Monthly Archives: December 2015

2015 The Year in Review

santa2015

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

Another year with little progress getting Tasmanian farmers growing commercial blackwood, or in getting the various players in the blackwood market to open up and help rebuild the blackwood industry.

The forest industry continues to be overwhelmed by negative sentiment and politics.

The Good:

Stringfest

The Deloriane Stringfest 2015 was a quieter affair than 2014. The promise and potential of 2014 just didn’t seem to carry on this year. Still waiting to see if it’s on again in 2016.

Leonardo Guitar Research Project

A great project run by a group in Europe looking at promoting the use of non-tropical woods in guitars.

Time will tell what impact the project will have on the blackwood tonewood market.

Timber price lists

I was initially unwilling to investigate retail timber prices, but once I started……

Retail timber prices are hard to find on the internet. Few companies advertise their prices. Nevertheless retail pricing provides many interesting insights into why the forest industry is in such trouble.

Firstly is the general lack of transparency in timber pricing. Secondly is the frequent lack of relationship between price and the cost of growing the wood – the “cost of time”. And thirdly is the impact of the “salvage” and “public native forest” prices that undermine attempts at profitable tree growing.

One major outcome from my investigations is to highlight the high prices for premium timber. Select blackwood at $7,500 per cubic metre must provide some interest and incentive to existing and potential blackwood growers! The downside is other retailers selling the same wood for $2,500 per cubic metre. The latter is a guaranteed way to destroy the blackwood industry.

I will continue my retail price investigations in 2016. Stay tuned!

Blackwood in Western Australia

This was the great surprise for the year. Finding that commercial blackwood can be grown successfully in Margaret River in Western Australia is nothing short of a small miracle. Hopefully 2016 will see this story develop further.

Hydrowood

I’m putting the Hydrowood project into the positive list as I’m hoping it will provide much needed market profile, transparency and tradability. It provides an opportunity for the special timbers industry to demonstrate some commercial muscle. Yes there are downside risks with the project, not the least of which will be flooding the market with premium blackwood.

The first Hydrowood tender put 21 cubic metres of premium blackwood logs onto the market, with the plain grain logs selling for an average $625 per cubic metre! This was an excellent result for the first tender and attracted a great deal of interest.

The next 12 months will be very interesting indeed!

 

The Not So Good:

World Heritage logging and the TWWHA Management Plan Review

The push by both major political parties in Tasmania to open the WHA to taxpayer-funded special timbers logging has been the main story for 2015.

It’s completely insane but this is Tasmania!

The UNESCO delegation recently visited Tasmania to get the local picture. No doubt they left here wondering what strange pathology inflicts this island state.

From what I’ve heard through my contacts I doubt whether UNESCO will support logging the WHA.

It will be entertaining to see how the politicians attempt to rescue their integrity.

(Yet another) Special Timbers Management Plan

The State Government (not Forestry Tasmania) is putting together yet another Special Timbers Management Plan to add to the other ST plans already on the shelf down at the State library. And like all the previous plans it will be a complete folly.

But wait! It’s not due to be released until 2017!! Just in time to ensure special timbers becomes a State election issue.

Groundhog Day in the Tasmanian special timbers industry!

Everything Forestry Tasmania

The Government forest agency and the public native forest resource continue to be the centre of forest policy, conflict and waste in Tasmania. They are the fundamental focus that drives the industry into decline.

Forestry Tasmania is bankrupt, selling what few remaining assets it has and dumping staff as quickly as possible. But the political rhetoric is all about building/saving the industry.

The sooner this charade ends the better it will be for Tasmania.

FSC certification

Forestry Tasmania’s application for Forest Stewardship Council (FSC) certification process has been a sham from both FT and the auditors point of view. Apparently engagement, transparency and deadlines are completely irrelevant in the FSC process. A year has passed with absolutely no word from either FT or the auditors (SCS Global Services). It’s pathetic!

Conclusion

I can’t imagine a more hostile political and 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.

Lack of Leadership

One of the main failings of the forest industry in Tasmania is the lack of leadership.

FIAT has traditionally “represented” the industry but the organisation is dominated by sawmillers and wood processors. There is no one representing private forest growers; and private growers have very different interests to wood processors.

The TFGA, as the major farming lobby in Tasmania, occasionally wades into the forestry debate but with no policy platform they more often than not shoot themselves and private growers in the foot.

So politicians and sawmillers are left to dominate the forestry debate.

The forest industry in Tasmania won’t develop until private tree growers have a strong, independent voice.

The only way to have a successful forest industry is for tree growing to be transparently profitable. No other business model will work.

Crystal ball

One really doesn’t need a crystal ball to see what 2016 will bring. Every day is Groundhog Day for the forest industry in Tasmania.

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.

UNESCO will most likely reject the proposal to log the World Heritage Area, leaving the State government with a Special Timbers Management Strategy and no wood resource. That should be interesting!!

And what of blackwood as a commercial opportunity in 2016?

There is not a lot of cause for optimism that I can see. Mostly another year of forest industry politics and nonsense.

So dear readers I trust you have a safe and happy festive season. See you all in 2016.

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Some more great Hydrowood blackwood

Here are some more great pictures of Hydrowood blackwood going over the saw.

It almost looks like rosewood rather than blackwood.

The next Hydrowood auction is late January 2016.

http://hydrowood.com.au/

Hydrowood blackwood

Posted by Wynwood Sawmill on Wednesday, December 16, 2015

 

https://www.facebook.com/Wynwood-Sawmill-712404122224523/?fref=nf

 

 

Federal Government to abandon plans to log World Heritage Area if UNESCO will not ratify it

DTWWHAMP

In yesterdays news media:

http://www.abc.net.au/news/2015-12-13/federal-government-could-abandon-plans-to-log-world-heritage/7024154

A UNESCO delegation recently visited the state to assess the practices and meet with stakeholders, with a final report expected next year.

The Federal Assistant Minister for Agriculture, Senator Anne Ruston, said the logging plan would be scrapped if UNESCO did not support it.

“When they [UNESCO] bring down that report I would be really surprised if the Federal Government did anything other than respect those decisions,” she said.

With the hardline, anti-conservation Tony Abbott administration now gone the politicians are already softening up the electorate and protecting their positions in the likely event that UNESCO will continue to not support logging special timbers in the Tasmanian Wilderness World Heritage Area.

Senator Ruston said she had some sympathy for users of specialty species timber.

“They also have an argument which is reasonable, that they have very low impact where they take those timbers from,” she said.

To forget the lessons of the last 30 years of bitter conflict over public native forest management in Tasmania would be foolish in the extreme. Tasmania has not changed and neither has our forest policy and management. Opening up the WHA to logging would be yet another forest industry disaster to add to an already long list of disasters.

Within the context of the past 30 years promises of “low impact” are utterly meaningless.

“It’s a major concern that the [special timbers] resource is now essentially behind closed doors.”

The remaining public native forest special timbers resource is “behind closed doors” precisely because of what has happened over the last 30 years.

The taxpayer-funded logging of public native forest old growth and rainforest for special timbers is over [subject to UNESCOs report].

Now when will Tasmania get a fully commercial and profitable forest industry?

Tasmanian blackwood sawlogs at $625 per cubic metre!

HydrowoodLanding.jpg

Ring the bells! Break out the champagne!!

The first Hydrowood tender results were much better than I was expecting.

https://blackwoodgrowers.com.au/2015/11/29/first-hydrowood-tender/

The 17.7 cubic metres (13 logs) of plain grain blackwood logs sold for an average of $625 per cubic metre mill door.

These were large good quality logs equivalent in size and quality to what can be grown in a well managed blackwood plantation.

The 3 feature grain blackwood logs sold for $547 per cubic metre.

So that’s $13,100 for one truck load (21.4 cubic metres) of blackwood logs.

At $625 per cubic metre a mature blackwood plantation has a mill door value of $180,000 per hectare!

Why aren’t Tasmanian farmers interested? Why isn’t the TFGA interested? Why isn’t the Government supporting this obvious commercial opportunity?

The standout feature of this tender was the price paid for good quality celery top pine logs at $2,846 per cubic metre. This price far exceeds any price that Island Specialty Timbers have achieved for Celery logs.

The results of this first Hydrowood tender clearly demonstrate that the market is prepared to pay very good prices for high quality special timbers logs.

All up the 35 cubic metres (38 logs) of high quality logs at this first Hydrowood tender fetched over $30,000!!

Congratulations to the Hydrowood team!

The Hydrowood tender results are going to show the lies and deceit of State forest policy as expressed at the recent LC scrutiny committee meeting.

https://blackwoodgrowers.com.au/2015/12/09/legislative-council-gbe-oversight-committee-2015-forestry-tasmania/

The Government and Forestry Tasmania say that growing special timbers can never be a profitable commercial business because the market can’t afford to pay good prices! That the special timbers industry is a community service and has nothing to do with commercial opportunities.

What pathetic lies!

No one is going to invest in planting Celery top pine, Huon pine, Myrtle or Sassafras for wood production. These species are just too slow growing.

Blackwood however is fast growing and can be grown successfully in commercial plantations. Research in Australia and New Zealand has proven that speed of growth does not negatively impact on wood quality in Tasmanian blackwood.

A second tender of Hydrowood logs and milled logs will commence in late January. To discover more about this innovative venture go to http://www.hydrowood.com.au.

Now who is interested in creating and supporting a profitable sustainable future for our special timbers industry?

Legislative Council GBE Oversight Committee 2015 – Forestry Tasmania

HarrissAnnells

Following on from my previous blog I have now reviewed the GBE Scrutiny transcripts in relation to special timbers. They provide me with no cause for optimism.

I don’t know why we have Corporate Governance standards in Australia.

Clearly they don’t apply to Government business enterprises.

Even more clearly our politicians have no understanding of their corporate governance responsibilities.

Friday the 4th of December was the annual fiasco called the GBE Oversight Committee with Forestry Tasmania as one of the performing circus acts.

The transcript from the 3.5 hour performance is available here:

http://www.parliament.tas.gov.au/ParliamentSearch/isysquery/9b76370a-4ba7-473d-9766-61717c5e7862/1/doc/

It makes for sad reading. In fact I would advise against reading all 52 pages. Severe brain haemorrhaging may result.

My review here focuses on special timbers/blackwood as they were discussed by the committee.

Special timbers are mentioned 28 times in the 52 pages of transcripts, on pages 2, 17, 18, 37, 39, 40, 49, 50, and 51.

Blackwood is mentioned only 3 times, even although blackwood comprises 80 % of special timbers harvest volumes, on pages 18, 49 and 51.

 

Community service obligations (CSO)/grants are mentioned only in relation to roads not special timbers!

The World Heritage Area is mention 9 times in the transcripts, on pages 39, 40, 46 and 48.

The word “profit” is mentioned 26 times even although Forestry Tasmania has no corporate objective to generate a profit.

So what matters pertaining to special timbers were discussed in the annual “scrutiny”?

What clarity, meaning and understanding does the annual scrutiny hearings provide for special timbers?

Page 2

Spin from the Resources Minister trying to oversell FTs performance including “and the speciality timbers effort has also been buoyant – I think more buoyant this year than even two years ago, at about 11 000 cubic metres of speciality timber”. Most of this 11 000 cubic metres is craftwood and outspec log for which FT has no supply contracts or commitments. FT is supposed to produce 12 500 cubic metres of special timbers sawlog per year.

Pages 17 & 18

A question from MLC Ivan Dean about the profitability of special timbers:

“CHAIR – That was the point of your question: how long before you can see the business becoming profitable as a whole?

Mr DEAN – That is very clearly it. With specialty timbers, is there a profit returned to Forestry Tasmania?

Mr ANNELLS – It depends who you ask.

Mr DEAN – That’s why I am asking you. You are the chairman and you ought to know – and with the minister here I would thought we would get the truth.

Mr ANNELLS – I certainly hope you would.

Mr DEAN – I would hope so.

Mr ANNELLS – I will flick it to my chief executive.

Mr WHITELEY – With special timbers, some portion of it is profitable and others it is done as a CSO. Things like blackwood swamps and those sorts of things are really profitable. Wood that is picked up associated with native forest harvesting is profitable in the sense that roading has been provided by an outscale operation. Things like Huon pine aren’t profitable in their own right. We receive some assistance in recovering Huon pine – and it varies. Within our operations there is a profitable component and another component that requires some support.

Mr DEAN – Why can’t it be profitable? It’s a very sought-after timber worldwide. The users of it tell us they are paying higher prices for it where they are getting it from – obviously a lot of it through Forestry Tasmania. Why is it not possible to make it profitable in the circumstances – Huon pine, for instance?

Mr ANNELLS – Basically because the market will only pay a certain price. It is not an inexhaustible or elastic price mechanism. Huon pine is harvested like a lot of specialty timbers, as a by-product of our main activity. At the moment we have very significant costs for roading and other establishment costs that if we try to apply it against Huon pine, for example, would take it beyond the reach of all but the very few. We choose to sell special species timber at what we think the market will bear, but we do not seek to gouge in that process because to do so, we think, would lead to more bad publicity and, quite frankly, the market would simply dry up until we reduced the price again.

I have a lot of confidence in our people who are setting the price for this sort of stuff. You will always be able to find examples where people say, ‘You could have got more for this or that’. That is why we set up Island Specialty Timbers, much criticised in certain places, but it was a genuine attempt to bring some stability into the marketplace and to test the marketplace pricewise on a more regular basis”.

 

And the answer is a lot of mealy-mouth waffle.

No mention of the fact that in 2014-15 FT received a $900 000 taxpayer subsidy for it special timbers operations. That’s $82 per cubic metre subsidy.

Given the context of the question I find Chairman Bob Annell’s answer “It depends on who you ask” to be highly offensive; as if squandering taxpayers money is of no consequence whatsoever. And none of the MLCs called him on his attitude!

Mr Dean was after “the truth”. Instead he got obfuscation.

Some parts are profitable some parts aren’t. Why can’t it be profitable? “because the market will only pay a certain price!” “we choose to sell special species timber at what we think the market will bear!”

Has anyone heard of competitive market-based pricing?

It’s enough to make you cry!

These are adult businessmen talking as though they know absolutely nothing about economics and markets.

“That is why we set up Island Specialty Timbers, much criticised in certain places, but it was a genuine attempt to bring some stability into the marketplace and to test the marketplace pricewise on a more regular basis.”

Even although the tiny amount of wood that IST sells through tender and the prices they get bear no relationship at all to the administered price that FT sells to its long term customers.

And no member of the oversight committee sought any further clarification or understanding around wood prices and markets!!

No mention of the CSO grant and no question about how the $900 000 of taxpayers money was spent?

Pathetic!!

 

Page 37

A very specific question about 72 kilometres of new roading for special timbers from Ivan Dean, for which he got no answer.

Page 39

A question from Rob Valentine about special timbers regeneration following clearfelling. A question that seems completely irrelevant as it is generally known that the eucalypt regeneration will be harvested again long before the special species are of any commercial value for wood or honey.

Page 40

A question from the committee Chair MLC Tania Rattray about the UNESCO delegation visit and special timbers harvesting in the World Heritage Area.

Given the political and social significance of special timbers logging in the World Heritage Area the lack of any serious questions from the committee about this subject is truly negligent. True it doesn’t directly involve Forestry Tasmania, but this is the main forum for discussing public native forest management and special timbers, so why the silence?

Pages 49, 50 and 51

More questions from MLCs Ivan Dean and Tania Rattray about special timbers supply and demand, which produce no clear credible answers. A new management plan is mentioned. The Three Year Wood Production Plan is mentioned. Hydrowood is mentioned, but not by name. By page 51 the mind is confused and exhausted.

Not one of the committee members seems to understand that the Hydrowood project may have significant positive and negative impacts on the special timbers industry. Certainly no one asked any questions in this regard.

Mssrs Dean and Rattray seem to be the committee members who have an interest in special timbers, but they seem to share the general view that our forests are a community service not a commercial resource. Never mind the fact that private growers are also competing with FT in the special timbers market.

I guess our elected representatives are busy people and just don’t have the time or interest to understand the special timbers industry and forest economics generally.

Three and a half hours and barely one useful question and certainly no useful answers.

I’m not sure what is more pathetic – the lack of quality and depth of the questions or the lack of quality and depth of the answers.

Even reading small parts of these transcripts is a mind numbing experience. The lack of clarity, purpose and outcome in these scrutiny hearings is truly staggering.

Twelve highly paid people in one room for 3.5 hours wasting time and money.

Three and a half hours of scrutiny and the special timbers industry is no better off than before.

Perhaps I should send a list of questions to the committee members next year so that they may better perform their corporate governance responsibilities, and the Tasmanian community may actually get some useful information from this circus act.

When will Tasmania get a fully commercial profitable forest industry?

The Slow Awakening

HarrissAnnells

Many members of our State Parliament have been long-time staunch supporters of Forestry Tasmania as the foundation of our forest industry to the point where simple logic and commonsense fail to persuade.

This wonderful review by finance commentator John Lawrence of last Friday’s performance at the annual GBE scrutiny hearing is just inspired. The Minister for Resources (and forests) Paul Harriss was clearly on his mettle.

http://tasfintalk.blogspot.com.au/2015/12/will-minister-harriss-outlast-ft.html

Here’s the Parliamentary website for the review committees:

http://www.parliament.tas.gov.au/ctee/Council/Archived/lcgbe2015.htm

But it does show that after so many decades at least some of our elected representatives are finally beginning to understand they have backed the wrong horse.

Is Forestry Tasmania broke?

Yes!

Is Forestry Tasmania (and the State government) acting to disadvantage private forest growers?

Yes!

You can almost hear the old rusted pennies drop. Kerclunk!!

And it’s all too late!!

No legislation will save FT now. The application for FSC certification is just a political smoke screen.

All the decades of chest thumping and sabre (chainsaw??) rattling were for nothing.

Game over!

As John Lawrence poses the question, which will happen first? Will FT be shut down or will Minister Harriss be consigned to the backbenches?

For existing and potential (disadvantaged) blackwood growers both events can’t come soon enough.

Rise and Rise of Crony Capitalism….

Well there’s a surprise! The book The Rise and Fall of Gunns last night won the Tasmania Book Prize for 2015.
http://www.arts.tas.gov.au/industry_development/premiers_literary_prizes
Here’s what the judges had to say:
“The prospect of negotiating a better future out of the past is the subtext for all three books shortlisted for the Tasmania Book Prize. The judges singled out The Rise and Fall of Gunns Ltd as the winner because of its brave and non-partisan approach to an issue that for many Tasmanians is still raw, but nevertheless, is important and needs to be told. The Rise and Fall of Gunns Ltd tells a difficult and painful story that has had an impact on all aspects of Tasmanian politics and society. But good literature should raise uncomfortable questions. Nobody comes out of this meticulously researched history of the long-standing environmental wars looking good, but this is not a book about apportioning blame. It is an invitation for all of us to accept responsibility for the future.”
I absolutely agree with those comments. Cheers!

Tasmanian Blackwood Growers Cooperative

and the Destruction of the Tasmanian Community!

You can’t live in Tasmania without this book and the story it tells having a deep impact. If you are in anyway connected with the forest industry in Tasmania the impact is magnified tenfold. The book was recently released and is a timely reminder that Tasmania has significant political, commercial and social issues that remain unresolved.

The decade 2003-2013 saw Tasmania in a state of virtual civil war with Gunns Ltd at its epicentre.

http://en.wikipedia.org/wiki/Gunns

http://en.wikipedia.org/wiki/Bell_Bay_Pulp_Mill

The book has little to do with growing commercial blackwood apart from the fact that it details the corrupt hostile commercial, political and social context in which my dream of a blackwood growers cooperative is trying to become a reality.

Am I wasting my time? As a forester this book makes for sad, depressing reading.

If we can’t turn Australia’s number one premium appearance grade timber species…

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