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Executive Summary

A Review of the Exotic Forestry Resource Availability in the Far North District Council catchments.

1. INTRODUCTION

This work has been undertaken on behalf of the Far North District Council (FNDC) as part of a project to enable potential investors from outside the district to better quantify the exotic timber resource contained within the district.

This review is intended to be used as an initial data resource from which a more comprehensive information database can be constructed. It is based upon data collected from many sources in the public domain and is intended to provide answers to questions that may be typically asked by potential wood processing investors.

The data available, in the context of the exotic forestry industry, which relates specifically to the FNDC catchment (as opposed to the Northland Region) is limited. Where possible district specific data has been used and presented and, when unavailable, regional and national data is included so that trends and potential resource can at least be approximated. Much of the data is presented is in the form of hyperlinks that will take the reader to externally sourced data, some of which address aspects of the exotic forest industry on a national level but contain reference to relevant district data.

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The work brief for this initial exercise was concerned only with identification and compilation of data sources. It is understood that this is to allow future presentation of this information via the FNDC website or a similar vehicle. This may form part of a secondary brief.

Two major source documents have used to underpin this review and introduce the reader to the exotic forest industry in a national context. It is recommended that this information be digested in the first instance prior to reading the remainder of this document.

Jaakko Poyry Consultancy Report.pdf

National Exotic Forest Description - 2001.pdf

The websites linked below give an extensive index of forest product related industries in New Zealand and cross-links to each of their respective websites.

http://www.piperpat.co.nz/nz/ag/forest.html

http://www.maf.govt.nz/forestry/

http://www.maf.govt.nz/forestry/publications/
forestry-sector-issues/fsigrowingtheindustry.htm


http://www.nzfic.nzforestry.co.nz/nzficfoaffabried_jul02.asp

The information in the proceeding sections is presented under a number of general headings in which responses are given to what could be adjudged typical "Frequently Asked Questions" posed by a potential wood processing investor.

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2. TIMBER

How much timber will become available in the next 20 years (in a chronological table)? As of April 1st 2001 the estimated total area of exotic plantation forest contained within the FNDC catchment was approximately 95,564 ha. The total for the Northland Region was estimated as approximately 205,105 ha. The exotic forest timber resource contained within the FNDC catchment therefore is approximately 47% of the total Northland Regional resource.

http://www.maf.govt.nz/forestry/woodprocessing/index.htm

MAF Forest Area Collected by Postal Survey and Adjustments for New Planting.pdf

Based on the above percentages it is possible to estimate the projected timber availability using the information contained in the following attachment.

MAF Regional Wood Supply Forecasts.pdf

Using the combined information it can be forecast that the total volume (m3) of exotic timber available in the FNDC catchment will be approximately 1.6 million m3 in the 2001 - 2005 period and approximately 1.9 million m3 in the 2006 - 2030 period.

The distribution of the planted exotic forest in the FNDC is depicted in the following map attachment. It can be seen that much of this resource is located north of Kaitaia with the remainder being scattered and distributed throughout the FNDC catchment.

Far North District Exotic Forest - 1999 - Map.jpg

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Quantities per year and distances from Kaikohe (20km, 50km, 100km)? 

This information is not readily available and further research is underway to better quantify this aspect of the exotic forest resource. Reference to the above map, which includes the main arterial routes, will allow an approximation of distances from Kaikohe.
The Northland Intergrated Transport study has identified some $500 million of roading upgrades and requires that Mangakahia road be upgraded and used as a central route for logging traffic.  Kaikohe is seen as an ideal location for wood processing activity as it is on route from large stands of wood and to the export port at Marsden Point.

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Timber Costs

This information is commercially sensitive and consequently difficult to obtain in the public domain. Cost will vary according to a number of parameters including wood quality, location, access, plantation size, ownership and age. As an indication the following link is useful, however prices do tend to fluctuate significantly as the ranges for prices show. Exotic forest harvest tends to slow down when economic growth within the country wanes.

http://www.maf.govt.nz/forestry/statistics/logprices/index.html

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Ownership Who owns the forests? 

Plantation Forest Ownership in Northland, 2002 (estimates only).

Carter Holt Harvey 24%
Juken Nissho  15%
Mangakahia Forest Ltd 11%
Crown (NZ Government) 6%
Far North Afforestation Ltd 3%
Evergreen Forests 3%
UBS Timber Investors 3%
Rayonier NZ 3%
Other 32%

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While the above figures pertain to the regional ownership of the exotic forest resource, what is significant is the percentage of ownership defined as "Other". This group is comprised of smaller holdings owned by private land owners, collectives or affiliations. It also includes Maori owned forestry holdings. The ownership pattern within the FNDC boundaries is thought to be similar to the regional breakdown.  Nationally this group own approximately 43% of the total exotic forest resource in New Zealand. Research continues to quantify and identify this information further and the following link gives a fair indication of this.

NZ Stats - Plantation Forest Ownership.jpg

A useful link to a listing of forest owners, logging and transportation contractors and forestry consultants for the Northland Region is attached below. Select the forestry option listed on the left hand side of the home page.

http://kaikohe.co.nz/d_Business.cfm?Scope=
Region&%20WPID=733&dirCatID=FT

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Rights to purchase timber 

The three major operators (Carter Holt Harvey, Juken Nissho, Manakahia Forest Ltd, etc) have a vested interest in limiting access to or sale of their respective exotic forest plantations. Juken Nissho and Carter Holt Harvey have invested in a wood processing plant in the district. 
Timber can be purchased from the major exotic forest owners but is likely to incur a greater cost. The smaller holdings, together with the group identified as "Other", are potentially more likely to be responsive to an approach with regards to purchase of their respective timber resources. Again, our current knowledge on the specifics of this group is limited.

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How does the quality of NZ pinus radiata compare with other areas and foreign countries? 

New Zealand's radiata pine wood properties vary by region. For example, trees in Northland tend to be higher in density and with shorter internodes making them more suitable for structural uses. In contrast trees in Otago/Southland have lower density but with longer internodes and whiter, giving more finely textured wood. This makes the latter more suited to clearwood production for furniture, mouldings and veneer. Other regions fall in between these two extremes with a wide range of processing opportunities available.

In general terms four categories of exotic forest are used to describe the expected wood quality. These are forests that are pruned without production thinning, un-pruned without production thinning, pruned with production thinning and un-pruned with production thinning. Nationally this equates to approximately 49%, 29%, 18% and 4% for each of the respective categories. The average age of the exotic forest resource in the Northland Region is 15.8 years. A summary of the kind of products that each category of timber is traditionally used for is presented below. It can be seen that un-pruned and pulp timber is predominant while pruned logs, destined for the high quality clear timber market, are comparatively less abundant in the region.

FNDC Timber Resource Summary.pdf

NEFD April 2001 - Forest Management Trends - Radiata Pine.jpg

MAF Growth Characteristics of the Planted Production Forest Area.pdf

http://www.nzpra.org.nz/nzpine.htm

http://www.nzpra.org.nz/buyers.htm

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What about species other than pinus radiata ?

Pinus radiata is the predominant exotic forest species. As the table below illustrates approximately 90% of the total national exotic forest resource is pinus radiata, approximately 5% is Douglas fur, 2% other softwoods and 3% other hardwood species. There is an apparent trend towards planting more Douglas fur while other softwood and hardwood planting has remained comparatively constant. The national average for wood volume per hectare (m3/ha), as at 1st April 2000, was 208 m3/ha. The national harvest of exotic roundwood for the same period was approximately 18 million m3/year. In 2001 this figure rose to 19.2 million m3/year and in 2002 this figure approached 21 million m3/year.

MAF Selected NZ Planted Production Forestry Stats.pdf

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How much wood is currently being processed in NZ and how much is exported? 

There is much information available in the public domain in this regard. An overview plus specific statistic relating to export products are presented in the links below. In 2000 approximately 12.5 million m3 of exotic forest products (logs, sawn timber, wood chips and other products) were exported while approximately 1.7 million m3 were imported. This latter figure includes all processed wood products especially paper.

MAF Selected NZ Planted Production Forestry Stats.pdf

NZ Stats - Log Flow in the NZ Forestry Industry.jpg

NZ Stats - Where the Log Harvest Goes.jpg

NZ Stats - Location of Major Forest Industries and Expected Woodflows by Wood Supply Region.jpg

Japan, China, Australia and other Asian countries are the most lucrative export markets and afford the greatest potential for the exportation of wood components, veneer (core), clear timber, MDF, remanufactured products and furniture. A more comprehensive breakdown of market opportunities is attached below.

JP Consultancy - Product by Market Opportunity.pdf

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Is processed timber imported? 

If yes, as what products? Could this be an opportunity to process timber products locally in NZ? A total of 35,000 m3 of sawn timber and 4,000 m3 of logs and poles were imported into New Zealand in 2000. Figures on high processed products (e.g. paper and cardboard) were given in the links above. Historically the imported timber figures have remained reasonably constant as the link below illustrates.

MAF Imports of All Timber by Product.pdf

A more comprehensive breakdown of timber imports (2001) is presented in the following link and the cost, and origin, of imported timber products is also shown.

MAF Imports of Forestry Products into NZ in 2000.pdf

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3. LABOUR

What is the labour situation? 

The cost of labour in New Zealand compares favourably with many other countries. Korea, Taiwan and Hong Kong, however, do have hourly rates that are lower than those in New Zealand.

NZ Stats - Employment in Forestry and processing Activities.jpg

The following link gives a full and comprehensive account of employment trends in New Zealand and offers an insight into the historical performance of the New Zealand economy.

Employment Trends and Outlook.pdf

A total of 24,315 people were employed within the forestry and forest product processing sector in New Zealand in 2001. A full breakdown of this figure is attached in the following link. Overall an increasing trend can be seen for the industry as a whole although a decreasing trend can be seen in some areas of the industry.

NZ Stats - Employment in Forestry and processing Activities.jpg

The Far North District forestry employment figures (2002) are presented in the following link

http://www.maf.govt.nz/statistics/primaryindustries/
forestry/employment/employment-by-district.htm

The Workforce 2010 link below gives a detailed account of how the New Zealand labour force is expected to change in the next decade. While descriptive it does describe much of the expected or anticipated demographic changes within New Zealand society and highlights areas within the labour force that will influence the future structure and composition of this resource. The forest research web site will provides further helpful information in this regard.

Workforce 2010.pdf

http://www.forestresearch.co.nz/

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Number of people in the FNDC area 

The links listed below give a comprehensive breakdown of the demographic characteristics of the Far North District Council resident population. This area has one of the highest Maori populations in New Zealand and also has average incomes and education qualifications below the national average.

http://www.stats.govt.nz/domino/external/web/WebMapInfo.
"nsf/0/7cf86c4167697a16cc256b5600793c9a?OpenDocument

http://www.stats.govt.nz/domino/external/pasfull/pasfull.
nsf/web/Brochure+Far+North+District+Census+2001+Area+data

http://www.statisticsnz.govt.nz/domino/external/omni/omni.
nsf/0/5cb032b08273d984cc2568e2007ea019?OpenDocument

http://www.fndc.govt.nz

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Skill levels etc. How can shortfalls in skill be overcome e.g. extra education, relocation? 

In general terms a skill deficit exists across the industry and regionally there are a number of programmes which offer training in all areas to redress this shortfall. Many of these are Government subsidised allowing the training costs to a potential investor to be offset. A guide to the various programmes and the organisation which run them can be found by opening the links below.

http://www.insights.co.nz/people_industry_ct.asp

http://www.training.org.nz/

http://www.northland.ac.nz/

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Relevant labour laws, working days, hours /day, days per year? 

The links listed below outline the regulations that govern the labour force in New Zealand. It can be seen that the labour force is not over regulated and that a high degree of flexibility is possible with regards to shift work and weekend operation.
The Government does provide "top up" benefits to assist workers in certain circumstances.

The minimum wage for adults in New Zealand is NZ$8.50/hr, NZ$68.00/8hr day and NZ$340.00/40hr week. There are 11 public holidays per annum, an employee must be paid a day in lieu in the event that they work on a public holiday and the rate at which they are paid for that day can vary form 1.5 to 3.0 times the normal hourly rate. An employee is entitled to 3 weeks annual leave a year and they are paid 6% of their gross annual earning in holiday pay. An employee is entitled to take a minimum of 2 weeks at once.

http://www.dol.govt.nz

http://www.dol.govt.nz/ers.asp

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Is it possible to work at weekends and 3 shifts? 
What are the extra costs? 

Many process industries in New Zealand do exactly this and there is a tendency for the hourly rates to be negotiated in-house and consequently the rates of pay can vary from industry to industry and from site to site.

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What is the cost for workers at different skills levels per year including al extra costs, such as insurance and superannuation?

 Typically in the exotic timber felling and processing industry the hourly rate (labour) is between NZ$10.00 - NZ$15.00. The hourly for more specialist staff (I.T, marketing, management) can be expected to be between NZ$30.00 - NZ$40.00.

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4. INFRASTRUCTURE
What is the infrastructure like? 

Distances from the forest to Kaikohe and Kaikohe to port in Whangarei? Conditions of roads etc? Road costs i.e. extra taxes? The present transportation network in the Northland region comprises 6,452 kilometres of road, rail links that terminate at Otiria and Dargaville, airports and marine ports at Marsden Point and Opua. Of the 6,452 kilometres of road, 714 kilometres are state highways, with the remaining being local roads.

The distance from Kaikohe to Whangarei is 115 kilometres.

Each of the local authorities within the region has acknowledged the need for an integrated transportation network to accommodate all transport based sectors and the forestry industry requirements as well. A document produced by the Northland Regional Council titled Northland Integrated Transport Study: Report on Integrated Transport Study details the intended improvements deemed necessary to the regional infrastructure to enable the region to cope with the increase in road, rail and port usage as a consequence of growth primarily in the forestry industry.

With reference to the forestry industry the report recommends that the integrated transportation network undertakes the following short-term improvements.

That the port at Marsden Point is the sole log and wood products export port for Northland · That whenever possible, forest based transport is separated from local and tourist traffic;

  • That a central route, comprising Mangakahia Road and Otaika Valley Road become the primary heavy traffic route for traffic to and from Marsden Point to areas north of Whangarei and Kaikohe.
  • That government accept that Pouto Road be a primary heavy traffic route for traffic to and from the Pouto Peninsula classed and funded as a special purpose highway.
  • That a rail link from Oakleigh to Marsden Point is provided by 2005.
  • Recognition that the roading network needs improvement to meet the increase in volumes of logs and wood products.
  • That the provision of road and rail links from Marsden Point to the national transport networks are an essential component of port operation.
  • That the existing rail network in Northland will be retained due to it maintaining linear continuity and its strategic importance to the national network.
  • That the bridging of the Hokianga Harbour has been included in the recommendations and that the bridge is to be completed by 2005.
  • The western route to Kaitaia via Paponga Road and Kaitaia Awaroa Road is progressively upgraded to meet the impact of logging as it arises.

An estimated NZ$500 million will be spent on the upgrade and/or new works for the proposed integrated transportation network in the next 20 years. It has been proposed that this money will in part be sourced from the forestry industry by the introduction of a special surcharge on the Road User Charges for log and wood product loads in the region and/or a specific contribution for particular road improvement works negotiated when resource consents are sought for tree felling. The New Zealand Forest Owners association have voiced concerns with regards to this proposal and do not support the idea of a different road funding regime to that applicable to other users of roads.

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What are the costs for shipping/handling at the port? 

The export of processed timber products from the Whangarei port are charged at approximately NZ$120.00/m3. The export of logs, poles and non-processed timber product is considerably less but volume dependant. The costs associated with Wharfage is a set rate of $4.40m3 for all products across the wharf. Storage and Marshalling costs vary dependent on the product, grade of shipping service and the volumes handled per annum.

http://www.northport.co.nz/

http://www.northlandportcorp.co.nz/

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5. INDUSTRY SITES

What are the resource consent issues for potential industry sites? Resource management issues are governed by the Resource Management Act 1991 (RMA) and administered by Regional and District Councils. Constructing and operating an industrial site in New Zealand may require a range of resource consents and building permits. For example, Regional Councils deal with resource consents that address discharges to air, land and water and water takes, whilst District Councils issue building permits (under the Building Act) and land use consents. Depending upon the effects of a proposed activity, resource consents may or may not be required. This is also dependent upon the "zoning" of the land being used.

Details of what activities are permitted (i.e. do not require resource consent) or those that require consent can be found in the various regional and district plans.

Where consents are required the RMA sets out the process for applying for the relevant consents. This includes a requirement for an Assessment of Environmental Effects (AEE)to be prepared as a substantive part of the application. Depending on the nature of the consent being sought a publicly notified application process may be required which can entail a public hearing before Resource Consent Hearing Commissioners. Consultation with the public, affected parties and tangata whenua is considered a normal part of the process. Consents, when granted, can have conditions attached to avoid, remedy or mitigate adverse effects on the environment generated by the proposed activity. The website links below gives a good introduction to the Resource Management Act and the resource consent application process.

http://www.rmaguide.org.nz/.

http://www.qualityplanning.org.nz/index.php

The Ministry for the Environment website also offers a wide range of relevant information.

http://www.mfe.govt.nz/

Relevant Regional Policy Statements and Plans and District Plans for the Northland Region and the FNDC are available from these councils' websites. Processes and application forms for applying for resource consents are also available online. We strongly recommend making early contact with both these authorities and discussing the proper procedures for applying for consents with planning staff in the initial planning phases of any proposed operation.

http://www.nrc.govt.nz/

http://www.fndc.govt.nz

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Environmental issues/laws which are effecting timber plants?

Any activity that has the potential for an adverse effect on the environment, whether short or long term, major or minor, cumulative, etc, is assessed under the RMA 1991. Again, most relevant information can be sourced from the Regional Policy Statements and Plans and District Plans. Both regional and district councils' are also responsible for undertaking environmental monitoring. In addition, the Ministry for the Environment has responsibilities for overseeing national implementation of the RMA and is responsible for producing national environmental standards and policy direction. In addition to the council websites above, the link below provides a useful starting point for these matters as they relate to the wood processing industry and has a number of related links embedded.

http://www.mfe.govt.nz/issues/resource/wood-processing.html

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Interest rates for loans? 

Interest rates on loans in New Zealand are typically around 10% but do fluctuate and are subject to external market forces. Details of the registered banks in New Zealand, alongside their respective credit ratings, monetary policies and performance can be found in the links below.

http://www.rbnz.govt.nz/banking/nzbanks/0091622.html

http://www.rbnz.govt.nz/statistics/exandint/index.html

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Water supply, drainage system, requirements, cost? 

These issues tend to be very site, purpose and layout specific. The regional council, Northland Regional Council, is responsible for water and drainage issues and can be contacted directly through their website.

http://www.nrc.govt.nz/

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Electricity: How much electricity is available at which prices? 

The cost of electricity is dependant on the amount used. Typically a small to medium processing plant could expect to pay approximately NZ$2,500 per month for electricity (Legacy Timber Processing) however charges are subject to relatively frequent market fluctuation. Pay back options do exist in the event that (FNDC) a cable that is laid for a specific plant is later used to supply other industries.

http://www.topenergy.co.nz/index.htm

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Cost of land, cost to get electricity, drainage, etc? Cost to build production buildings, cost/m2 and m3? 

These costs vary enormously from site to site and area to area. Specific information on the site, type of construction, distance from road or existing services etc would be necessary before these questions could be answered.

If you have any queries on wood processing or suggestions on how this site may be improved please contact us using our normal contact details.

 

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