Evaluating profitability of solid timber production from 15 year old pruned and thinned Eucalyptus nitens (Deane & Maiden) in Canterbury

Abstract

This case study investigated profitability of a small stand of fast-grown Eucalyptus nitens in Canterbury for sawn timber production. This stand was pruned and thinned and then harvested at 15 years old. An estimate of per-hectare log yields and diameters was made from the stand. Sample logs were sawn, dried and profiled, then products quantified. Log prices were estimated using the residual value method. Prices were summed for sawn products from each log, from which processing expenses and sawmill profit were deducted for an estimate of log value. In the absence of market prices for sawn E. nitens products empirical estimates of price were derived from market survey data. Predictive models were produced from estimated stand log yields along with predicted product revenues and processing costs from sample logs. These were used for estimating per-hectare log residual values from the case study stand trees. Financial returns to the grower were then calculated as discounted cash flows from the estimated log residual values per hectare, taking into account grower costs along with harvesting and transport costs. Best-practice processing methods were identified from the literature and applied as a productivity benchmark. Methods were developed with the view to standardising data across research efforts that seek to improve grade recoveries for E. nitens. A range of factors were investigated that potentially influenced E. nitens log residual value in this case study, including log diameter and log position. Outcomes included a reasonably favourable return on investment for the grower. However, this depended on a number of factors such as land price, distance from processor, product prices, grading methods, drying methods and level of sawmill profit. The application of contemporary best practice small-scale processing methods indicates that E. nitens has potential as a profitable plantation species for solid timber production.