2014 The Year in Review

santa

It’s that time of the year to wish everyone a safe and happy festive season, and to recap on another year in the Tasmanian forest industry.

I have to admit not much progress was made during the year in getting Tasmanian farmers growing commercial blackwood, nor in getting the various players in the blackwood marketplace to open up and help build the blackwood industry.

This is not surprising. The forest industry continues to be overwhelmed by negative sentiment and politics.

The Good:

The Inaugural Deloraine Stringfest

Until I got a phone call from the organiser asking me to participate I had not heard about this event. What a great event it was and such a natural fit with developing the commercial future for blackwood, one of the world’s great sustainable tonewoods. Unfortunately Stringfest remains significantly enslaved to the unsustainable public native forest special timbers fiasco. Until these ties are broken Stringfest remains a festival compromised. But it’s on again next year and hopefully bigger and better than 2014. See you there!

Taylor Guitars 2014 Fall Limited edition guitars

US guitar giant Taylor Guitars continued to show their support for Tasmanian tonewoods in 2014 with the successful Fall Limited series.  True it was the stunning blackheart sassafras models rather than the plainer blackwood that captured most of the market attention. But it’s the blackwood that remains the quiet achiever and the tonewood with the future. The feature article in the Fall 2014 Wood & Steel magazine was also great promotion.

Strong export markets and prices

Meeting some blackwood processors who are involved in private blackwood log export was a real eye-opener. The first surprise was the high quality of the private blackwood logs being sourced. That blackwood of this quality is still available from private land in Tasmania was a real eye opener for me. The second revelation was the obvious high demand for quality blackwood from so many countries, and a willingness to pay good prices! Especially at a time when the domestic markets remain subdued.

That all this good trading is happening completely “off the radar” is the real disappointment. No advertising, no media coverage. This positive forestry story remains completely unknown to most Tasmanians. And the commercial future and potential of blackwood remains thwarted. Just how do we get the blackwood marketplace to open up and work properly? Because until it does then Tasmanian farmers and the Tasmanian community will be the losers.

The Not So Good:

2014 was another year dominated by negative sentiment and politics on almost a weekly basis.

The State Election

Yet another State election campaign dominated by the forest industry. No wonder Tasmanians are fed up! And anyone would think that the public native forest special timbers industry is fundamental to Tasmania’s economic prosperity the way the politicians behave. It really is a joke. And it will all be repeated again in 2017/18 at the next State election (see below)!

The Scrapping of the TFA, Rebuilding the Forest Industry Bill 2014, the Workplaces (Protection from Protesters) Bill 2014, the Triabunna witch-hunt and finally the annual Government Businesses Scrutiny Committees

There is absolutely no doubt whatsoever that politics dominates and controls the forest industry in Tasmania. It dominates and controls just about every aspect of the industry on a daily basis. There is nothing about business or commerce here at all. The new State Liberal Government plans to rebuild the industry without even the outline of a Plan, whilst the new anti-protest legislation has been soundly condemned by just about everyone without a vested interest in a draconian future.

Even the distressed residents of Triabunna eventually came to realise that the political witch-hunt around the sale of the woodchip mill was a waste of time and money, not to mention the opening of old wounds for no apparent gain.

And lastly the annual week of Government Businesses Scrutiny Committees turned into another political fiasco, demonstrating the real value of political rhetoric and promises. So we now have the stupidity of Tasnetwork customers subsidising Forestry Tasmania. Tasnetwork customers would include a large number of existing and potential future private forest growers. Private forest growers subsidising the public grower! And for this we sack teachers and nurses. The nonsense and stupidity just has no end and knows no bounds!

Why aren’t people out in the streets protesting this nonsense? Tasmanians are just too placid when it comes to politics!

The FT Blackwood Resource Review

Forestry Tasmania released the first blackwood sawlog resource review since 1999. There was essentially no relationship at all between the 1999 and the 2014 review, with no demonstration of sustainability let alone profitability. Very disappointing!

The FT draft FMP and FSC application

As part of Forestry Tasmania’s FSC Certification application the draft Forest Management Plan (FMP) shows some improvement in transparency and accountability but there is still a very long way to go. It sure fails to demonstrate any commercial management skills whatsoever. The FMP also tells us that the next State election campaign will once again be dominated by forestry issues especially around the special timbers industry and harvesting in parks and reserves. I just can’t wait!

The continuing commercial failure of FT

Forestry Tasmania itself acknowledges that it will continue to make losses for the foreseeable future, 2014 being no exception. But with no commercial objectives and no plan to improve commercial performance what hope is there? And all this while we sack teachers and nurses!

Whilst the major grower of high quality timber and special timber to the market continues to be managed as a taxpayer subsidised community service the forest industry will keep going backwards.

Conclusion

I can’t imagine a more hostile business environment for a forest industry than in Tasmania. On almost a weekly basis the Tasmanian media broadcasts to the world how dysfunctional our politically driven forest industry really is.

As I said 12 months ago 2014 was only ever going to be a bad year for the forest industry and so it has been!

And 2015 looks like being no different. More politics, more conflict and more stupidity!

Forestry Tasmania will most likely fail in its first attempt at FSC Certification. This will result in much agitation, shouting and finger-pointing in State Parliament and sections of the community. In fact given the highly politicised nature of forestry in Tasmania FSC certification is unlikely in the foreseeable future. Forestry Tasmania will also declare yet another financial loss and another taxpayer subsidy for the year whilst teachers and nurses will continue to lose their jobs.

Will Tasmanians ever wake up?

And what of blackwood as a commercial opportunity in 2015?

Stringfest 2015 will be bigger and better which will be good for my coop dream. Don’t forget the field trip to the private blackwood plantation I am organised as part of Stringfest.

Who knows what Taylor Guitars will do in 2015 but the rhetoric surely indicates they have something planned for blackwood and Tasmania.

As I build my network of blackwood industry and market contacts hopefully I can bring you more up-to-date market information on demand, supply and prices in 2015.

So dear readers I trust you have a safe and happy festive season. See you all in 2015.

Forest Industry Dictatorship

This blog was originally called “Groundhog Day”. But on reflection I think things have gone well beyond a Hollywood fantasy comedy. The events of the past week when added to the events of the past 12 months clearly demonstrate that Tasmania is now a forest industry dictatorship. Logic, reason, common sense and all other interests (including health and education) have now become subservient to the interests of the politically-driven forest industry in Tasmania. It is beyond contempt!

groundhog-day-driving

As a consequence of the 1993 American fantasy comedy movie of the same name, the phrase “Groundhog Day” has entered common use as a reference to an unpleasant situation that continually repeats.

Working in the forest industry in Tasmania is definitely a Groundhog Day existence.

The past week was another terrible example with the annual fiasco that is the Government Businesses Scrutiny Committees hearings.

http://www.parliament.tas.gov.au/ctee/House/Archived/hagbe14.htm

This should be an example of the epitome of good corporate governance. Instead every year it becomes a political circus. This year was no exception.

Once again the Tasmanian community (including private forest owners) finds itself continuing to subsidise Forestry Tasmania for yet another year despite emphatic promises to the contrary by the new State Government. At the same time Tasmanian teachers, nurses and other public servants are losing their jobs!

And judging by the comments from readers in the newspapers many Tasmanians are thoroughly sick and tired of the stupidity and continuing waste.

This continues to be extraordinary!

And private forest owners (who are being total screwed in all of this disaster) remain completely mute on the issue. I just don’t get it!

http://www.abc.net.au/news/2014-12-05/forestry-tasmania-asks-the-public-to-have-faith-in-its-future/5948360?section=tas

http://www.abc.net.au/news/2014-12-04/tasmania-power-users-to-supply-30m-to-forestry-tasmania/5945404?section=tas

http://www.abc.net.au/news/2014-12-04/millions-in-tas-forestry-exit-funds-to-be-spent-on-industry/5945212?section=tas

http://www.themercury.com.au/news/politics/storm-over-tasnetworks-30-million-payout-to-forestry-tasmania/story-fnpp9w4j-1227145291339

http://www.examiner.com.au/story/2745241/forestry-tasmania-to-face-scrutiny-hearings/?cs=95

And to add insult Forestry Tasmania Chairman Bob Annells was quoted as saying this:

Forestry Tasmania is asking Tasmanians to have faith the company will eventually return to profitability.  Chairman of the state-owned forester Bob Annells said the loss-making company had fundamentally changed how it did business.

Every time Tasmania has had yet another another forestry agreement or peace deal over the last 30 years we have been told to have faith. Every time we have had a State election over the past 30 years we have been told to have faith. And every time our faith has been betrayed.

Mr Annells seems not to appreciate that the community’s store of faith has run dry.

Sacking teachers and nurses whilst subsidising woodchips is well and truly beyond contempt let alone faith.

fundamentally changed how it did business”?

I have seen not one dot of evidence to support this claim. Not a smudge of evidence.

No! It is definitely Groundhog Day again (and again and again and again…..).

For the past 30 years the forest industry in Tasmania has been caught in a perpetual Groundhog Day and it has to stop. It must stop! Someone within the industry with integrity and leadership must step forward and call a halt to this madness or it will continue indefinitely.

Does the industry have anyone of that calibre?

Happy Groundhog Day!

Tasmanian forest turkeys

In response to a comment I received on my earlier blog on the Canadian-US lumber dispute I can’t help but post a link to this excellent article from the British Columbia Private Forest Landowners Association.

http://www.pfla.bc.ca/log-export/what-turkeys-can-teach-us-about-b-c-timber-supply-complaints/

rsz_turkeys

Just so much of the comments and observations on forest policy and practice in British Columbia ring true here in Tasmania.

One major difference is that at least in BC the private forest owners understand that they are being screwed by the Government and its forest industry servants.

Thanks to Rod Bealing, Executive Director of the BC PFLA for the comment and link.

Deloraine Stringfest 2015

Planning is underway to include a visit to a successful private blackwood plantation as part of the Deloraine Stringfest in March 2015.

http://blackwoodgrowers.com.au/2013/11/13/carrabin-first-thinning/

This is a magnificent blackwood plantation with plenty of unique features and lessons to learn. There are plenty of opportunities to repeat this same success on farms across northern Tasmania.

Come and find out whether growing commercial blackwood is for you.

Transport will be by bus so places will be limited.

This is your chance to see and learn the art of growing commercial blackwood.

http://www.stringfesttas.com/

The visit will be on the Sunday the 22nd of March (Stringfest runs from 20-22 March 2015). The bus will depart Deloraine at 9.00am and be back in Deloraine by about 12.30pm. Hopefully we will have about 1-1.5 hours onsite to learn and discuss issues around successfully growing Tasmanian blackwood in plantations.

Come and see the tonewood of the future.

Contact me on m. 0428 754 233 to book your place.

20131113_111101s

Canada–United States softwood lumber dispute

softwood-lumber

Isn’t it amazing.

Here’s a forest industry story that has strong echoes here in Tasmania.

It seems the forest industry has the same problems around the world.

http://business.financialpost.com/2014/10/31/the-granddaddy-of-all-canadian-u-s-trade-disputes-is-about-to-rear-its-ugly-head-again/

and even a Wikipedia entry about this trade dispute:

http://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute

So what’s the issue?

Well the Canadian lumber industry is unfairly subsidized by federal and provincial governments (just like here in Tassie), as most timber in Canada is owned by the provincial governments (just like here in Tassie). The prices charged to harvest the timber (stumpage fee) are set administratively (just like here in Tassie), rather than through the competitive marketplace, the norm in the United States.

And why are forest product prices in the US set through the competitive marketplace? Because most forests in the US are privately owned and private owners do not want to be competing against stupid anti-trust Governments. They want to get the best price possible for their trees.

And the National and Provincial Governments in Canada refuse to reform their forest industry and open it up to competitive pricing, just like the Tasmanian Government.

And don’t the American’s hate that!

Hence the massive trade dispute!

Here in Tasmania private tree growing is still a bit of a novelty. Until 20 years ago most farmers regarded trees is a liability not an asset. Governments did forestry, not farmers. After the disaster of the failed MIS schemes of the last 20 years we have returned to that same situation – trees as liabilities. And we still have Tasmanian Government policy deliberately discriminating against existing and potential future private tree growers through taxpayer subsidised Administered log pricing. Echoes of failed Government bureaucracy from around the world.

Now I’m not sure what defines “unfair” subsidies? Sounds like an oxymoron to me.

I just hope the Americans give the Canadians a lesson in economics 101.

Now I wonder how many of those subsidised, anti-trust Canadian forest operations have FSC certification?

And here we are in Tasmania with exactly the same problem, but we don’t have a trade partner like the USA to kick our stupid butt!

A shame really!!

 

Summary of Stakeholder Submissions and Responses

seeking_your_input_blog_banner_2014

My apologies for such a long blog but the ongoing fiasco of Tasmanian State forest policy and practice continues to dominate the commercial and political landscape.

I wish it were different!

As part of the application process for Forest Stewardship Council (FSC) certification Forestry Tasmania recently released a summary of issues raised by stakeholders and Forestry Tasmania’s responses to these issues. These two reports are available from their website.

http://www.forestrytas.com.au/topics/2014/11/forestry-tasmania-s-forest-management-plan-now-available

As usual my comments relate to Forestry Tasmania’s commercial management and performance, as well as to special timber issues. These are discussed in the report Forest Management Plan – Public Summary of Stakeholder Submissions and Responses (103kb PDF).

Commercial management

The first thing that is immediately obvious in the response documents is the ongoing absence of any serious discussion around commercial management and performance. There is not even a section in the document with the heading Commercial Management and Performance.

I find this utterly extraordinary. Actually I find it quite offensive!!

At a time when Tasmania faces a budgetary crisis and we are sacking teachers and nurses and dropping other essential public services, we continue to subsidise Forestry Tasmania. A Government Business Enterprise wasting scarce taxpayer’s money getting native forest products to market!

This is apparently more important than our children’s education or the health of the community!

It also says a lot about the lack of corporate governance by the State Government and the State Parliament.

Clearly FT does not regard taxpayers as important stakeholders. Also not enough Tasmanian taxpayers are visiting their local FT offices and complaining about this ongoing waste! Common people! Get to it!!

Here’s some stakeholder comments on commercial matters:

  • A common comment was that insufficient consideration was given to production and economic considerations. Some stakeholders were concerned that there was an over emphasis on environmental and social considerations compared to economic considerations in the draft plan.
  • Some stakeholders commented that Forestry Tasmania needs to be financially self sufficient and return a profit to its shareholders.

 

I couldn’t agree more with these stakeholder comments. And here’s FT’s response:

Positive financial outcomes are one of six strategic objectives now identified in the released Plan. Forestry Tasmania will implement the systems and strategies outlined in the Plan to meet the other five objectives, while also seeking to meet the objective of achieving positive financial outcomes. Forestry Tasmania’s Ministerial Charter details the activities that the Government expects us to undertake. In addition, Forestry Tasmania also produces a Statement of Corporate Intent, which is available on our website and describes the organisation’s financial performance targets as agreed by its Board and shareholder Ministers.

I find this response pretty pathetic especially within the context of the State budget crisis. Both the Ministerial Charter and the Statement of Corporate Intent are incredibly lightweight documents. You can find them here:

http://www.forestrytas.com.au/forest-management/policies

and

http://www.forestrytas.com.au/forest-management/forestry-tasmania-ministerial-charter

They provide little information on how FT is going to improve its commercial management and performance. I would think that given the ongoing State budget crisis and need for taxpayer support, that these matters would form a major part of the Forest Management Plan. Instead the FMP ignores these important issues.

Clearly the stakeholder concerns expressed above are in fact correct and have yet to be dealt with.

Forestry Tasmania continues with the charade that wood production is not a profit-driven, commercial business. Curious really. All private tree growers against which Forestry Tasmania competes in the marketplace, certainly regard wood production as a profit-driven, commercial business.

 

Special Timbers

At least there is a section in the document dealing specifically with special timbers (page 5). Not surprising given that this issue has dominated much State parliament discussion.

Here’s what the report says about special timbers:

The long term sustainable supply of special species timbers including blackwood was of concern to a number of stakeholders. This was expressed in a number of ways including:

o Suggestions that the Permanent Timber Production Zone land would not be able to sustainably supply industry needs.

Haven’t we known this for decades? Despite all the gloss, spin and promises the supply of special timbers has never been on a sustainable basis.

o Suggestions that current harvesting practices are leading to poor recovery and waste of special species timber.

The inevitable result of poor commercial management and an industrial forestry business model. Again no surprises.

o Requests for a detailed inventory of special species.

Such an inventory would cost more than the resource is actually worth. Which is why FT has never done one.

Response

  • Forestry Tasmania acknowledges the concerns stakeholders have about special species supplies. The Plan has been updated to detail how recent legislative changes affect the special species timbers supply from Permanent Timber Production Zone land. These changes have reduced the area of the Special Timbers Zone managed by Forestry Tasmania from 97 000 to 56 000 hectares. The Forestry (Rebuilding the Forest Industry) Act 2014 requires the Minister for Resources to develop a special species management plan by October 2017. The final Plan indicates that Forestry Tasmania’s future management of special species timbers from PTPZ land will be informed by the special species management plan when it becomes available.

So it’s going to take 3 years (!) to produce a plan that will tell us that the public native forest special timbers industry is over??!! Now let me guess! When is the next State election due? Oh that’s convenient! It’s just after the plan comes out. Stand by for yet another State election dominated by the forest industry! This is just too much! If it’s anything like the last Strategy in 2010 this plan will be a joke.

  • The Plan has been updated to include the results of the December 2013 review of the sustainable level of harvesting from Forestry Tasmania’s blackwood management zone.

This is true! It is now mentioned on page 32 of the Forest Management Plan (FMP). What is not discussed is why the ongoing harvest of blackwood from our public forests continues well above the sustainable yield at 10,000 cubic metres of sawlog per year. Is this blatant fraud or deception?

  • Forestry Tasmania is obligated to make available a minimum of 137 000 cubic metres per year of high quality eucalypt sawlog and veneer log from Permanent Timber Production Zone land. In the process of harvesting this product, a range of other forest products are generated, including special species timbers. Forestry Tasmania has a range of systems in place to maximise the economic value, use and recovery of all forest products arising from harvesting operations. The Plan has been updated to include that in addition to supplying sawmill customers with special species timber, Forestry Tasmania maintains its commitment to its Island Specialty Timber business in order to stock and supply specialty timber products to meet market demand. This includes a tender system for higher quality products.

I could really go to town on this one! Why do we have a legislated sawlog production volume but absolutely NO commercial performance objectives or criteria? It is the epitome of stupidity! And as for the “range of systems …. to maximise the economic value, use and recovery”. Clearly the systems have failed! Either that or the forest products produced by Forestry Tasmania are worthless! Either way the system clearly doesn’t work!

  • Forestry Tasmania is presently conducting an inventory of the special species timber resource , using LiDAR imagery, as a consultancy for the State Government.

What can I say? A futile exercise that will arrive just in time to dominate the next State election. I can’t wait! All of this for a “non commercial” activity! It really is a deeply offensive joke!

 

Well at least FT is being more transparent about the commercial management of special timbers. Here’s what the revised Forest Management Plan has to say:

In general, the harvest of special species timbers from the blackwood and eucalypt forest zones is a commercial activity while the harvest of special species timbers from the rainforest zone is a non-commercial activity and requires funding support (FMP, p. 32).

So a “commercial activity” is defined as one that requires ongoing taxpayer support, whilst a “non-commercial activity” is defined as one that also requires ongoing taxpayer support.

OK! Clear as mud!

Appendix 1 of the FMP (Summary of recent legislative changes related to land previously managed by Forestry Tasmania) is also worth reading as it sets the stage for the next State election campaign, and further blood-letting around the special timbers industry.

Conclusion

The stupidity around State forest policy and management is clearly set to continue for many years to come.

Whilst FT appears to have made some minor progress is terms of transparency and stakeholder engagement, there is still a very long and difficult road ahead.

As a member of the private special timber-growers industry my message to the FSC remains clear and simple:

Absolutely no FSC certification for Forestry Tasmania until:

  1. FT is restructured, managed and governed on a fully commercial and profitable basis;
  2. All harvesting of wood from public native forest both inside and outside the Permanent Timber Production Zone must be on a profitable, commercial basis. Absolutely no taxpayer support for public native forest wood harvesting at all.

United Forestry Group NZ

UFG

Notice was given of the formation of this New Zealand organisation in my story back in August.

http://blackwoodgrowers.com.au/2014/08/23/new-group-looks-to-become-fonterra-of-forestry/

So here they are up and running with their own website.

http://www.unitedforestrygroup.co.nz/

And here’s a collection of “cut and paste” from that website to give you an idea of what they have to offer the small forest owner in New Zealand.

United Forestry Group | UFG

A strong new company, United Forestry Group Ltd (UFG), has been formed in New Zealand to help the owners of some 14,000 small plantation forests, totalling more than half a million hectares, with the challenge of marketing a  “wall of wood” coming to maturity  over the next two decades.

Mission Statement

To unite the interests of forest owners to provide innovative and attractive harvesting options incorporating world class logistics and marketing resources delivering excellent commercial and community benefits.

Our approach will assist small forest owners to compete with the owners of larger forests who currently enjoy the advantages of economies of scale and greater expertise.

About Us

Joining with United Forestry Group (UFG) will enable small forest owners to compete more successfully and achieve better returns than by trying to go it alone.

United Forestry Group (UFG) shareholders bring local forestry management expertise and contacts together with considerable financial resources, long established contacts in the Asian and local markets, and shipping and supply chain expertise.

Joint Venture Superpen Limited, a NZ company, is a cornerstone investor in the new company. Partners in the joint venture are major players in timber exporting – international timber marketer Pentarch of Australia and Chinese conglomerate Xiamen Xiangyu, which has considerable logistics, shipping and and supply chain assets.

The Superpen joint venture will deliver expertise, contacts with timber buyers, shipping services and financial strength to United Forestry Group (UFG).

Financial Strength

Our financial strength, our expertise and contacts, and a strategy devised to improve the return from small forests whether by marketing to local processors or overseas buyers, are the key.

Our size and resources will enable us to buy and consolidate existing forests and co-ordinate orderly harvesting, marketing and shipping. Our approach enables small foresters to join with us and extract the maximum possible return – the lowest possible cost and and the best possible price. At the same time we offer forest owners investment opportunities if they wish to participate in the wider forestry industry.

Asset Protection and Security

We believe that union is strength and that owners of a single small forest are vulnerable because of their limited bargaining power and marketing ability.

Consolidating forests through UFG (United Forestry Group) will enable you to enjoy the benefits of economies of scale, greater bargaining power and greater expertise. It will be possible to manage a consolidated forest resource sustainably to produce better outcomes and to time the market better.

Consolidation will protect your asset and give you greater security.

 

I doubt we will see anything like this in Tasmania anytime soon but it sure sounds like a great idea.

It will be interesting to see whether they can attract the support of small forest growers and become a major player in the New Zealand forest industry.

Those New Zealand farm foresters are lucky to have such an option.

Go to the website and check them out.