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About Tenco
Tenco is one of New Zealand’s largest exporters of forest products. We have built to this position since 1991 when the company was set up to export lumber to growing Asian export markets.  Experience and reputation count; from small beginnings Tenco has become the largest independent exporter of New Zealand lumber and New Zealand’s 4th largest log exporter.  Tenco has a regular shipping program of their own log vessels and in combination with these and other ships currently calls  at 7 New Zealand ports (5 North Island and 2 South Island).
 
Tenco buys standing forests.  Tenco currently has a number of forests which they purchased at harvestable age to log over a number of years for export and domestic markets.  Tenco also regularly buys smaller tracts of forest to harvest immediately or immature forests to hold until harvest time.  Tenco is interested in broadening  the  base of owners from whom it purchases forests and stands of trees.  A deal with Tenco is a certain transaction.  The owner and Tenco will agree on a value of the tree crop and then Tenco will pay this amount to the owner either in a lump sum amount or on rate per volume unit out-turn from the forest depending on the nature of the tree crop.
 
Tenco knows there are a lot of farmers who have trees that are close or ready to harvest and will be asking themselves how they should proceed with the sale of their trees.  For some farmers the kind of certain transaction with money in the bank could well be appealing. Tenco is actively interested in buying harvestable forests or trees from areas including all the North Island (except the Gisborne and East Coast districts) and Nelson & Marlborough in the South Island .
 
If you own a forest in this area (16 years and older) and are ready to enter into this kind of agreement Tenco is interested to develop something with you.
Please contact: Josh.Bannan@tenco.co.nz 
Work: +64 7 357 5356  Mobile:  +64 21 921 595  www.tenco.co.nz
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NZFFA Member Blogs

Any member of NZFFA can set up their own blog here, just ask Head Office to set one up for you and join the ranks of our more outspoken members...

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Member Blogs


Recent blogs:

A levy on log exports and the proposal to plant a billion trees?

Wink Sutton's Blog
Tuesday, February 27, 2018

New Zealand Tree Grower February 2018.

The pre-election intentions on forestry of the New Zealand political parties were ably summarised by Hamish Levack on pages 12 to 15 of the August 2017 Tree Grower.All except the National Party responded to his request − I cannot accept that this major party has no policy on such an important export earner. Log exports feature in the intentions of some parties. Most significant was that of the Labour Party spokesman Stuart Nash.The Labour Party proposed to implement ‘...an export levy of between one and five dollars a cubic metre on all wood exported without value added, in other words on logs’.

Exporting costs

In 1957 the Japanese first came to New Zealand to buy our logs.The Japanese offered a stumpage of around two shillings and six pence a cubic foot − nearly nine dollars a cubic metre.This price represented a premium of 10 times the then average stumpage of three pence a cubic foot or 88 cents a cubic metre.

The domestic price had been ‘unintentionally’ set by the long-term government contract to sell wood from Kaingaroa forest to Tasman. Similar to today there was much discussion then along the lines of why not add value by processing within New Zealand and export a finished wood product.Typical of the time is a quote in the 1958 Annual Report of the New Zealand Forest Service ‘...it is very much in New Zealand’s interests that the export of forest produce should be undertaken in its most elaborate form, viz, in paper rather than pulp and in processed rather than rough sawn timber’.

Although there was a small increase in domestic wood processing the log trade has continued to increase and be more profitable to the plantation owner than domestic processing.This has been despite local processers having the advantage of not exporting round logs with about 50 per cent of their weight being water.

There were many reasons why we appear to have exported costs rather than increased our overall profits or export earnings including our high labour costs as well as the long delay and distance from the actual market place.This meant we were unable to quickly respond to changing markets. Most important of all were the increased tariffs and non-tariff restrictions on the import of processed wood products. New Zealand wood processors then, as now, could get all the wood they want by simply matching the log export price.

A levy on log exports is in effect a subsidy to local processors − not paid for by the government but unfairly deducted from the earnings of the forest grower. Is not a levy on log exports effectively a tax on exports? Governments should be aware that private investors could be very reluctant to invest in an industry, such as forestry, where the government can reduce final returns simply by imposing an export levy.

A billion new trees

Since the 2017 election New Zealand has been governed by a Labour/New Zealand First/Green coalition.To provide regional employment, as well as increase the nation’s carbon sink, it is proposed to plant a billion trees over the next 10 years. Not all will be new planting − about half of the trees to be planted are to be the replanting of harvested plantations. Even so, this ambitious proposal appears attractive.

However, to be successful, much more is involved than just planting pines and other tree species.Where is the land to come from? Are the sites suitable and available for plantation forestry, especially given that some sites are more suitable than others for tree growing? Will the forest be highly productive? Site location greatly determines profitability as well as its carbon sink potential.Who will own the plantation? Where are the trees to come from? There are not enough trees currently available from our nurseries to immediately start an additional planting effort.

At least eighteen months of advance commitment is required before nursery owners could be expected to produce the extra millions of trees required each year. However, a recent report suggests that one nursery could supply five million trees this coming winter - see Timber and Forestry E News 493 for 15 December 2017.

The overheads

Is the plantation to be tended? Peter Clark, CEO of the consultancy P FOlsen, in his comment in Wood Matters of 9 December 2017 asked ‘where will the labour come from?’This is relevant since many unemployed are totally unsuited, as well as being most reluctant, to be employed as tree planters or for other forestry work. Who will pay for the many and considerable overheads – site preparation, rates, insurance premiums for fire or wind damage, pest and disease control, mapping, the measurement of growth, the maintenance of roads and fences, annual inspections and project management?

Plantation forestry is very capital intensive. Over a rotation the cost of trees and their planting may be only 20 to 40 per cent of the total plantation management cost.To an outsider the proposals may seem to be simple but much more is involved than simply planting. More policy development needs be done before the proposal proceeds.

The proposal is achievable but until these questions are answered there must be doubts about the proposal ever achieving its ambitious target. Forestry would be the loser if the scheme is abandoned or fails.

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The local market for Lusitanica and Macrocarpa timber

Murray Grant's Blog
Sunday, May 13, 2018

For the last 25 years I have been developing the local market for Lusitanica and Macrocarpa timber. Our sawmill sources trees from predominantly plantations.

Coming from Dairying then owning a sheep and cattle farm I have found this a very “lonely” space, even more so as cypress is often seen as the poor, if not irrelevant, cousin of the pine industry.

I came into the industry when “Macrocarpa” was rarely sold through merchants because of inconsistent and unprofessional supply and grading.

From the early nineties I have gradually sought to overcome this often negative mindset amongst established timber suppliers and builders.

We would now be probably the largest producer of building grade “macrocarpa/lusitanica cypress timbers, supplying all major merchants throughout New Zealand.

Our mill uses 300-400 tonne of log per month to meet the present market, processing right through to profiled weatherboard, sarking, beams, framing etc.

With an average buy in price $140-160 per tonne, up to 20 staff, plus continual maintenance and upgrading of vehicles and machinery, I sometimes miss those simple days of growing sheep and cattle and a few trees.

However, I have enjoyed the challenge and have become a real enthusiast for the potential of cypress timbers becoming a significant part of the New Zealand building scene.

We all have a part to play in this. Farm Foresters grow trees, loggers/carriers deliver, sawmillers process, customers enjoy.

It is satisfying to know that houses in New Zealand can still be built largely with this natural product, grown and processed in NZ.

As the sawmills not concentrating on pine are all owner operated with often limited resources our voice is often not heard amongst the clamor of the corporates, so I thought it would be informative to hear a cypress sawmillers perspective.

Buying logs

Every sawmiller has the juggling act of consistent guaranteed log supply, meeting promised demand, and cash flow.

The majority of MacDirect’s supply in the last 18 years has come from old Forest Service plantings now owned by corporates whose only interest has been pine. Although some have been pruned, the majority have been done on an ad-hoc basis, which means purchasing has been mainly as unpruned trees.

Last year we have become more dependent on private farm blocks, which are available. The biggest issue, as most log procurement people are aware of, is lack of loggers especially to do smaller cypress blocks. This has had quite a serious impact on supply. Not to mention logging charges have increased. End result apart from stress has been an increase in log prices.

We normally have bought sound plantation logs (no bug or rot minimal canker) at one price for all sizes to simplify logging etc. We have a minimum SED of 200mm for well-formed lusitanica logs where we are buying the whole plantation. Recovery and therefore profitability is far better on over 250 SED logs, but we realise forest owners have no other market for these smaller logs apart from firewood.

What will impact our log price?

  1. Dimensions (SED)
  2. Uniformity (Fluting, taper etc)
  3. Bark encasement of knots.
  4. Knot size.
  5. And of course rot, bug, or canker infestation.
  6. Distance from sawmill.

Log Grade

The greatest timber demand we have is for small tight knot heart grade. We struggle to keep up with demand for weatherboard in this grade. There is a some demand for clears weatherboard, sarking etc but not the premium really needed. Most of our clears timbers goes into joinery where there is not the same need for heart or long lengths.

Therefore the greatest value log for MacDirect with our present market is well grown plantation log (preference lusitanica) unpruned with small live branches. As stated above we have been buying pruned plantation logs. These however are very variable in recovered quality for the following reasons:

  1. Where 150mm knotty core or less with 600mm SED, great clears are produced (not often available).
  2. Boards cut at prune point have ugly black knot fallout causing downgrading.
  3. Above pruned log knots are excessively large, often above 50mm especially where wider spacing thinning has taken place

Therefore I suggest while well grown pruned trees produce maybe 30% clearwood the remaining timber has often had to be downgraded, making it doubtful of any overall benefit in $ sales. The classic cypress customer is purchasing a timber that they want to observe as natural. The knotty look is usually their preferred option. eg Last year we supplied a $9million build (home) with over 24,000 mtrs ex 200x25 and over 300 mtrs of 300x100 beams, plus. Specifically requesting knotty grade as customer preference. These “high end” discerning home builders who want, not only chemical free timber but a natural look, are often our market.

Other Factors

The other direct contributor to sawmill profitability is recovery from log to saleable timber. We breakdown and resaw with bandsaws to optimize recovery. Unfortunately with cypress we often have to deal with logs that would, in a pine situation, be downgraded (pulp etc). As we purchase the complete plantation, the grower has no downgrade logs discounted, this ultimately affects our sawn recovery.

To optimize recovery we buy as many over SED250 logs as possible as stem logs (9-14mtrs), allowing us to cut to specific order lengths but also to negate sweep where necessary. The remainder of the plantation comes in 3.0– 6.1 mtr lengths. Without detailed research I would estimate that below 250 SED logs have 15-20% less recovery in cypress where taper is present compared to an average SED of 350. Another factor is because nearly all of our timber goes out as a visual grade, this means there is always considerable “loss” between “greensawn” and finished dressed or bandsawn product as quality needs to be high. We air dry and in winter and in particular, finish off in a dehumidifier kiln. I estimate we average at minimum 5% loss from bent boards, distortion, or cell collapse (some resawn).

Log Price

Log price has risen approx. 25% – 30% over the last 2-3 years. While our finished timber prices have risen approximately 12%. Even when buying well grown plantation logs, because the whole crop comes into the sawmill, there is pressure to receive logs that pine sawmills would never accept. This not only impacts recovery and grade but lowers through put of log (sweep taper fluting etc) putting pressure on sawmill production costs.

A well managed 25-30 year old plantation producing 450 tonne per ha (the highest we have recorded was 600 tonne) at average price $160 per tonne, less $70 costs (harvesting/freight) etc returns are approximately $40000 per ha less planting and silviculture costs. Only farm foresters could tell me whether that is satisfactory, but from my experience approx. $1300 per ha per annum, less non harvest farm costs, seems quite profitable as a land use.

The Future

Cypress species timbers are now seen as a premium product and standard lines (framing, weatherboard etc) sell above similar grade pine. We sell minimal timber to the “group housing” sector because of cost. I do see a market for reasonable cost cypress timber designed for the group housing sector. There is a growing market demand for natural chemical free housing, especially from exotic trees grown and produced in NZ. We presently supply all house requirements. The next marketing step we would like to see is this option being more readily available to the home buyer. Part of this will be supplying the market with "stress graded" or code compliant structural framing. It has been gratifying to see Dean Satchell doing the "hard yards" advocating for alternative timbers in this space.

We have purchased a stress-grader. Having the structural and stress bending values of cypress available we are in a position where we expect to be able to supply SG8 cypress framing to the market within 6 months.

Log supply

One inhibiting factor is consistent log supply. One big advantage of cypress is we have stored logs for up to a year in our yard with no deterioration. We therefore have bought up to 2000- tonne at one time. To be confident in investing further in development, assured supply is crucial. My observation is that because we take the whole forest into our sawmill there is plenty of raw-stock out there of cypress. On present usage approximately 12 ha of well grown plantation trees keeps us going for a year. However, if we developed the framing market that would double conservatively.

Unfortunately although cypress has a long, even ancient, history of use in construction and purpose grown forestry, the NZ building establishment on the whole has put minimal effort into research or development of these species. Also most of the plantations we buy, it has to be said, have had quite poor and inconsistent silviculture.

A large well-tended and grown forest would undoubtedly attract a premium. 

One particular downside is the growing population of the native kaka bird, which loves to find insects inside the bark of lusitanica. If any canker is present it rapidly spreads the disease.

So that’s just a small look into the life of MacDirect sawmill to help you understand what we do day to day to encourage the consistent supply of Macrocarpa/Cypress to the New Zealand market. We would love to hear from any farm foresters who are keen to work closely with us to grow plantations into the future, get our perspective on silviculture for the marketplace and/or look at log price and harvesting.

Murray Grant
Director/Owner
MacDirect Limited 



Disclaimer: Personal views expressed in this blog are those of the writers and do not necessarily represent those of the NZ Farm Forestry Association.

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