with Gerry Mortimer
Should we prune the next crop?
This is the question Woodmetrics staff are often asked by clients after we’ve managed a sale for them.
There are a number of reasons they’re in this quandary. The main one is the pruned log price has fallen in the last 11 years. In 2003 there was a differential of about $90 between the pruned log price and the price of the top unpruned logs making the domestic structural grades. The current price differential is down to $15 per tonne.
If we add up the pruning costs and use a discounted cash flow analysis, it’s pretty obvious a $15 per tonne price differential doesn’t currently justify the additional silvicultural costs.
Even when the price differential was wider, there was sometimes little difference in earnings-per-hectare between pruned stands and forests treated with a well-managed structural regime. There are several reasons for this; one is not all pruning is equal. If timing and quality of pruning is not good, it will not yield the returns, no matter how much you pay for pruning.
In other forests Woodmetrics has sold, thinning has been to such a low stocking even if the composite stumpage price is good; there are just not the tonnes-per-hectare to sell. This is very pronounced once stands get below 200 stems per hectare.
There is also a big difference between a stand managed with a well-planned structural regime, and a stand that’s just plain neglected.
A good structural regime is about managing branch size and tree diameter. You also need to consider the distance from your forest to the local sawmills versus the export port. If there is a local sawmill 15km down the road verse 150 km, the net price-per-tonne to the owner will be increased greatly. The transport differential might be $30 per tonne, which is a large difference in terms of cost.
To prune or not to prune?
While I’m reluctant to give specific advice, there are things I suggest people consider. One don’t be too driven by today’s market when making long-term decisions. It’s not an annual crop.
The various log markets will probably fluctuate up and down several times before your trees are mature. Stand back and look at the big picture.
Consider your site. Some of the smarter corporates are now making the pruning decision on a site-by-site basis. Each site is analysed and a decision is based on site index, location, weeds, contour and fertility. This has to be a smarter approach than to prune everything or prune nothing. Finally, pruning gives options for small and large forest owners.
For further information, contact Gerry Mortimer at Woodmetrics Forestry Marketing.