Earlier this week we received some of the decent rain we’ve looked forward to for months. Long may it last to give this planting season’s 1.6 million seedlings their best start over the winter.

Our harvest programmes are progressing well, despite some local supply chain constraints which we’re managing daily. Productivity on our Wairarapa log trains has never been better, but Port congestion in Gisborne and Wellington is still a major focus area for our planning. Log demand is at very high levels and price has shown an improving trend. The strong log market increases revenues to the forest owner and investment returns have been very satisfactory in this period.

It has been a busy year already. We are progressing the annual reporting commitments to our investors, and we have a good team in place looking after your forestry investment.

In this Update, we bring news of recent industry recognition for Forest Enterprises with respect to environmental management. This is really pleasing and the result of very hard work by our forestry team in particular.

Enjoy the update.

Bert Hughes
CEO & Forestry Director

Forest Enterprises wins East Coast environmental award

Forest Enterprises won the Environmental Management Award at the 2021 Eastland Forestry Awards in Gisborne on 21 May 2021.

This award recognises Forest Enterprises for its leadership in harvest catchment management and planning, and for supporting contractors to implement innovative mechanised harvesting systems.

A key principle of forestry investment is to protect the underlying asset being the land.

“We’re taking leadership in making meaningful change to the way we manage land during the vulnerability of harvest”, says Dan Fraser, Forest Enterprises’ co-owner and Gisborne Regional Manager.

“It’s a real focus on lifting the value of forestry for our community.”

“From the onset of our Gisborne harvest, we identified that we cannot continue doing the same things and expect a better result.”

Forest Enterprises has sought practical solutions to the impacts on harvest, not only from regional supply chain constraints, but from the significant risk to the environment that harvesting large single age class blocks could pose.

“Planning a harvest within natural boundaries like a river catchment, means we are managing risk holistically to mitigate downstream effects. Our replant strategy has also changed. We incorporate planting of alternative species along some stream margins for the second forest rotation.”

Forest Enterprises has ‘opened the gate’ and demonstrated its positive actions by hosting numerous open days, inviting other forest owners, contractors, Gisborne District Council staff and officials on forest tours and for harvest visits. The Council has been supportive of the operational changes and its monitoring team has provided very good feedback. Similarly, visiting Department of Conservation staff have praised the level of technology involved and the extent of planning undertaken to improve environmental performance.
Forest Enterprises’ collective harvest strategy has enabled us to partner with the best contractor workforce. The combination of continuous harvest programmes and highly skilled contractors has leapfrogged the development of new harvest technology.

Forest Enterprises’ Gisborne contractors are some of highest production crews in the region. They are innovative and successful. Importantly, they are setting new standards on the East Coast for mitigating and managing the environmental and health and safety risks.

Forest Enterprises’ contractors shone among those honoured at this year’s awards. Congratulations go to:

  • Ben MacArthur (Speirs Logging) – Skilled Professional of the Year (2021 Overall Winner)
  • Ben MacArthur (Speirs Logging) – Faller Excellence (Mechanised)
  • Speirs Logging – Crew of the Year
  • Grant Walker (Raywood Contracting) – Roading (Civil)
  • Kevin McKay (McKay Cartage) – Cartage Excellence. Runner-up was Steven Kent (Pacific Haulage Ltd)

We’d also like to acknowledge Krissy Mackintosh from the movement Hear4U, for winning the Good Deed Award. Dan Fraser (pictured below, right) nominated Krissy for her work with male suicide prevention. The very popular Good Deed Award is voted by the audience on the night.

Hannah Harvey wins environmental excellence award

Forest Enterprises’ Environmental Manager, Hannah Harvey, was recognised at the 2021 Southern North Island Wood Council Awards this month.

She received the Outstanding Environmental Management Award. This award recognises a person who goes above and beyond for environmental management. Hannah has demonstrated environmental leadership in our business and service to our clients.

Hannah managed the implementation of the Forest Stewardship Council environmental certification framework at Forest Enterprises. This sets international standards for responsible forest management.

She set up a new environmental compliance system, improved the cloud-based productivity tools we use, and developed comprehensive documentation. The groundwork laid by Hannah will help us achieve our goal of certification for our managed investment forests.

Hannah also guided the team through three environmental audits, the first of which was challenging, taking place during the Covid-19 lockdown. Forest Enterprises passed all audits with distinction.

Hannah joined Forest Enterprises in January 2020. She holds a Masters in Geology with Honours.

Environmental certification a goal for forestry investments

Forest Enterprises is pursuing Forest Stewardship Council environmental certification for our managed investment forests.

FSC sets international standards for responsible forest management and timber supply. Forest Enterprises already has FSC Forest Management certification (FSC® C131650) for over 15,000 hectares of forestry owned in New Zealand by an international impact investment fund, which we manage.

The people, policies and practices we have in place creates efficiencies and scale, meaning we can affordably pursue certification for the additional 20,000 hectares of forestry owned by our retail investors.

FSC certification is particularly important for harvesting forests for maintaining domestic supply into sawmills which prefer logs from FSC certified forests.

At present, no other managed investment schemes in New Zealand are FSC certified.

December annual report now available

The latest annual investment reports for our December balance date investments were circulated to investors on 14 May 2021. They are also available on the Companies Office Disclose Register.

The Manager’s Report includes a summary update on the investment. You will find the updated Indicative Value, Projected Harvest Return and Cashflow Projection within the Financial Report.

Once again, we will hold the MIS Annual Meetings online via Zoom. A Notice of Meeting will accompany the annual reports when circulated and will include the online joining instructions.

March 2021 reports will be circulated to investors after 1 August. The Annual Meeting for March investments will be held online no later than 30 September.

Tax details out early June

We are on track to have the 2021 Tax Details Statement out to investors early next month.

Determining the tax position for a harvesting forest is complex and takes longer to prepare than for a non-harvesting forest. Plus, with each year, more of our investment forests begin harvesting. Thank you for your patience.

Notes for harvesting forests will accompany the Statements if relevant, which you may forward directly to your accountant or tax adviser.

The difference between taxable income and distributions

The distinction between taxable income and distribution payments is helpful for forestry investors to understand.

Income earned by the limited partnership in a tax year, such as from harvest, is taxable at the investor level.

Distributions paid to investors is simply the surplus cash available. The amount distributed may not comprise all the income earned by the investor.

It is important that you declare the taxable income, not the distributed income, in your tax return. Your Tax Details Statement (available next month) includes the tax information for your Forest Enterprises investments that you need to file your return.

We no longer accept cheques

Please note that we no longer accept cheques as payment, such as for calls.

Instead, you can pay via online banking, by direct debit or with a credit card. Payment options will be outlined in the call notice.

If you’re due to pay a call this June, and would like to pay by direct debit, please return to us a completed direct debit authority no later than 31 May so we can set up your details.

Upcoming investment opportunities

We are working through the details of our next second-rotation forestry investment which we hope to bring to market next quarter.

For an advanced copy of the product disclosure statement when available, click here.

If you’re interested in investing in established Forest Enterprises investments which are closer to harvest, click here to be notified when we have secondary market opportunities available, or contact our Customer Services Manager, Sean Roberts.

Please note, no money is currently being sought in relation to offers of new issue forestry investments. Investors cannot currently apply for or acquire shares in an investment until Forest Enterprises Limited has registered a product disclosure statement and the offer is made in accordance with the Financial Markets Conduct Act 2013. No indication of interest by investors will involve an obligation or a commitment to acquire shares.

Harvest distributions exceed $83m

The latest round of harvest distributions takes our total investor payments in the last four years to over $83m. We expect to reach the $100 million mark by Christmas.

Around 30% of Forest Enterprises clients are currently earning harvest income, the vast majority having received well over 100% of their gross contributions to date.

We recently implemented our fifth collective harvest joint venture, and aim to progress the formal investor vote for at least another three joint ventures before Christmas.

Forest Enterprises is proposing collective harvest arrangements where the benefits of risk reduction and cost efficiencies can be achieved for all investors involved.

Latest log market commentary

Current log prices are strong and we are achieving very good returns for our investors. However, high production across the forestry sector is challenging log distribution systems and creating bottlenecks in transport and storage.

Read and download our latest quarterly Log Market Analysis at this link.

And feel free to sign up to receive these regularly by email at this link.

The graphs below show Forest Enterprises’ 36-month average log price series for Gisborne and the Lower North Island, and include scheduled May 2021 prices. JAS conversion (from volume to tonnes) in Gisborne, at $200 per JAS m3 pruned, is the highest we’ve recorded.

Click on the graphs to take a closer look.

Eastland Port update on Twin Berth project

In the Gisborne Herald recently, Eastland Port gave an update on its Twin Berth project. The planned additional berth is expected to improve capacity for the region’s forestry industry, but currently the Port is at maximum capacity for export log volumes.

Infrastructure availability, such as the ports, rail and cartage, affects the timing and duration of our harvest programmes. We’ve been facing challenges in the log supply chain recently in both Gisborne and Southern North Island.

Love Our Forests

Check out the new Love Our Forests website from peak industry body New Zealand Forest Owners’ Association.

It features a new publication from Forest Growers Levy Trust, Plantation Forestry Aotearoa.

This is an excellent overview of forestry’s important role in the New Zealand economy and environment, and the sector’s challenges and opportunities for the future.

Autumn 2021 Bulletin out now

Just published is the Autumn 2021 issue of the Forestry Bulletin from NZFOA.

News in this issue:

  • Climate Change Plan – Exotics and other renewables
  • Dryland eucalypts take off
  • Roundup on glyphosate
  • Forestry scoops MPI award
  • Sheep and beef farm carbon – the numbers
  • and more…

Fred the Forester Discovers…

Fred the Forester is a book series for school-aged children, explaining how forestry works in our communities, and how forests contribute a sustainable resource for the economy and the world around us.

The first two books are available to buy online – “Where do the pine trees go?” and “What is climate change?” The third book is due out later in 2021.

Themes explored include forestry and the environment, tree and soil biology, the different jobs in forestry, timber processing, and new technologies. Books include puzzles, facts and activities.