Agenda of Forestry Committee

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Notice is hereby given that a Meeting of the Forestry Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Wednesday, 6 April 2016

9am

Council Chambers
15 Forth Street
Invercargill

Forestry Committee Agenda

OPEN

MEMBERSHIP

Chairperson	Brian Dillon
	Mayor Gary Tong
Councillors	Lyall Bailey
	Stuart Baird
	George Harpur
	Ebel Kremer
	Neil Paterson

IN ATTENDANCE

General Manager Services and Assets

Ian Marshall

Contact Telephone: 0800 732 732

Postal Address: PO Box 903, Invercargill 9840

Email: emailsdc@southlanddc.govt.nz

Website: www.southlanddc.govt.nz

Full agendas are available on Council’s Website

www.southlanddc.govt.nz

1 Apologies

At the close of the agenda no apologies had been received.

2 Leave of absence

At the close of the agenda no requests for leave of absence had been received.

3 Conflict of Interest

Committee Members are reminded of the need to be vigilant to stand aside from decision-making when a conflict arises between their role as a member and any private or other external interest they might have.

4 Public Forum

Notification to speak is required by 5pm at least two days before the meeting. Further information is available on www.southlanddc.govt.nz or phoning 0800 732 732.

5 Extraordinary/Urgent Items

To consider, and if thought fit, to pass a resolution to permit the committee to consider any further items which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded.

Such resolution is required to be made pursuant to Section 46A(7) of the Local Government Official Information and Meetings Act 1987, and the Chairperson must advise:

(i) the reason why the item was not on the Agenda, and

(ii) the reason why the discussion of this item cannot be delayed until a subsequent meeting.

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a) that item may be discussed at that meeting if-

(i) that item is a minor matter relating to the general business of the local authority; and

(ii) the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b) no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

6 Confirmation of Minutes

6.1 Meeting minutes of Forestry Operations Committee, 18 November 2015

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Forestry Committee

OPEN MINUTES

Minutes of a meeting of Forestry Committee held in the Council Chambers, 15 Forth Street, Invercargill on Wednesday, 18 November 2015 at 9am.

present

Chairperson	Brian Dillon
	Mayor Gary Tong
Councillors	Lyall Bailey
	Stuart Baird
	George Harpur
	Ebel Kremer
	Neil Paterson

IN ATTENDANCE

Group Manager Services and Assets Ian Marshall, Committee Advisor Fiona Dunlop, Dan Minehan Managing Director IFS Growth Limited and Reece McKenzie Forest Manager/Carbon Business Manager IFS Growth Limited

1 Apologies

There were no apologies.

2 Leave of absence

There were no requests for leave of absence.

3 Conflict of Interest

There were no conflicts of interest declared.

4 Public Forum

There was no public forum

5 Extraordinary/Urgent Items

There were no Extraordinary/Urgent items.

6 Confirmation of Minutes

There was discussion regarding the delegation of authority to sell trees for harvesting which was considered at the 26 August 2015 meeting as contained in item 7.2 – Delegation of Authority to Sell Trees for Harvesting – Forestry Business Unit.. Clarification of this delegation would be captured when the Committee discussed item 7.1 Strategic Purpose of the Forestry Business Unit.

(Mayor Tong joined the meeting at 9.03am.)

Resolution

Moved Cr Dillon, seconded Cr Kremer and resolved:

That the Forestry Operations Committee confirms the minutes of the meeting held on 26 August 2015.

Reports

7.1

Strategic Purpose of the Forestry Business Unit

Record No: R/15/11/20364

Group Manager Services and Assets Ian Marshall was in attendance for this item.

Mr Marshall advised that the purpose of the report was to achieve clarity and confirmation regarding the strategic purpose of the Southland District Council Forestry business unit.

The Committee noted that the report discussed the aspects of management of the forest estate and contemplates how the issues of recreational amenity, sale and acquisition, local support, supporting research and management support for urban plantings should be managed.

The Committee also clarified the delegation regarding the Delegation of Authority to Sell Trees for Harvesting.

Resolution

Moved Cr Bailey, seconded Cr Paterson and resolved recommendations a to d with new e to g (as indicated):

That the Forestry Operations Committee:

a) Receives the report titled “Strategic Purpose of the Forestry Business Unit” dated 10 November 2015.

b) Determines that this matter or decision be recognised not significant in terms of Section 76 of the Local Government Act 2002.

c) Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d) Supports further development of the Forest Estate Management Plan to incorporate the issues of Recreational amenity, Sale and Acquisition, Local Support, Supporting Research and Management Support for Urban Plantings.

e) Note the delegated authority given to the General Manager Services and Assets and Chair of the Forestry Operations Committee at the meeting held on 26 August 2015 in relation to the selling of trees for harvesting and request that the Committee members be informed of any proposal to sell trees for harvesting before the decision is made.

f) Request that Officers report back to Committee at the next meeting to clarify the specific delegations of the General Manager Services and Assets in relation to forestry operations for Southland District Council.

g) Report back to the next meeting of the Committee on the status of each block of forestry land.

7.2

Financial Report to 30 September

Record No: R/15/10/19030

Group Manager Services and Assets Ian Marshall, Dan Minehan Managing Director IFS Growth Limited and Reece McKenzie Forest Manager/Carbon Business Manager IFS Growth Limited were in attendance for this item.

The Committee noted that the forestry business unit has had a slow start to the year in financial terms, due to no timber sales and as a result, minimal operational activities.

It was also noted that expenditure for the year to date stands at $150,000, from a total budget of $840,000 to year end. Major areas of expenditure so far have revolved around replanting operations at Dipton and Waikaia ($77,000), internal council rates, forest management and general maintenance.

The Committee further noted that the net position for the year stands at negative $150,000, which will quickly correct once the 2015/16 harvesting program begins. On a positive note export log prices are significantly up at the time of reporting for the Committee.

Resolution

Moved Cr Bailey, seconded Cr Baird and resolved:

That the Forestry Operations Committee:

a) Receives the report titled “Financial Report to 30 September” dated 10 November 2015.

7.3

IFS Growth Forest Manager's Report of Forestry Activity for the period to 30 September 2015

Record No: R/15/10/19064

The Committee noted that the have been no Health and Safety issues over the over the three month period to 30 September 2015 being reported on. Three contractors had been employed. Two for planting in the Dipton and Waikaia areas and one for general maintenance. All the operators (including IFS Growth staff supervisors) require pre-operation induction, forest specific hazards and regular supervision to ensure all safe practices are being carried out.

The Committee also noted that IFS Growth continues to actively identify and manage hazards in Southland District Council’s forests. From a health and safety perspective anyone (including IFS Growth staff and landowners, or their representatives) entering a forest (that we manage) should ensure that they have a list of hazards for that forest prior to entering the forest.

Officers advised that domestic log prices continue to improve. A per tonne return on a pruned log is now 11% up on three month ago. A mill saw log (S & L) is also currently trading favourably at $88/t compared to the equivalent export A grade at $73/t.

Export logs were subject to good news in October 2015 with a suggestion of an increase in the market. This is likely because of a reduction of logs in China and a pickup in demand.

Resolution

Moved Mayor Tong, seconded Cr Kremer and resolved:

That the Forestry Operations Committee:

a) Receives the report titled “IFS Growth Forest Manager's Report of Forestry Activity for the period to 30 September 2015” dated 10 November 2015.

The meeting concluded at 9.54am. CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Forestry Operations Committee HELD ON WEDNESDAY 18 NOVEMBER 2015.

DATE:...................................................................

CHAIRPERSON:...................................................

Forestry Operations Committee

06 April 2016

MEMORANDUM TO FORESTRY OPERATIONS COMMITTEE

Meeting Date: 17 FEBRUARY 2016

Subject: FOREST MANAGER’S REPORT FOR PERIOD TO 31 DECEMBER 2015

File No.: 220/10/3/2

Memorandum by Mr Reece McKenzie dated 2 February 2016.

RECOMMENDATION

That the Memorandum on the Forest Manager’s report on forestry activity for the period to 31 December 2015 be received as information.

Signature
	Author		Executive Staff

MEMORANDUM

This note covers activity over the three month period to 31 December 2015, since the last formal meeting on 18 November 2015.

1. Health and Safety

Reported incidents past 12 months = 3

This period = 0

Forestry works for this period have employed six contractors including:

· Spot Spray - Dipton (1)

· Prune - Ohai, Dipton (1)

· General maintenance activities (2)

· Aerial Spray - Waikaia (1)

· Forest Health Survey (1)

From a health and safety perspective all of these operators (including IFS Growth staff supervisors) require pre-operation induction, forest specific hazards and regular supervision to ensure all safe practices are being carried out.

Hazard Management

IFS Growth continues to actively identify and manage hazards in Southland District Council’s forests. From a health and safety perspective anyone (including IFS Growth staff and landowners, or their representatives) entering a forest (that we manage) should ensure that they have a list of hazards for that forest prior to entering the forest. IFS Growth can be contacted at any time for requests for an
up-to-date hazard map and/or list for Southland District Council’s forests.

No new hazards have been identified during this period.

2. Re-establishment

All releasing operations have been carried out during this quarter including spot spraying Dipton and aerial releasing at Waikaia.

Land preparation for the 2016 planting area is awaiting block availability once harvesting is completed. At this stage any area available in Ohai will be deferred to the following year due to weeds.

3. Harvesting

There was no harvesting activity during this quarter. Sale 1 in Dipton of the first 10,000 tonnes is due to commence in February.

In total there is 38,000 tonnes scheduled to be harvested this year, with approximately 30,000 tonnes from Dipton and 8,000 tonnes from Ohai. There is also some roadline harvesting to occur in Waikaia as road preparation for next season’s harvest.

4. Roading

There has been no roading activity during this period.

5. Silviculture

The 2015/2016 programme includes an area of 134 hectares in Ohai, Gowan Hills and Dipton.

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There has been 21 ha completed including all Dipton pruning and thinning, and P3 at Ohai. There is currently a silviculture crew progressing with the pruning at Ohai.

6. Forest Health

The 2015/2016 forest health survey was completed during December by SPS Biosecurity Ltd. This work includes both aerial and ground survey of all forests. Whilst no new pests or diseases were picked up, there are some nutrient disorders noted in young trees at Gowan Hills and Waikaia forests.

IFS Growth recommends an annual foliage survey (age 3) to quantify nutrient status going forward.

7. Weed Control/Maintenance

The majority of the annual maintenance programme was completed during this period. Activities have included:

· Roadside and boundary spray in all forests

· Track clearing from debris Gowan Hills, Waikaia and Dipton

· Clear tree and log jam from stream Waikaia

· Mulch strip to progress Ohai frontage tidy up.

Security cameras are installed in Waikaia, Dipton and Gowan Hills forests.

8. Security and Trespassing

An illegal hunting party caught in Gowan Hills during November has been referred onto the police. One of them is a repeat offender caught on security camera from February. We know who he is and his reputation.

Gowan Hills is currently open for hunting permits; due to pest numbers building and dialogue between hunters knowing that it is not being hunted attracting illegal interest. The TB operators have also mentioned that numbers are healthy. Any access authorised is under strict control.

Hunting permits are currently not being issued for other Southland District Council’s forests.

Forest access permits issued during this period have included:

· Ground TB operations at Gowan Hills and Ohai,

· Bathurst Resources Ltd drilling test holes at Ohai,

· Firewood permit at Ohai,

· Aerial pig shooting for TB monitor at Gowan Hills,

· Hunting permits (2) in Gowan Hills.

9. The Emissions Trading Scheme

· The Council’s Post-1989 forest areas (129.2 ha) = 31,280 NZU. The 2015 allocation of NZU’s can now be claimed.

· The Council’s pre-1990 forest areas (1,384 ha) remain at 82,914 NZU. Current value = $829K, up $249 in value this quarter period.

· The NZU market strengthened by 40% during this quarter, current trading is around $10/NZU.

· Source: OMF Financial (28/01/16)

10. Log Prices

Domestic Log Prices

Domestic log prices have remained stable and are unchanged from the last quarterly report. A mill saw log (S & L) are currently trading unfavourably at $88/t compared to the equivalent export A grade at $104/t.

Export Prices

Export prices have improved significantly through to January, as falling oil prices pushed down shipping rates while a decline in the kiwi dollar made the country's goods more attractive to overseas buyers. Both A and K grade logs have lifted 20% in value during this quarter.

Regional Log Price Summary

Source: IFS Growth Dataset

11. Revenues and Expenditure

The financial contribution remains quiet with minimal operational activities and no timber sales in this past quarter. The total direct spend for the YTD is $230K.

signiture

Reece McKenzie B.Com Ag, Dip. For

Forest Manager/Carbon Business Manager

IFS Growth Limited - Living, Breathing Investments

Forestry Committee

6 April 2016

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Financial Report to 29 February 2016

Record No: R/16/3/3718

Author: Ben du Mez, Graduate Accountant

Approved by: Ian Marshall, GM - Services and Assets

☐ Decision ☐ Recommendation ☒ Information

Management Commentary

1 With a slow start to the financial year, the forestry business is expected to have a strong finish in the last four months with harvesting now in progress. The annual harvest target this year is 38,000 tonnes, with 5% cut so far.

2 Income to date comprises of $178K of timber sales out of Dipton Forest. Total forecast timber sales should be close to $3.4M by the end of the financial year. The forecast variance to budget income ($2.2M) is due to a change in accounting methodology between stumpage selling (as was budgeted) versus the new graded sales system. Under the new graded sales system income received and forecast is now independent of harvesting costs (eg. logging and transport costs), these costs are now coded to forestry expenditure via “Harvesting Costs”. As a result the total expenditure to year end is forecast at $2.2M compared to $841K budgeted.

3 Expenditure for the year to date stands at $454K. The areas of expenditure revolve around pruning operations in Dipton and Ohai ($119K), establishment in Dipton and Waikaia ($98K), forest management, and general maintenance.

4 The current year net position stands at negative $276K, which will quickly correct as harvesting income continues. The forecast net position to year end should be a surplus of approximately $1.2M, before forestry revaluation. The $100K variation to budget net surplus is mainly a reflection of the reduced harvest volume, down 2,000 tonnes to budget. This is not a reduction in yield but a change in forest mix to suit domestic and export markets. On a positive note current log prices are up on forecast. If these hold beyond April and the full harvest program is achieved, there should be an improvement to this figure.

Reece McKenzie

FOREST MANAGER

IFS GROWTH

Recommendation

That the Forestry Operations Committee:

a) Receives the report titled “Financial Report to 29 February 2016” dated 24 March 2016.

Attachments

There are no attachments for this report.