Monthly Archives: June 2014

The incomplete history of unsustainable blackwood mismanagement

Forestry Tasmania recently and quietly released the latest Review of the Sustainable Sawlog Supply from the Blackwood Management Zone (BMZ). As I predicted last year Tasmania’s iconic blackwood industry is about to go into serious decline if not disappear.

https://blackwoodgrowers.com.au/certification-and-supply/

Last year I reviewed the available information on the public blackwood resource and predicted a serious reconciliation in the near future. The reconciliation has now begun.

http://www.forestrytas.com.au/sfm/review-of-the-sustainable-sawlog-supply-from-the-blackwood-management-zone

The 2013 Review is a difficult document to read and understand. Important information is missing making it nearly impossible to “join the dots”. To help better understand the 19 page review I have compiled a chart of the planned vs actual production data that is scattered throughout the document. In fact the chart neatly summarises about 80% of what the review has to say, but it is still a very incomplete picture. There is no chart like this in the review.

Incomplete history

Chart notes:

  1. The 1991 Forest and Forest Industry Strategy (FFIS) set a blackwood supply target of 10,000 m3 of blackwood sawlogs per year.
  2. The 1997 Tasmanian Regional Forest Agreement (RFA) reaffirmed the FFIS blackwood sawlog supply target.
  3. The Forestry Tasmania 1999 Review of the sustainable blackwood (Acacia melanoxylon) sawlog supply from Tasmanian State forest calculated the Statewide sustainable yield of blackwood sawlog at 8,500 m3 of blackwood sawlogs per year. The figure for just the BMZ was 6,800 m3 of blackwood sawlogs per year, with the remainder coming from the rest of the State.
  4. The Forestry Tasmania 2010 Special Timbers Strategy (STS) continued to reaffirm the blackwood supply target of 10,000 m3 of blackwood sawlogs per year until 2019.
  5. The Forestry Tasmania 2013 Review of the Sustainable Sawlog Supply from the Blackwood Management Zone (BMZ) recalculates the blackwood sawlog sustainable yield at 3,000 m3 per year. Production of blackwood sawlog from public forest outside the BMZ is expected to be negligible.
  6. Actual blackwood production figures from 1991 to 2006 are not publically available. The 2013 Review only provides actual blackwood sawlog production figures from 2008. Forestry Tasmania wood production dropped dramatically following the 2007 GFC.

Blackwood generally comprises >80% of all special species sawlog production from State forest. Between 2000 and 2007 special timbers production averaged 17,000 m3 per year, with some years exceeding 20,000 m3 (Forestry Tasmania Annual Reports). Clearly neither the so called supply target nor the 1999 sustainable yield estimate had any relevance to the actual production of blackwood sawlogs.

Where are the actual blackwood sawlog production figures between 1991 and 2007?

Why is Forestry Tasmania so reluctant to clearly demonstrate sustainable blackwood management and production?

Here are some other highlights from my analysis of the 2013 Review of the Sustainable Sawlog Supply from the Blackwood Management Zone:

  1. No mention is made in the 2013 Review of the fact that in 2010 Forestry Tasmania classified it’s blackwood and other special timber operations as “non-commercial, non-profit”, and subject to a significant taxpayer subsidy. There is no discussion of what impact this non-commercial focus will have on future blackwood forest management and production (it will have a major impact), or its impact on blackwood production from Tasmanian farms;
  2. An update of the current area of the Fenced Intensive Blackwood (FIB) resource is provided but still, after 30 years, no estimate is provided of it’s likely contribution to the future blackwood industry. There are no details of the financial investment that has been spent to date on creating this resource. The 1999 Review estimated this resource would provide over 250,000 cubic metres of blackwood sawlog to industry between 2040 and 2050.
  3. The major investment to establish 880 ha of blackwood plantations in the early 1990s has now officially been written off and will contribute nothing to the blackwood industry. The 1999 Review estimated this plantation resource would contribute over 370,000 cubic metres of blackwood sawlog to industry. No estimate is provided of the financial loss due to this asset write-off.
  4. As mentioned the 2013 Review provides grossly inadequate details and analysis of blackwood sawlog production since 1991. There is absolutely no way to verify whether blackwood has been sustainably managed or not. Limited available information indicates that since 1991 blackwood has been grossly over-cut;
  5. There is no discussion why in 1999 blackwood sawlog production did not drop to match the sustainable yield estimate. There is also no discussion or explanation of why actual blackwood production appears to have greatly exceeded even the FFIS/RFA/STS 10,000 m3 supply target.
  6. The 2013 Review provides no details at all about the commercial management of blackwood or the contribution of blackwood to the commercial performance and profitability of Forestry Tasmania. Given that the new Forest Management Bill 2013 provides Forestry Tasmania with a greater commercial focus does that mean that all blackwood operations will now be reclassified as “commercial and profitable”?
  7. The 2013 Review contains no discussion about the past and ongoing Sovereign Risk to blackwood production;
  8. Without any discussion or explanatory information the 2013 Review drops the blackwood sawlog sustainable yield from the BMZ from 6,800 m3 per year in 1999, to 3,000 m3 sawlog per year. It provides absolutely no details about how the 3,000 m3 estimate was calculated. It’s a number out of a hat! I personally doubt even this figure. I suspect the real figure is somewhere between 1,500 and 2,000 m3.
  9. The 2013 Tasmanian Forestry Agreement had little impact on the area of the BMZ, so the dramatic drop in production is due to causes other than the TFA.
  10. And that concludes the 2013 Review. No mention at all of a major drop in blackwood supply. No mention of whether the 10,000 m3 supply target will remain in force. No discussion about what impact this drop in supply will have on Forestry Tasmania’s profitability, nor on the Tasmanian blackwood industry. Is 3,000 m3 per year even commercially viable to log, or is the BMZ now a liability?

The Review proudly states:

The blackwood forests are managed on a sustainable basis on a rotation length of about 70 years.

I’m not convinced. There is absolutely no evidence of ecological, commercial, political or social sustainability here at all. How can a drop in sawlog production from 10,000 to 3,000 m3 per year be called sustainable?

By 21st century commercial business standards the 2013 Review of the Sustainable Sawlog Supply from the Blackwood Management Zone is a profoundly deficient document.

As an example of an organisation seeking Forest Stewardship Council (FSC) Certification the 2013 Review completely fails. No meeting with stakeholders, no press conference, no presentation, no Q&A.

As a stakeholder in the Tasmania’s iconic blackwood industry I consider this is a complete disaster. Yet another Tasmanian forest industry catastrophe.

On the positive side the drop in supply from public forests should mean that blackwood log prices will increase. This will help attract the interest of farmers.

But on the negative side the forest product markets and prices in Tasmania have never been transparent. This continues to be one of the forest industries biggest problems. Also the volume of blackwood trade will drop dramatically. Businesses will close. The blackwood market will contract. Options for farmers to sell blackwood timber will shrink. And we still have many legislative, policy and management issues that inhibit private farm forestry, not the least of which is Forestry Tasmania’s taxpayer-subsidised blackwood production.

It is ironic that Tasmania is about to lose its iconic blackwood industry at the very time that New Zealand farmers are about to crank up blackwood production across the Tasman Sea.

Tasmanian blackwood has been Australia’s premier timber species for over a century. It is a Tasmanian icon.

Is the Tasmanian community going to surrender its blackwood heritage and commercial potential to New Zealand farmers?

Or will the necessary legislative, policy and management changes be made to allow Tasmanian farmers to rebuild the Tasmanian blackwood industry?

Will the forest industry open up and become more market transparent?

And will the Tasmanian community take up the opportunity?

Taylor Guitars 524ce Tasmanian Blackwood prototype

The international appreciation and development of Tasmanian blackwood as a quality tonewood continues apace. Continuing on from my recent story about Bob Taylor

https://blackwoodgrowers.com.au/2014/05/01/bob-taylor-wants-more-tasmanian-blackwood-growers/

here’s a recent review of a new prototype from Taylor Guitars featuring all Tasmanian blackwood.

Beautiful quality blackwood supplied by Tasmanian farmers and Tasmanian Tonewoods.

Enjoy!

 

Blackwood Sawlog Tender Results 2013-14

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Here’s a summary of tender results for blackwood logs sold by Island Specialty Timbers (IST) for the 2013-14 financial year. In the absence of any IST Market Report or any better market information, this small dataset is as good as it gets.

Island Specialty Timbers, an enterprise of Forestry Tasmania, was established at Geeveston in 1992 to increase the recovery, availability and value of specialty timbers from harvesting activities in State forests.

Unfortunately this laudable “mission statement” is not translated into anything concrete or measureable like a business plan. Are these objectives being achieved? What are the measurable performance criteria? How has performance changed over the years? Unfortunately IST does not produce any annual reports, market reports or sales summaries. Also Forestry Tasmania does not report separate financial results for its special timbers activities including IST. So while the “mission statement” is couched in pseudo-commercial language, unfortunately IST exhibits all the hallmarks of a politically motivated public relations exercise.

How do special timbers contribute to Forestry Tasmania’s profitability?

Such a non-commercial, anti-competitive environment makes it difficult to convince farmers that the forest industry is about business and not politics.

It is also curious that although over 80% of the volume of special timbers sold by Forestry Tasmania is blackwood, blackwood makes up only a minor component of the volume of logs tendered by IST every year.

Note that all of the logs and wood sold by IST comes from the harvesting of public native forest. Remember also these tender prices are effectively mill door prices that already include harvesting and transport costs. They are not stumpage prices.

Still I am grateful for the small scraps of commercially useful information that IST provides. This is my attempt to summarise these scraps for the past 12 months.

Summary

For the year 2013-14 a total of 12 blackwood logs were put up for tender by IST. Three of these logs, including the single log in the June 2014 tender, failed to sell. The total value of blackwood logs sold at tender for 2013-14 by IST was $20,800.

The highlight for the year were two very large tear-drop grain logs from the one tree which sold for $9,600 and $7,500 ($2,900 and $2,750 per cubic metre respectively) or a total of $17,100 for 6.04 cubic metres of log from the one exceptional tree. The combination of feature grain, good log quality and large size clearly attracts a significant price premium.

With such incredible prices the obvious question is can blackwood of this size and quality be grown on private land? There are a few key issues that need to be discussed:

Size

The butt log from the above tree had a diametre of over 1 metre, with a total combined merchantable length of 9 metres. Even at the top of the top log the diameter was 83 cm! That is a big blackwood by anyone’s reckoning. Such a log could really only be grown in a (public or private) native forest environment. So yes! Private native forest could be managed to grow blackwood of this size and value given enough time and good management. The goal in blackwood plantations is to produce trees with a diameter at breast height (dbh) of 60 cm in about 35 years. It would take at least 50-60 years to grow a 1 metre diameter blackwood even in a fast-growing environment.

Figured grain

The other key factor with the above logs was the tear-drop grain. Figured grain of any sort is relatively rare in blackwood, tear-drop grain being more rare than fiddleback. Little research has been done on figured grain in trees anywhere in the world. My own belief is that it is both genetic and physiological in origin. Just about all trees have some fiddleback in their stumps as a response to physiological stress. If figure has a genetic component to its origin then there is the potential for cloning. I know a few people in Tasmania who have spent time trying to clone blackwood fiddleback. If feature grain can be cloned then the prospects for commercial blackwood growers improve dramatically. But cloning will only happen within the context of a private blackwood growers industry.

Plain-grain logs

Seven (7) plain grain blackwood logs totalling 10.0 cubic metres sold at tender during the year for a mean of $390 per cubic metre, or a volume-weighted mean of $370 (see Table 1). Some of these logs may be considered equivalent to those grown in commercial blackwood plantations. Logs ranged in size from 0.57 to 3.46 cubic metres, with the smallest log attracting the biggest unit price of $600 per cubic metre!

TABLE 1

  Number Average of SED (cm) Average of Len (m) Average of Vol (m3) Sum of Vol (m3) Average Unit Price ($/m3) Sum of Value ($)
Sold 7 59 4.1 1.4 10.05 $390 $3,707
Unsold 3 59 4.5 1.5 4.35
Plain Total 10 59 4.3 1.4 14.40 $390 $3,707
Sold 2 88 4.5 3.0 6.04 $2,825 $17,107
Tear drop Total 2 88 4.5 3.0 6.04 $2,825 $17,107

Notes: SED is log small end diameter, Len is log length, Vol is average log volume.

Figure 1 shows the frequency distribution of prices for the blackwood logs sold. For plain grain blackwood logs prices ranged from $180 to $600 per cubic metre. With a mean sale price of $390 per cubic metre, blackwood is attracting a similar price to good quality pruned Macrocarpa cypress sawlogs in New Zealand (see Allan Laurie’s great website). This is surprising given the long heritage of blackwood in the market compared to Macrocarpa which is a relative newcomer to the premium timber market. I have yet to see any equivalent mill-door prices for New Zealand grown blackwood.

FIGURE 1

IST price histogram

The dataset was too small to allow any analysis or correlations to be made between price and log quality for the plain grain logs. The fact that the very large 3.5 cubic metre log from the April tender, by far the biggest plain grain log for the year, sold for only $430 per cubic metre indicates that log size by itself does not necessarily attract a price premium.

It seems unlikely that this tiny set of market-based blackwood log prices is representative of the broader blackwood market, given that they represent just 0.18% of the annual blackwood harvest (excluding the unknown volume sold from private property). I suspect the IST tenders attract only a very limited range of small, custom buyers with limited purchasing power.

It would certainly improve market transparency and stimulate greater investor confidence if IST would tender more blackwood and demonstrate real commercial focus. Increasing the blackwood volume tendered to even 100 cubic metres per year would be a good start. At a bare minimum IST could produce an annual summary of tender results.

In the mean time I look forward to providing another summary of IST blackwood tender results next year.

At $390 per cubic metre a mature blackwood plantation is still valued at over $100,000 per hectare!

Now how do I get Tasmanian farmers interested?