Grade timber properly to take ‘Timber to Market’
Grade timber properly, avoid selling in bulk, use registered forestry experts and research thoroughly – those are some of the tips that forest growers should keep in mind as they take their timber to market. Source: Philip Hopkins
That was the message from Steve Dobbyns, a forestry consultant with decades of experience, who was a key speaker at a ‘Timber to Market’ session late last month.
The seminar, organised by the Institute of Foresters of Australia and Australian Forest Growers, was sponsored by VicForests.Mr Dobbyns said private timber growers were faced with the issue of selling the product as a ‘job lot’ or differentiating the timber out.
“I’ve found if you tend to average anything, you end up with a buffer factor,” he said.
People tried to hedge their bets in offering a timber price.
“A lot of private growers … are offered a lump sum as a job lot. This is quite dangerous – you end up only with what the mill wants,” he said.
“Divide the cake into various components – you will get a better average rate overall.”
Mr Dobbyns said owners should grade their timber as best they could. Grading both hardwood and softwood was based on internal defects and length defects such as bends, bump and lumps, with softwood a little easier to grade.
“The more grades you have, the more dollars you can achieve,” he said.
“Grading can be difficult. You should familiarise yourself with it. Most state organisations will have information to guide you on how to grade logs. There is a national competency in log measurement and grading that can be done through a registered training provider. You can also outsource that skill.”
Mr Dobbyns said the next influence on a sale price was the location of the property – whether the point of sale was made when the timber was delivered to the mill or sold on the stump. The delivered price included stumpage – the value of the timber on the stump – plus harvest and haulage.
“I tend to favour ‘deliver to the mill’ sales, particularly if the supply is from different locations,” he said. This made it harder for the consumer/processor to pick apart the various cost inputs.
“A processor can pay a certain amount of money for a log. It comes down to the distance from the mill and the quality of the log.”
Mr Dobbyns said the price was affected by how much timber there is, the volume per hectare on the property and the area available.
“The harvesting contractor tends to want a certain volume. They have costs to cover,” he said. They factored the cost of moving equipment in and out into their harvesting rate.
“The grower wants the harvesting contractor to be sharpening his pencil. The harvesting costs are generally 30-45 per cent of the delivered price. Those figures are based on the last two years of sales and $6.5 million products sold through my business,” he said.
The distance to market made up 15-30% of the delivered price.
“You can haul a good log a long way, but a poor or pulp log, you can’t take far at all.”
Mr Dobbyns said another impact on price was competition for other logs. Prices for private logs could be better in areas where the supply of logs from state forests declined due to more national parks. However, a run of good weather close to the end of the financial year meant the state authority could slowed or turn down wood from private buyers.
Roading also affected harvesting costs. The landowner owned the road and paid for the road costs, an area where the harvesting contractor had no expertise.
Mr Dobbyns said the timing of the sale and harvest could influence the price.
“In wetter months, supply is limited, so tends to get better prices. When it’s drier and everyone can work and produce, you tend to get weaker prices,” he said.
For landowners, wetter months meant higher roading costs, which “eats into residual”. Timing could also be important; for example, the Chinese New Year could affect export markets for six-seven weeks.
Another influence was the size of the property. Small holdings potentially achieved poorer pricing than larger holdings, who can offer security of supply for the customer.
Mr Dobbyns said market demand was affected by events such as bushfires, where burnt infrastructure raised demand for poles and posts.
“There is the opportunity to make good sales if you have the wood and are ready to go,” he said.
To gain information, there were a number of websites and newsletters with price data, while you could watch markets through subscriptions to ABARES.
“Another factor on price is motivation,” he said. Landowners for various reasons may have to sell their timber quickly.
Mr Dobbyns said owners should find out who the contractors were aligned to.
“Often mills have their own harvesting crews,” he said. Find out also whether the contractors had to a full range of markets.
“Don’t deal with just one or two products. A butcher has a few prime cuts, but produces mince and sausages as well, so owners also need markets for those wood products and not have them lying in the bush.”
Mr Dobbyns said owners can do their own harvesting.
“That can put money back in your own pocket but comes with risks. There are a lot of requirements regarding work health and safety to be a timber contractor,” he said.
“You operate in the bush. You must have to satisfy both yourself and potentially WorkCover or similar in your state if something goes wrong. At the end of day, it’s better to hire someone with right equipment rather than do it yourself unless you are well set up and experienced.”
Mr Dobbyns said use Registered Forestry Professionals.
“The IFA provides an accreditation system for professional forest scientists and forest professionals,” he said.
Many people claimed to be professional forestry consultants.
“Check whether they have RFP qualifications. It guarantees a level of professionalism you may not get with someone who labels themselves for consultant.”
Mr Dobbyns said doing an inventory of stock was a lot of work and not worth it, particularly if you had to pay someone. However, being thorough was crucial.
“Make sure every truck is on a numbered document, and you know what everyone in the supply chain is getting paid. Do research on reputable millers and contractors, ask for references,” he said.
“There are some bad news stories in the industry. Through the AFCA (Australian Forest Contractors Association), there is a ‘forest fit’ training program to provide contractors with business skills and a level of accreditation and professionalism. A gold licence for harvesting contractors exists.
For security, with a motion sensing camera on the entrance and exit to your property, you can buy yourself a bit of peace of mind.”