Farm Forestry New Zealand

The local market for Lusitanica and Macrocarpa timber

Sunday, May 13, 2018, Murray Grant's Blog

Coming from Dairying then owning a sheep and cattle farm I have found this a very “lonely” space, even more so as cypress is often seen as the poor, if not irrelevant, cousin of the pine industry.

I came into the industry when “Macrocarpa” was rarely sold through merchants because of inconsistent and unprofessional supply and grading.

From the early nineties I have gradually sought to overcome this often negative mindset amongst established timber suppliers and builders.

We would now be probably the largest producer of building grade “macrocarpa/lusitanica cypress timbers, supplying all major merchants throughout New Zealand.

Our mill uses 300-400 tonne of log per month to meet the present market, processing right through to profiled weatherboard, sarking, beams, framing etc.

With an average buy in price $140-160 per tonne, up to 20 staff, plus continual maintenance and upgrading of vehicles and machinery, I sometimes miss those simple days of growing sheep and cattle and a few trees.

However, I have enjoyed the challenge and have become a real enthusiast for the potential of cypress timbers becoming a significant part of the New Zealand building scene.

We all have a part to play in this. Farm Foresters grow trees, loggers/carriers deliver, sawmillers process, customers enjoy.

It is satisfying to know that houses in New Zealand can still be built largely with this natural product, grown and processed in NZ.

As the sawmills not concentrating on pine are all owner operated with often limited resources our voice is often not heard amongst the clamor of the corporates, so I thought it would be informative to hear a cypress sawmillers perspective.

Buying logs

Every sawmiller has the juggling act of consistent guaranteed log supply, meeting promised demand, and cash flow.

The majority of MacDirect’s supply in the last 18 years has come from old Forest Service plantings now owned by corporates whose only interest has been pine. Although some have been pruned, the majority have been done on an ad-hoc basis, which means purchasing has been mainly as unpruned trees.

Last year we have become more dependent on private farm blocks, which are available. The biggest issue, as most log procurement people are aware of, is lack of loggers especially to do smaller cypress blocks. This has had quite a serious impact on supply. Not to mention logging charges have increased. End result apart from stress has been an increase in log prices.

We normally have bought sound plantation logs (no bug or rot minimal canker) at one price for all sizes to simplify logging etc. We have a minimum SED of 200mm for well-formed lusitanica logs where we are buying the whole plantation. Recovery and therefore profitability is far better on over 250 SED logs, but we realise forest owners have no other market for these smaller logs apart from firewood.

What will impact our log price?

1. Dimensions (SED)
2. Uniformity (Fluting, taper etc)
3. Bark encasement of knots.
4. Knot size.
5. And of course rot, bug, or canker infestation.
6. Distance from sawmill.

Log Grade

The greatest timber demand we have is for small tight knot heart grade. We struggle to keep up with demand for weatherboard in this grade. There is a some demand for clears weatherboard, sarking etc but not the premium really needed. Most of our clears timbers goes into joinery where there is not the same need for heart or long lengths.

Therefore the greatest value log for MacDirect with our present market is well grown plantation log (preference lusitanica) unpruned with small live branches. As stated above we have been buying pruned plantation logs. These however are very variable in recovered quality for the following reasons:

1. Where 150mm knotty core or less with 600mm SED, great clears are produced (not often available).
2. Boards cut at prune point have ugly black knot fallout causing downgrading.
3. Above pruned log knots are excessively large, often above 50mm especially where wider spacing thinning has taken place

Therefore I suggest while well grown pruned trees produce maybe 30% clearwood the remaining timber has often had to be downgraded, making it doubtful of any overall benefit in $ sales. The classic cypress customer is purchasing a timber that they want to observe as natural. The knotty look is usually their preferred option. eg Last year we supplied a $9million build (home) with over 24,000 mtrs ex 200x25 and over 300 mtrs of 300x100 beams, plus. Specifically requesting knotty grade as customer preference. These “high end” discerning home builders who want, not only chemical free timber but a natural look, are often our market.

Other Factors

The other direct contributor to sawmill profitability is recovery from log to saleable timber. We breakdown and resaw with bandsaws to optimize recovery. Unfortunately with cypress we often have to deal with logs that would, in a pine situation, be downgraded (pulp etc). As we purchase the complete plantation, the grower has no downgrade logs discounted, this ultimately affects our sawn recovery.

To optimize recovery we buy as many over SED250 logs as possible as stem logs (9-14mtrs), allowing us to cut to specific order lengths but also to negate sweep where necessary. The remainder of the plantation comes in 3.0– 6.1 mtr lengths. Without detailed research I would estimate that below 250 SED logs have 15-20% less recovery in cypress where taper is present compared to an average SED of 350. Another factor is because nearly all of our timber goes out as a visual grade, this means there is always considerable “loss” between “greensawn” and finished dressed or bandsawn product as quality needs to be high. We air dry and in winter and in particular, finish off in a dehumidifier kiln. I estimate we average at minimum 5% loss from bent boards, distortion, or cell collapse (some resawn).

Log Price

Log price has risen approx. 25% – 30% over the last 2-3 years. While our finished timber prices have risen approximately 12%. Even when buying well grown plantation logs, because the whole crop comes into the sawmill, there is pressure to receive logs that pine sawmills would never accept. This not only impacts recovery and grade but lowers through put of log (sweep taper fluting etc) putting pressure on sawmill production costs.

A well managed 25-30 year old plantation producing 450 tonne per ha (the highest we have recorded was 600 tonne) at average price $160 per tonne, less $70 costs (harvesting/freight) etc returns are approximately $40000 per ha less planting and silviculture costs. Only farm foresters could tell me whether that is satisfactory, but from my experience approx. $1300 per ha per annum, less non harvest farm costs, seems quite profitable as a land use.

The Future

Cypress species timbers are now seen as a premium product and standard lines (framing, weatherboard etc) sell above similar grade pine. We sell minimal timber to the “group housing” sector because of cost. I do see a market for reasonable cost cypress timber designed for the group housing sector. There is a growing market demand for natural chemical free housing, especially from exotic trees grown and produced in NZ. We presently supply all house requirements. The next marketing step we would like to see is this option being more readily available to the home buyer. Part of this will be supplying the market with "stress graded" or code compliant structural framing. It has been gratifying to see Dean Satchell doing the "hard yards" advocating for alternative timbers in this space.

We have purchased a stress-grader. Having the structural and stress bending values of cypress available we are in a position where we expect to be able to supply SG8 cypress framing to the market within 6 months.

Log supply

One inhibiting factor is consistent log supply. One big advantage of cypress is we have stored logs for up to a year in our yard with no deterioration. We therefore have bought up to 2000- tonne at one time. To be confident in investing further in development, assured supply is crucial. My observation is that because we take the whole forest into our sawmill there is plenty of raw-stock out there of cypress. On present usage approximately 12 ha of well grown plantation trees keeps us going for a year. However, if we developed the framing market that would double conservatively.

Unfortunately although cypress has a long, even ancient, history of use in construction and purpose grown forestry, the NZ building establishment on the whole has put minimal effort into research or development of these species. Also most of the plantations we buy, it has to be said, have had quite poor and inconsistent silviculture.

A large well-tended and grown forest would undoubtedly attract a premium. 

One particular downside is the growing population of the native kaka bird, which loves to find insects inside the bark of lusitanica. If any canker is present it rapidly spreads the disease.

So that’s just a small look into the life of MacDirect sawmill to help you understand what we do day to day to encourage the consistent supply of Macrocarpa/Cypress to the New Zealand market. We would love to hear from any farm foresters who are keen to work closely with us to grow plantations into the future, get our perspective on silviculture for the marketplace and/or look at log price and harvesting.

Murray Grant
Director/Owner
MacDirect Limited 

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Disclaimer: Personal views expressed in this blog are those of the writers and do not necessarily represent those of the NZ Farm Forestry Association.