Farmers given practical advice on selling timber

Press, 2 November 1984, Page 26

Farmers given practical advice on selling timber

By

DERRICK ROONEY

Firm agreement on prices, timing of logging, access, and the standard of

cleaning up afterwards was essential before a farmer entered a contract to sell standing timber, a group of fanners taking part in a forestry workshop at Windwhistle was told last week.

The workshop, which included a morning’s practical demonstrations of mensuration and logging techniques, was part of a series of extension courses arranged by Lincoln College. It was held at, “Birch View,” the property of Mr Tom McElrea, for whom the Canterbury Forestry Foundation recently arranged a sale of mature 30-year-old stands of radiata pine and Douglas fir. A stumpage calculation provided by Mr Rob Miller, of the Forestry Foundation, showed that there is a big difference between the delivered cost of sawlogs at the mill and the net stumpage received by the growers. Cartage costs are a major factor. Taking Mr McElrea’s property as an example, Mr Miller noted that it is 80km from a mill in Christchurch,. At the present cost of 13c per cubic metre per kilometre, the cost of cartage would be $10.40 per cubic metre. To this must be added the loading cost of $1 per. cubic metre and the logging cost of $8.50, giving total cost of $19.90. If the miller were prepared to pay a delivered price of $4B per cubic metre for radiata, the net stumpage left for the grower amounted to $28.10. On that basis, chip logs often returned a net loss to the grower, Mr Miller said. Logging and loading costs were the same, but cartage, at $12.74, was higher because of the greater distance to the chip mill at Rangiora. At a delivered price of $22 per cubic metre for chip logs there was a net loss of 24c to the grower. However, Mr Miller said, many sawmillers were prepared' to accept a loss on chip logs so that they could secure the sawlogs they needed.

Discussing yields, Mr Miller said that on Mr McElrea’s property a stand of unpruned and unthinned Douglas fir, carrying 762 stems to the hectare, had yielded a total of 510.76

tonnes of logs at the age of 31. Of this, 439.88 tonnes equivalent to 494 cubic metres, was graded as sawlogs. At a price of $43 per tonne for sawlogs and $3 per tonne for chip, the value of the stand was $19,168 per hectare.

This represented an annual return of about $6OO per hectare, said Mr Theo Russell, senior forestry extension officer of the Forest Senrice in Christchurch.

But the most interesting aspect was that it showed that Douglas fir of good quality could be grown to maturity in 30 years in the Canterbury foothills. To put it another way, there was a mean annual increment of 18 to 19 cubic metres per hectare at the age of 30 years. Douglas fir could be expected to go on increasing at this rate to the age of 40 or 50 years, whereas the increment of radiata pine tended to flatten out, Mr Russell said. Both Mr Miller and the other speakers noted that prices for farm-grown timber tended to be higher in Canterbury than elsewhere because of the shortage which had resulted from the nor’west windstorm of August .1,1975. This indicated the importance of good management of the timber stands, to achieve “good utilisation” — in other words, a good yield of timber and low wastage. Sale by tender was the most fair system, in the view of the Forestry Foundation, Mr Miller said. The foundation would, at a grower’s request, make a preliminary assessment of a stand, to be used as a basis for tendering. The whole process, up to the signing of an agreement, took about six weeks, and the foundation took a percentage of the price as commission. The initial assessment was charged on a time-cost basis, but this charge was refunded if a sale were completed.

The foundation considered the reputation and ability of a tenderer and did not necessarily let a tender to the highest bidder, Mr Miller said.

Sales by tender could lead to a lot of strife, said Mr Des Kelly, of the Christ-

church sawmilling company, McVicars.

Farmers should negotiate with a reputable and reliable firm; Mr Kelly said. His company would enter any reasonable negotiation for payment, would pay some advance if necessary, and was happy to trade some of the log inconie for timber, Mr kelly said. He had found some farmers confident in their approach to timber sales, well aware of current prices, hard and skilled negotiators, and demanding in their clean-up requirements. “Farmers are well able to look after themselves,” Mr Kelly said. Discussing prices, Mr Kelly said these were affected by a variety of factors, including the quality of the trees offered, the ease of access to them, and the distance from the’mill.

In a sense, he said, Canterbury sawmillers were in a false situation, competing for a diminishing resource. Shortages were pushing up the stumpage pnce .in Canterbury, and in a normal situation growers would be lucky to get the prices now being paid for wood by tenderers.

"The price is reaching its economic limit, and we may soon have to consider trucking logs from Southland or shipping them from Nelson or the North Island,” Mr Kelly said. “Sawn timber prices have gone up only 5 per cent in the last three or four years but stumpages have doubled. If we weren’t exporting we would be closed down.”

Mr Kelly was less ,than enthusiastic about the clearwood logs expected to be produced under modern pruning and thinning regimes.

“There is a limited market at present for clearwood,” Mr Kelly said. “We feel that with.prunned logs we will get 'super-quality butt-logs and chip above them. In close spacing the quality of wood actually improves as you go up the tree.

“A high percentage of timber is sold for framing, and we like that sort of wood," Mr Kelly said. Log sales must be tied to the best advantage of the client — the grower, said Mr Hugh Jolliffe, of J. E.

Watson, Ltd, an OtagoSouthland stock firm which recently expanded into forestry consultancy. In sales handled by the firm, the firm engaged the contractors and sold the logs in a prepared state, he said. Thus it had direct control of the logging standards and utilisation. If required, the firm would also arrange replanting. “Logs must be assessed in terms of local demand,” Mr Jolliffe said. The advantage to the vendor of selling through an agent was that he was dealing with only one person. At the same time he could become part of a larger sales pattern, thus achieving collective marketing strength. . Prices must be fixed before a sale was made, and regular inspections must be made during logging, Mr Jolliffe said.

During a brief panel discussion which closed the workshop, Mr Miller said he believed that the sales agreement should provide for the seller to be paid “as the trees are going out” To check the amount of timber taken from a property, the foundation used a docket system, he said. Sales were made only by weight. A load docket was left at the farm for each truck-load of logs, and later checked and reconciled with the weighbridge dockets. A written agreement was essential, even for very small sales, Mr Miller said. Mr Kelly, however, said that in the case of small sales a letter from the company stating its price and the approximate time of logging, plus a telephone call a few days before logging started,, usually sufficed. Fences were often a problem, he said, but usually there was an old fence on one side of the woodlot which could be removed by the fanner so that logging could begin.

“There are rarely any other hassles in small timber sales,” he said. Under most sale agreements the farmer was responsible for fences, and for any internal tracks needed, Mr Jolliffe said.