produced when peeling logs is used to mulch young seedlings rather than being aimed at a veneer market. Since the late 1990s this company and at least one other Australian hardwood plantation company have been establishing durable eucalypt plantations for poles, veneer and sawlogs, at a scale that will enable a sustainable production.

How do the numbers stack up?

There is considerable uncertainty surrounding the likely value of durable eucalypt logs and wood products.  Therefore, we have taken the approach of calculating the price range at which logs will need to be sold to achieve what most investors would consider to be an acceptable internal rate of return of eight per cent. The calculations include all growing costs from establishment to being ready to harvest to give a required nett harvest return or stumpage value.

We have also evaluated the One Billion Trees planting grants currently available for most new planting on greenfield sites. The grant is worth $1,500 a hectare for up to 300 hectares of planting on land which has not
been in forestry for a minimum of five years.

The required returns from the high productivity site look to be achievable, with or without the Billion Trees grant based on the stumpage which has been possible for radiata pine on good sites. However, the returns required for a low productivity site, if not eligible for the grant, could be difficult to achieve if harvest and transport costs are high.

Peeler pole regime

Regime and site type	Optimum rotation length	Required cubic metres nett harvest returns to achieve eight per cent internal rate of return
		With Billion Trees grant	Without grant
Peeler pole, high productivity site	15 to 20 years	$12 to $14	$23 to $27
Peeler pole, low productivity site	20 to 25 years	$31 to $42	$58 to $81

Estimated returns from carbon under averaging

	First rotation length	Unobligated carbon allocation in New Zealand units	Unobligated New Zealand units per hectare	Value at $25 per New Zealand unit
Peeler pole, high productivity site	18 years	First 11 years	286	$7,150 a hectare
Peeler pole, low productivity site	25 years	First 15 years	409	$10,225 a hectare

By planting genetically improved nursery stock growers will produce a high percentage of straight trees with durable heartwood which will be saleable to a processor.  Future log values will be determined by the grower’s stumpage value and their harvesting and transport costs versus the processor’s costs and margin. This will depend on future prices, demand from manufacturers and the future price and demand for naturally durable poles and posts. For example, comparable treated pine roundwood products currently have a retail value ranging between $600 and $1,000 a cubic metre.

A comparison of these prices to the stumpage values shown in the table indicates this is a significant commercial opportunity for forest growers and future processors.

The Emissions Trading Scheme

As with any other forest species, durable eucalypts will be eligible for the Emissions Trading Scheme as long as they are planted on land which meets the other standard criteria needed for registration. They are classified as an exotic hardwood. For total registrations of less than 100 hectares, standard Te Uru Rakau tables will be used to estimate their growth.

Any new plantings entered the Emissions Trading Scheme from 2020 onwards will be registered under the new averaging model. This means approximately 60 per cent of the total volume of carbon produced over the first rotation will be obligation-free.

The table above shows the estimated value of carbon credits per hectare under averaging for the high and low productivity scenarios. The averaging model favours longer rotations, and will therefore improve the financial outcome from low productivity sites managed under the peeler pole regime.

In summary

The major attractions of durable eucalypts for land owners keen to plant them −

• They could be a fast-growing alternative to radiata pine
• They produce durable timber which needs no chemical treatment.

In the short term it is anticipated that motivated land owners will be prepared to go ahead and make landuse decisions based on what they have seen of our trials and research activities together with these early growth models and economic estimates. We will continue research and development of this peeler pole regime and report this in future articles.

The NZ Dryland Forests Initiative acknowledges the support of the Specialty Wood Products Research Partnership which is part-funded by the Forest Growers Levy.

Paul Millen is the NZ Dryland Forests Initiative Project Manager, Dr Clemens Altaner is Associate Professor of Wood Science, School of Forestry, and Harriet Palmer is an independent forestry communications specialist.