Forest Products Industry

Metsä Group has funded biodiversity management and restoration projects with a total of 600,000 euros in 2024. This year, 26 new projects were approved for the funding program for nature projects. Source: Timberbiz With this year’s selections, the themes of the projects are increasingly diverse and their geographical coverage is expanding. The themes of the funded projects include, for example, condition of water bodies, restoration of flowing waters, removal of invasive species and predators, pollinator services, management of traditional habitats and restoration of bird wetlands. “In the funding program for nature projects, expert networks focusing on different nature themes have started implementing projects that improve the state of nature regionally. Our goal is to mainstream the operating culture, where Finnish nature is the force that unites us. We invite all companies to participate, regardless of industry,” said Metsä Group’s leading nature expert Timo Lehesvirta. The expansion of the funding base for nature projects was discussed at the beginning of June at an event organized by Metsä Group and the Association for the Management and Protection of Archipelago Nature. The experience and knowledge shared at the event create a basis for the development of a more diverse and stable funding base than before in projects that strengthen the state of nature. “We are a small but active association that promotes and supports nationally set nature goals through voluntary activities. We welcome the fact that the private sector is getting involved in financing the well-being of Finnish nature,” said Tommy Arfman from the Association for the Management and Protection of the Archipelago Nature. “Metsä Group’s funding channel is an example and a welcome opening for the environmental work of the private and public sector to play towards the same goal. The expansion of the funding base in the direction of companies is a welcome message. There is potential in the projects selected now. Personally, I especially like the nature initiatives from schools,” said Pekka Pesonen, head of the office of the Ministry of Agriculture and Forestry and chairman of the expert council. Metsä Group has set the goal of strengthening the state of nature in its operations by 2030. In order to achieve the goal, action programs for regenerative forestry and land use are implemented, recognizing the nature effects of the company’s own operations. The funding program for nature projects is the company’s free additional contribution to support Finland’s national nature goals. A total of 67 different projects have been financed within the framework of the program since 2022. An independent panel of experts from organizations in the natural resources sector participates in the evaluation of the projects.

The EU’s Deforestation Regulation (EUDR) is set to go into effect on 30 December 2024. EUDR aims to prevent and mitigate the impact of deforestation and forest degradation associated with certain commodities placed on the EU market. Source: Timberbiz Since wood is one of the targeted commodities, all forest products companies exporting to the EU will be required to prove that the goods’ production did not contribute to the deforestation of primary forests. The US pulp, paper, pellet, and solid wood industries collectively contribute billions of dollars annually to the EU economy. The pulp and paper industry contributes approximately $2.4 billion, pellet manufacturers roughly $1.5 billion, and the solid wood industry roughly $500-800 million. Non-compliance with EUDR will jeopardize significant portions of these revenues, affecting individual companies and broader economic landscapes. Many companies are concerned about their ability to meet compliance requirements. ResourceWise CEO Pete Stewart stated, “Population growth and climate change call for bans on single-use plastics, and incentives for renewable energy and carbon storage are increasing pressure on global wood supply. Consumer brands using paper packaging are more aware that their purchasing practices may be leading to deforestation. In response, calls for wider forest supply chain transparency are growing, and EUDR is acting as an accelerant. Its implications are top of mind for anyone exporting affected products to Europe.” Commodity markets intelligence consultancy ResourceWise is holding a webinar hosted by Mat Stone, an EU regulations expert. He will discuss topics such as: The global implications of EUDR for the wood products industry Key timelines and implementation Challenges and strategic adjustments needed for forest products exporters and buyers The value of supply chain transparency and traceability ResourceWise is working with industry leaders, third-party partners, and EU representatives to build a technology tool to help assist the EUDR’s objectives in preserving our valuable resources.

The summer General Assembly of EOS, the European Organisation of the Sawmill Industry, took place in Helsinki on 12-13 June 2024, hosted by the EOS Finnish member the Finnish Sawmills Association, Sahateollisuus. Source: Timberbiz The Finnish Minister of agriculture and forestry, Sari Essayah, took part in the meeting and shared her thoughts about forest related policy at the EU level during the next five-year term. She also emphasized the key role of sawn wood products in responding to global challenges, including climate change and sustainable economic growth. The Assembly noted the recent launch of the European woodworking and sawmill industries manifesto for the political term 2024-29. The manifesto identifies eight key actions that need to be taken by decision makers to deliver a green, cost efficient, competitive and resilient EU economy. In a lively discussion EOS members noted important topics such as the entry into application of the “Deforestation Regulation” reiterating their concerns regarding the insurmountable difficulties and bureaucracy that SMEs will actually have to face. It was also stressed that the missing implementing act on the country benchmarking could lead to unfortunate and regrettable consequences: ie considering that all countries have been assigned a standard level of risk on 29 June 2023, the efforts made by companies to comply with the obligations of the EUDR with regard to the countries that will be classified as “low risk” will be essentially pointless in the end, resulting in a disproportionate and unnecessary burden for operators and traders . The latest edition of the EOS Annual Report – 2023/2024 – was also presented during the General Assembly and it can be downloaded on the EOS website at: https://eos-oes.eu/annual-reports/ The report provides the usual overview of European sawnwood markets, building on fresh data shared by the Member Countries of EOS. It also has exhaustive chapters on forests and the availability of raw materials for the European sawmill industry as well as an analysis of overseas markets of interest to the European sawmill industry, including North America and China. An extensive chapter on construction markets with a section also on statistics of wood as a building material will also help readers understand what the future holds for the European sawmill industry. While the long-term prospects of the industry look bright on the demand side, the short- term picture is not too rosy. Production and consumption of sawnwood have been declining since H2 2022 due to the challenging economy and geopolitical tensions. Costs for sawmills are high amid rising raw material prices, increasing labour costs (while also facing labour shortages) and high energy prices. In addition, the report noted that inflation rates have been declining over the last few months, but they remain high. Most sawnwood produced in Europe is used in European construction markets so as long as European construction markets are subdued, it is difficult to imagine a turnaround. Construction markets are weak also in important export markets for the sawmill industry such as China and Japan. The United States was a partial exception in 2023 and increasing sawnwood deliveries to the States have helped some European sawmills navigate this challenging environment. Trust in the long-term prospects of the industry remains high, which is proven by many companies adding production capacities over the last couple of years. However, the precondition for a successful sawmill industry remains access to sustainably managed raw materials. In this regard, policies passed in Brussels will play an increasingly important role over the next few years. The Report is also the “go-to” source to understand the European policies of interest to the European sawmill industry as well as the advocacy and promotion activities carried out by EOS over the last year. The Assembly also noted the intention to revise the EU Bioeconomy Strategy by the end of 2025. As with the earlier revision this is both an opportunity and a threat to the sawmill industry. An opportunity if policy makers will rightly recognise that construction timber is at the heart of the bioeconomy offering the possibility of storing yet more carbon and of substituting for carbon intensive alternatives (hence it also needs to be at the heart of the circular economy which is perfectly possible given timber is a renewable, recyclable, and reusable sustainable material). But a threat if it fails to do so. In addition to the revision of the Strategy the bioeconomy will feature in several initiatives that EOS will need to engage with, using as its guide the recently produced document ‘Biomanufacturing, the circular economy and the European woodworking and sawmill industries’. The General Assembly meeting was followed by a very interesting visit to a Koskisen sawmill plant and to a study tour on “Biodiversity and harvesting” kindly offered by Versowood.  

New Zealand forestry companies could face a rate hike to cover legal costs as well as a “pay as you go” levy to cover road damage, under a Gisborne District Council proposal. Source: Local Democracy Reporting, Gisborne Herald While committing to investigate these funding options from forestry to help cover sector-related costs, the council has also adopted a higher roading-targeted differential of 13.75, up from 12.5, and a new woody debris-targeted rate. Mayor Rehette Stoltz said during deliberations for the three-year plan: “Part of our job is to investigate whether we are doing our jobs in the best possible way. “Are our rate systems fit for purpose? “At this stage, if we prosecute a company, we do not cover our costs with the small amount under the law that they are allowed to be fined,” she said. Council chief executive Nedine Thatcher Swann said for every NZ$1 million spent on legal and investigation fees, “you may get NZ$250,000 back”. If the Resource Management Act changed, the additional targeted rate for court and prosecution costs might not proceed, she said. If there were changes, Thatcher Swan said fines from successful prosecutions might cover council costs. The council will also investigate introducing a forestry levy for road repairs. For forestry companies, this would more likely align the charges for road damage with when they received revenue, compared with the targeted rate based on property values. “A forestry levy would be a ‘pay as you go’ or ‘user pay’ principle,” a council staff report said. According to the report, the council’s current rating model was based on “rates are a tax”. “[While] industries damaging the roads are paying, individual ratepayers are not paying for specific damage they cause,” said the report. Deputy Mayor Josh Wharehinga said: “Our community expects us to investigate ways to make forestry pay. “I’m happy for us to investigate these potential new targeted rates to recover legal and prosecution costs for forestry damage. “The ratepayer has had to carry the burden between the difference of the legal costs, and the fine that we get back. “This is not saying we are going to make a decision right now. This says to our community we are going to investigate this.” Councillor Debbie Gregory wanted to know the impact rate options would have on the region. “At this stage, our economy depends on the forestry industry. This feels like a knee-jerk reaction to the weather,” she said. Chief financial officer Pauline Foreman said the changes wouldn’t be implemented until the 2025/26 year. “It would be within the annual plan of year two.” Before the council made the final decision, they would be given modelling to see the overall impact, she said. There were only two options to create a forestry levy, Ms Foreman said – to create a bylaw, or an Act of Parliament if it was an order of council. “The bylaw is more problematic because you have to capture every truck that occurs in that area – you can’t differentiate one from another,” she said. The report said: “Forestry would not be able to be singled out; all heavy users would need to be factored into fees and charges. “A change in legislation to have a localised solution is the most transparent way of raising a levy in the future.” The report said the previous Government had said there would be no new localised funding legislation, however, the new central Government had “signalled a willingness to look at new funding options”. A new targeted rate for woody debris removal has been set at 70% for the forestry industry, as research has shown that exotic pine makes up between 69% to 86% of woody debris found in the Uawa and Waimatā catchments. Pastoral farms will cover 15%, and the other 15% will be a public good component collected from the community. The council aims to adopt its three-year plan, based on recommendations from Tuesday’s deliberations, on 27 June.  

Annual service charges paid by forest owners with trees in the Emissions Trading Scheme (ETS) will be cancelled for the 2023 – 24 year. New Zealand Forestry Minister Hon Todd McClay announced the ETS change while outlining the Government’s vision to grow forestry as part of his address to the Fieldays Forestry Hub. Source: Timberbiz Minister McClay said the government wanted to rebuild confidence in forestry, noting that the charges imposed on growers for administering the ETS felt excessive, with insufficient transparency around them. The introduction of a series of initiatives supporting forestry and wood processing’s growth was also announced by the Minister during his address, including four key priorities to drive more positive outcomes across the supply chain. These included encouragement of economic growth through forestry and wood processing jobs and exports, delivering low emission solutions and products, supporting land use resilience, adaptation, biodiversity and social benefits; and providing carbon removals to support climate goals. New Zealand Forest Owners Association chief executive Dr Elizabeth Heeg welcomed the news removing the ETS charge and supported a more collaborative relationship with the Government to grow forestry in New Zealand. “We look forward to working with officials to ensure that the setting of ETS charges is done with transparency, efficiency and reasonableness,” Elizabeth said. “It has been a challenging time for forest owners. The encouragement from government to add more value domestically and address the climate crisis will go a long way in helping the sector grow revenue and jobs for New Zealand. “New Zealand’s forests – plantation, native or otherwise – are the only tangible means we have at present for mitigating climate change and meeting our 2050 emissions target. “Amendment to the administrative costs forest owners face for forests entered into the ETS will ensure forestry continues to be part of the solution to reducing our nation’s emissions. “We agree with the Government that transparency and collaboration is key and we look forward to helping them deliver their priorities.” The Forest Industry Engineering Association (FIEA) also backed the move. “With our sector delivering the most carbon-friendly set of exports and benefits to land use all while reducing New Zealand’s carbon emissions compared to other materials, it’s great to see Government showing it wants to grow the sector. Everything we do for industry aligns with the intent of today’s vision from the Minister,” FIEA events director John Stulen said. Government’s vision to grow the forestry sector aligns well with FIEA’s events: Spurring economic growth through jobs and exports; (ForestTECH) Delivering low emission solutions and products; (Wood Residues) Supporting land use resilience, adaptation, biodiversity & social benefits; (Wood Residues and Environmental Forestry) and Providing carbon removals to support climate goals. (Carbon Forestry) Annual service charges paid by forest owners with trees in the Emissions Trading Scheme (ETS) will be cancelled for the 2023 – 24 year. Ekos a New Zealand company that works with environmental financing also welcomed the statement by Forestry Minister McClay. “This is a good day for native forests. By removing this crazy service fee on native forests in the NZETS we can now restore more habitat with carbon funding,” Ekos CEO Sean Weaver said. Ekos specialises in using carbon credit revenues to pay for restorative forestry projects. In this way it can finance forest conservation without needing government grants or philanthropy. Ekos forest restoration projects have been hampered in recent years by changing government policy and a new service fee imposed in 2023. “I could never understand why the government encouraged native plantings one minute and the next minute would financially penalise native projects and make them harder to get off the ground”, Weaver said. “Native reforestation projects are financially difficult enough as it is because native trees tend to grow quite slowly. But this service fee – we called it the ‘MPI Bull**** Tax’ in our spreadsheets – just made everything much worse and stopped many of our projects from being financially possible.”  

AFCA will hold industry transition information sessions for its Victorian members, the following events will be held on Thursday 20 June. Source: Timberbiz Information sessions in Bairnsdale for businesses impacted by the closure of native timber harvesting and who are weighing up their options A general member meeting in Traralgon followed by a casual dinner. In Bairnsdale there will be two information sessions for businesses who have been impacted by the decision to close native timber harvesting and weighing up their next steps. Businesses needing information about transition pathways and support programs should attend. Staff from Forestworks and DEECA will be on hand to answer questions. Session 1 – 10-11.30am, Session 2 – 1.30-3pm Centre Room, Club Eastwood, 117 Great Alpine Road, Bairnsdale VIC 3875 A general member meeting will be held in Traralgon, and it will be an opportunity for discussion about AFCA activities and priorities. DEECA and Forestworks will not be at this meeting. Meeting 5.30-6.30pm, followed by a casual dinner (own expense), venue to be confirmed. To confirm attendance at either event please email tim@afca.asn.au

Recently multiple publications have claimed VicForests did not conduct night surveys. This is demonstrably false according to VicForests. VicForests undertook surveys both at night and during the day given the differing needs of the array of species that make up the valuable biodiversity of our forests. Source: Timberbiz VicForests staff accumulated 1000s of hours conducting night surveys. Since 2017 VicForests staff and contractors have been responsible for: 1930 night surveys, including 1344 spotlight transect surveys 2219 surveys using remote cameras that detect animals day and night. These are deployed in the forest for a set period, sometimes as long as a month and sometimes on a repeat basis. These surveys resulted in over 27,000 species detections being made. VicForests uploaded all survey results to the publicly available Victorian Biodiversity Atlas (the VBA). VicForests is a major contributor to the VBA, which provides vital information about species location and habitats. VicForests surveys were performed in accordance with recognised survey standards, usually those developed and issued by the Department of Energy, Environment and Climate Action and its predecessors. We reiterate that false claims do harm. This includes the impact on the mental health and wellbeing of people who have dedicated themselves to the management of forests for future generations.

The latest data from the United States Department of Agriculture shows stellar growth in the export of American red oak lumber to Australia in the first quarter of 2024. Source: Timberbiz Compared with the same period in 2023 there has been a value increase of 1687% to over US$4 million in this species alone, a volume increase of 1531% to nearly 4,000 cubic metres. The ever-popular American white oak also experienced growth of 52% in value and 64% in volume in this period, but this is the first time that its share has been overtaken by its close relative. “We have been promoting the benefits of American red oak in Australia for the last few years,” Roderick Wiles from the American Hardwood Export Council said. “It shares many of the characteristics of American white oak and is readily available and a cost-effective choice, so I am not surprised that it’s taken hold in the Australian market. We always encourage specifiers to look to use what the forest provides; too much focus on the best grades of a few popular hardwood species increases pressure on one part of the resource and encourages waste. “There are over 22 commercial species in the US forest and red oak is the most abundant, accounting for 18% of the hardwood growing stock. Some of Australia’s importers have recognised and seized the opportunity to encourage buyers to consider red oak.”

The use of prefab and modular construction can help to improve the capacity issues the industry is currently facing according to HIA Managing Director, Jocelyn Martin. Source: Timberbiz Ms Martin was speaking at a government roundtable designed to consider the barriers and opportunities for prefab housing hosted by Minister Ed Husic in Melbourne. Participants at the roundtable recognised that there were still a number of barriers preventing prefab and modular construction reaching its potential. “Addressing gaps in the National Construction Code is critical, as is a clearer understanding of the chain of custody in the manufacturing and building process, financing and business models and insurance,” Ms Martin said. “A better understanding of terminology is also needed. There are many options for construction from modular floor and wall panels through to fully completed homes. “Often people see prefab and modular as being an inferior housing option, but there are a range of builders doing some beautiful work, producing amazing homes. In addition, the use of moduar components has the potential to improve energy efficiency and apply innovative manufacturing techniques.” Participants at the roundtable committed to investigate improvements to contractual terms and financing models and to address the shortcomings of the Code as quickly as possible.

Timber Queensland is warning of a looming building materials crisis due to a lack of policy and budget measures for increasing future timber supply to help meet the state’s rising housing demand. Source: Timberbiz “While we support the critical need to accelerate housing and building projects for a growing population, the 2024-25 budget is weak when it comes to supporting essential supply chains such as timber for meeting the future construction of houses,” said Timber Queensland CEO Mick Stephens. “Up to 90% of homes in Queensland rely on local plantation softwood for timber framing and Queensland native hardwood and cypress is used extensively for structural beams and posts, flooring, cladding and decking products as well as for furniture and cabinetry. “With high forecast housing demand, the state budget does not address longer term measures to expand investment in farm forestry and new plantations for future timber supply while the government is dragging its feet on securing future hardwood supply from state-owned and private native forests. “Back in 2019 the Queensland Government committed to a Native Timber Action Plan to secure jobs and a long-term future for the hardwood industry. It’s now 2024 and we have no action other than one line in the budget papers to implement the plan with no funding commitments. “Lack of action on the plan is putting in jeopardy an ability to guarantee essential building materials from a $700 million hardwood industry supporting 6000 jobs across the state. “Over $140 million in new mill investment is stalled as hardwood supply contracts from state forests expire at the end of 2024.” Key measures to increase future hardwood supply we have recommended to Government include: implement new 20-year hardwood supply contracts from existing state forests and other crown land for processors as soon as possible. provide certainty for native forest owners to manage and invest in the responsible management of their forests by providing a long-term right to harvest, in accordance with the appropriate code of practice or management plan, to remove sovereign risk; and provide greater support for private forestry education and extension services so that farmers and landowners, including traditional owners, can implement best forest management practices to increase timber yields, profitability and related environmental benefits. “Recent research has found that state forests in South and Central Queensland generate better long-term environmental and social outcomes compared to if they were managed as national parks, with sustainable timber production an important benefit,” Mr Stephens said.