Monthly Archives: June 2016

IST Blackwood Log Tender Results 2015-16

IST 0815 log23double

In the interests of greater market and price transparency in the forest industry here is my annual summary of blackwood log tender results from Island Specialty Timbers (IST) for the 2015-16 financial year.

This is the only publically available competitive market price data for blackwood logs.

http://www.islandspecialtytimbers.com.au

Unfortunately IST does not produce any market reports or annual summaries of their sales or other activities, which is why I produce this report every year.

During the year 15 lots were tendered across 9 separate tenders. These comprised 11 individual blackwood logs, and 4 log parcels totalling 70.4 cubic metres (100 logs at an average volume of 0.70 cubic metres per log). Total volume tendered was 91.1 cubic metres. This is less than 1% of all blackwood harvested from our public native forests.

This volume compares with 32 and 20 cubic metres of blackwood logs tendered in 2015 and 2014 respectively.

In addition to the IST tenders there were two tenders by Hydrowood during the year, run through IST, one of which included 16 premium blackwood logs totalling 21.4 cubic metres.

http://hydrowood.com.au/

You can read my review of this Hydrowood tender result here:

https://blackwoodgrowers.com.au/2015/12/11/tasmanian-blackwood-sawlogs-at-625-per-cubic-metre/

For the IST tenders the best result for the year was a small (0.68 cubic metres) plain-grain blackwood log (show in the above picture) that sold for $850 per cubic metre.

The worst result for the year was a 30 cubic metre parcel of 44 plain-grain logs that sold for a very low $100 per cubic metre.

One highlight for the year was a very large blackwood log that measured 4.35 cubic metres, with a length of 7.5 metres and a large-end diameter of 98 cm! Unfortunately this log had spiral grain and was deeply fluted so the sale price was only $275 per cubic metre.

Of the four parcels of logs tendered only 2 parcels sold totalling 34.6 cubic metres for an average price of $135.50 per cubic metre, average log volume of 0.72 cubic metres. These are small logs. The average volume of the Hydrowood blackwood logs that sold for $625 per cubic metre was 1.5 cubic metres. An average plantation grown blackwood sawlog contains 1.5 cubic metres.

The table below summarises the IST tender results for the 2015-16 financial year:

IST_Annual table_16

All up the IST tender results for 2015-16 are a mixed bag with indications of a soft market. This is indicated by the low prices for the figured grain logs, by the fact that half the volume put to tender failed to sell, and total blackwood tender sales revenue ($10,096) was 50% down on last year. The real stand out result for the year was the Hydrowood tender at $625 per cubic metre for a large parcel of good size plain-grain logs.

For what it’s worth here is a chart showing IST blackwood log tender price trends for the past 3 years:

IST_Annual chart_16

Unfortunately the volume of IST blackwood tender material is too small and the quality too variable to allow meaningful market/price comparisons between years. Much of the material is of poor quality, or in the case of the log parcels, the logs are of small size compared to what would be produced in a well managed blackwood plantation. Large volumes of large, good quality logs from blackwood plantations should generally command better prices than shown by the IST result.

Wouldn’t it be great if this chart represented more meaningful data?

So whilst an increasing (if still miniscule) volume of blackwood log is being put to public tender by IST, the volume of quality blackwood sawlog from public native forest continues to decline. Half of the volume of special timbers now harvested from public native forest in Tasmania constitutes “non-millable” material in order to make up the politically correct headline figure.

Despite the fact that blackwood comprises over 80% of the volume of special timbers harvested from Tasmania’s public native forests, it comprises only 15% of the volume put to tender by IST. The blackwood market desperately needs more tradability, more transparency and much more commercial credibility.

Caveats:

  1. Island Specialty Timbers (IST) is an enterprise of Forestry Tasmania established in 1992 to increase the recovery, availability and value of specialty timbers from harvesting activities in State forests.
  2. Forestry Tasmania manages its special timbers operations (including IST) as a taxpayer-funded, non-commercial, non-profit, community service. Last year each cubic metre of blackwood log harvested by Forestry Tasmania received a taxpayer subsidy of $82! No private blackwood grower received any taxpayer subsidy.
  3. Note that all logs and wood sold by IST (excluding the Hydrowood logs) come from the harvesting of public native old-growth forest and rainforest certified under AFS (PEFC).
  4. It is unlikely that this tiny set of market-based blackwood log prices is representative of the broader blackwood market.
  5. The dataset is too small and variable in quality to allow any analysis or correlations to be made between price and log quality apart from the obvious result that feature-grain logs attract a significant price premium over plain-grain.
  6. Remember also these tender prices are effectively mill door prices that already include harvesting and transport costs. They are not stumpage prices.

So whilst Forestry Tasmania, the State government and the State parliament all regard the special timbers industry as a taxpayer-funded community service and political play-thing rather than a commercial opportunity, then blackwood’s commercial future remains difficult.

“The lack of price transparency for forest products, particularly from hardwood forests/plantations [in Australia], represents an impediment to the uptake of farm forestry. Unlike other commodities, price information for forest products is not published through the newspaper or accessible online. Better price transparency is required to encourage smallscale investment in trees” (p. 71. FWPA Report PN: PNA243-1112/2, 2013).

http://www.fwpa.com.au/rd-and-e/market-access/229-the-case-for-renewed-development-in-plantations-identifying-forest-values-and-the-constraints-to-attainment-stage-one-and-two.html

This quote from a recent forest industry report says it all. Even the forest industry recognises price transparency is a major issue, but then does nothing about it.

  1. One of the authors of this report was none other than the recently appointed Director of Forestry Tasmania. Does this mean we will see greater transparency and competition at FT?

When will Tasmania get a fully commercial, profitable forest industry, based on profitable tree-growing?

For previous years IST tender reviews see:

https://blackwoodgrowers.com.au/2015/06/18/ist-blackwood-sawlog-tender-results-2014-15/

https://blackwoodgrowers.com.au/2014/06/14/blackwood-sawlog-tender-results-2013-14/

Advertisements

Transforming Australia’s forest products industry: recommendations from the Forest Industry Advisory Council

Transforming_FIAC

I would love to know how many hundreds of forest industry reports, strategies and reviews have been written in Australia over the last 50 years; how many thousands of dust-covered pages now lie forgotten on library shelves?

So here we have yet another new report to join the list:

https://dl.dropboxusercontent.com/u/4187545/Transforming%20Australia’s%20forest%20products%20industry%20-%20Recommendations%20from%20the%20Forest%20Industry%20Advisory%20Council%20May%202016%20(2).pdf (10.7 MB pdf file)

And straight away from the title of the report it is clear where the focus of the report lies, and why we have another industry report already consigned to the dusty library shelves.

The focus is the forest industry, the wood processors. Once again wood growers are the minor party in the scheme of things.

The maxim that the only basis for a successful forest industry is profitable tree growing is completely absent in this report. In fact the word “profit” is completely absent from the report.

This report originated in the Tony Abbott government era when Richard Colbeck, minister responsible for forestry, established the Forest Industry Advisory Council. The FIAC was tasked with developing yet another vision for the future of the industry.

It’s a political document. It’s not a business plan. It’s not a report designed to engage the rural community, nor the broader Australian community.

So why am I bothering to review this new report?

Well at least the report does mention farm forestry, if not in a very encouraging manner.

Farm Forestry features on page 8 of the report under the heading:

Strategy: Expand the productive forest estate in strategic regions – Farm forestry

This is one of 8 strategies in the report, and here are a few of the more positive quotes from the section:

Farm forestry can provide an opportunity to contribute to the industry’s resource needs through increasing the volume of wood.

And another….

Landholders can derive financial returns from farm forestry through improved land values and on-farm benefits. Benefits include: shade and shelter for stock or crops; soil and water protection; erosion control; reversed salinity; and increased biodiversity, landscape and amenity values.

No mention at all of profits or good financial returns from tree growing, just secondary benefits from trees on farms. Are farmers expected to sell their trees at a loss to subsidise the forest industry?

Exciting stuff!!

That kind of talk will definitely ignite the interest of rural community!!

The report then talks about barriers to farm forestry investment and participation.

This confused discussion on farm forestry ends with the recommendation:

Recommendation 5: That industry develops a strategy for expanding the productive forest estate in strategic regional hubs through farm forestry, and identifies the role for government.

Well we already have a strategy developed including a role for Governments. As I identified in an earlier blog it’s called the National Action Statement on Farm Forestry (NASFF). It was written in 2005 and currently resides on one of those dusty library shelves.

https://blackwoodgrowers.com.au/2016/02/25/two-significant-forest-industry-reports-that-went-nowhere/

This new report has a list of references at the end that does not include the NASFF. Curious!

The new report finishes with the following recommendation:

Recommendation 19: That the Australian Government convenes a meeting of state and territory ministers responsible for forestry to discuss issues raised in this paper.

Yet another ministerial meeting. Another talk-fest!

Instead of expecting politicians to solve the industries many problems why doesn’t the report have a list of all the new initiatives that the forest industry is implementing to move towards this new/old vision?

Does the forest industry know anything about profitable tree growing?

Unfortunately there is nothing in this new report/vision for growers of high value timbers such as blackwood.

Martin Custom CE07 Australian Blackwood

MartinCEO7TB_double.jpg

Is a single custom made Tasmanian blackwood guitar worth promoting on this website?

I guess it qualifies if it comes from CF Martin in Nazareth, Pennsylvania, the world’s most renowned guitar company.

And positive blackwood stories are rare enough that even small stories have value.

The fact that I’m a guitar-centric person may also have some influence…

The classical, restrained elegance of Martin’s design ethos is clearly evident in this guitar. I love that colourful edge binding and back strip.

This guitar has a huge, powerful voice that barks twice as loud as you’d imagine.

http://themusicemporium.com/guitars/martin-custom-ce07-australian-blackwood

CF Martin seems to enjoy producing these limited edition models for the collectors market.

This one has already sold so I guess the marketing strategy is working.

Nice work Mr Martin!

Further web searching tells me this guitar is from 2 years ago. Still a good old news story!

For my previous reviews of Martin blackwood guitars see here:

https://blackwoodgrowers.com.au/?s=Martin

Blackwood weather

It’s great to see some real blackwood weather again. It’s been a long time since we’ve seen rain like this. A bit more of this in the next few months should set us up for some good Spring growth.

Stay safe everyone!

Blackwood Weather