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

Date:                       Time: Meeting Room: Venue:	Wednesday, 8 June 2016 2pm 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

Group Manager Services and Assets	Ian Marshall
Committee Advisor	Fiona Dunlop

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

Terms of Reference for the Forestry Committee

This committee is a committee of Southland District Council and has responsibility to:

· Monitor the operations of the Forestry Business Unit.

· Oversee the development of an Annual Business Plan, Forestry Management Plans and a long term Strategic Plan for Council's forest estate structured on a sustainable yield basis.

· Carry out any activity relevant to the Forestry Business Unit's operations and in accordance with the Annual Business Plan and Forest Management Plans.

· Prepare an Annual Report of activities and performance compared to the Business Plan.

· Ensure that the forest estate is managed to the best advantage of Council and in particular recognising the need to provide a consistent cash return to Council where at all possible.

Forestry Committee 08 June 2016

TABLE OF CONTENTS

ITEM                                                                                                                                   PAGE

Procedural

1          Apologies                                                                                                                        5

2          Leave of absence                                                                                                           5

3          Conflict of Interest                                                                                                         5

4          Public Forum                                                                                                                  5

5          Extraordinary/Urgent Items                                                                                          5

6          Confirmation of Minutes                                                                                               5

Reports

7.1       Financial Report to 31 March 2016                                                                            11

7.2       IFS Growth Forest Manager's Report of Forestry Activity for the period to 31 March 2016                                                                                                                                       19

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 held on 6 April 2016

Forestry Committee

OPEN MINUTES

Minutes of a meeting of Forestry Committee held in the Council Chambers, 15 Forth Street, Invercargill on Wednesday, 6 April 2016 at 9am.

present

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 and Committee Advisor Fiona Dunlop

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

Resolution

Moved Cr Kremer, seconded Cr Paterson and resolved:

That the Forestry Operations Committee confirms the minutes of the meeting held on 18 November 2015 as a true and correct record of that meeting.

Reports

7.1	IFS Growth Forest Manager's Report of Forestry Activity for the period to 31 December 2015 Record No:         R/16/2/1517
	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. (Councillor Bailey joined the meeting at 9.02am.) The Committee noted that IFS Growth continues to actively identify and manage hazards in the Southland District Council’s forests.  From a health and safety perspective anyone (including IFS Growth staff and landowners, or their representatives) entering a forest managed by them should ensure that they have a list of hazards for that forest prior to entering. The Committee also noted that releasing operations had been carried out during the reporting quarter.  This included 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. It was also noted by the Committee that there was no harvesting activity during the reporting quarter.  Sale 1 in Dipton of the first 10,000 tonnes was due to commence in February 2016.  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. The Committee further noted that the 2015/2016 silviculture programme includes an area of 134 hectares in Ohai, Gowan Hills and Dipton and that 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. Also noted was the 2015/2016 forest health survey which was completed during December 2015 by SPS Biosecurity Ltd.  This work included both aerial and ground survey of all forests.  No new pests or diseases were picked up, but there are some nutrient disorders noted in young trees at Gowan Hills and Waikaia forests.  AS a results IFS Growth recommends an annual foliage survey to quantify the nutrient status going forward.  The Committee noted that the majority of the annual maintenance programme was completed during this reporting period.  Activities conducted were as follows: ·                 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. The Committee were advised that an illegal hunting party was caught in Gowan Hills during November 2015 and this has been referred onto the police.   The Gowan Hills block is currently open for hunting permits.  Due to pest numbers building and dialogue between hunters knowing that it is not being hunted has been attracting illegal interest.  Also advised was that TB operators have also mentioned that numbers are healthy.  Any access authorised to the area is under strict control.  Hunting permits are currently not being issued for other Southland District Council’s forests.  The Committee noted that forest access permits issued during this reporting 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. The Committee were also advised that the Emissions trading scheme is as follows: · 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. A discussion was had on the issue of the Southland District Council carbon credits.  The Committee agreed that officers should report to the Committee on this.
	Resolution Moved Cr Harpur, seconded Cr Paterson recommendation a with a new b (as indicated) That the Forestry Operations Committee: a)         Receives the report titled “IFS Growth Forest Manager's Report of Forestry Activity for the period to 31 December 2015” dated 1 April 2016. b)         Requests that officers discuss with the Finance Team regarding the management of the Southland District Council carbon credits and report back to the Committee.

7.2	Financial Report to 29 February 2016 Record No:         R/16/3/3718
	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 income to date comprises of $178,000 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 $841,000 budgeted. The Committee also noted that expenditure for the year to date stands at $454,000. The areas of expenditure revolve around pruning operations in Dipton and Ohai ($119,000), establishment in Dipton and Waikaia ($98K), forest management, and general maintenance.  Also noted by the Committee was the current year net position which stands at negative $276,000.  This 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 $100,000 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. 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.
	Resolution Moved Cr Bailey, seconded Cr Baird and resolved: That the Forestry Operations Committee: a)         Receives the report titled “Financial Report to 29 February 2016” dated 24 March 2016.

7.3	Dipton Harvest Progress Report- Mar 2016 Record No:         R/16/3/4661
	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 harvesting had progressed well in the Dipton Forest and that a progress report had been prepared advising of progress as at 30 March 2016. The Chair advised that he had been on a site visit to the and seen the Dipton harvesting progress. A site visit to the Dipton site was suggested.  The Committee agreed to one on 2 May 2016.
	Resolution Moved Cr Paterson, seconded Cr Bailey and resolved: That the Forestry Operations Committee: a)         Receives the report titled “Dipton Harvest Progress Report- Mar 2016” dated 31 March 2016.

The meeting concluded at 9.57am.               CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Forestry Operations Committee HELD ON WEDNESDAY 6 APRIL 2016.

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

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

Forestry Committee 8 June 2016

Financial Report to 31 March 2016

Record No:        R/16/4/5584

Author:                 Ben du Mez, Graduate Accountant

Approved by:       Ian Marshall, Group Manager Services and Assets

☐  Decision                           ☐  Recommendation                      ☒  Information

Management Commentary

1        The forestry business has continued to perform during the third quarter of 2015/16. As we approach the end of the financial year, a third of the harvesting income and forest expenditure forecast has now been processed. Whilst there is still a large amount of work to be done till year end, this should be achievable under current resources and market conditions.

2        Income to date comprises of $994K of timber sales out of Dipton Forest. Total forecast timber sales should be close to $3.4M by the end of the financial year. As stated in previous reports both income and expenditure will be over budget at year end due to a change in accounting methodology for timber sales.

3        Expenditure for the year to date stands at $857K. The areas of expenditure revolve around harvesting operations ($425K), silviculture ($151K), establishment in Dipton and Waikaia ($98K), forest management, and general maintenance.

4        The current year net position stands at $136K, with a forecast year-end surplus of approximately $1.2M, before forestry revaluation forecast.

Reece McKenzie

FOREST MANAGER

IFS GROWTH

Recommendation

That the Forestry Operations Committee:

a)         Receives the report titled “Financial Report to 31 March 2016” dated 1 June 2016.

Attachments

There are no attachments for this report.  

Forestry Committee 8 June 2016

IFS Growth Forest Manager's Report of Forestry Activity for the period to 31 March 2016

Record No:        R/16/4/6243

Author:                 Ian Marshall, Group Manager Services and Assets

Approved by:       Anne Robson, Chief Financial Officer

☐  Decision                           ☐  Recommendation                      ☒  Information

Report Summary

1        The IFS Growth Forest Manager’s Report advises of forestry activity for the period
to 31 March 2016.

Southland District Council Forestry Activity

2        The IFS Growth Forest Manager’s report received is attached.

Recommendation

That the Forestry Operations Committee:

a)         Receives the report titled “IFS Growth Forest Manager's Report of Forestry Activity for the period to 31 March 2016” dated 24 May 2016.

Attachments

a         Report to Forestry Operations Committee - IFS Growth Forest Manager s Report of Forestry Activity for the period to 31 March 2016(2)- PDF View

Forestry Operations Committee

08 June 2016