Post on 15-Apr-2018
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Economy of high quality birch management (Anssi Ahtikoski)
Contents of the presentation
•Two different cases and locations on silver birch management in Finland –does better quality pay off ?
•curly birch management, economic aspects
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Locations of the birch stands
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
High quality silver birch management in south-central Finland
Management schedules, in brief
Planting with 1500 seedlings, no tending of seedling stand, two or three intermediate thinnings, final cut
•Planting with 2500 seedlings, tending of seedling stand, two or three intermediate thinnings, final cut
•Two locations: Lahti and Kuopio
with and
without pruning
QUESTIONS:
1) two or three thinnings ?
2) 1500 or 2500 seedlings ?
3) South or Central Finland ?
4) what is the return of investment (ROI) on pruning ?
all analyses on high productive site type (dominant height100= 30-33m)
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Applied stumpage prices and the costs
of silvicultural works
378pruning (350 stems/ha)
306tending of seedling stand
594planting
260mounding
135clearing of regeneration area
unit price, €/hasilvicultural work
pulpwood 13.14 €/m3
birch sawlogs43.21 €/m3
..if pruned then 25% of total sawlogs volume in final cuta) is worth 120 €/m3
(65% of normal quality, 10% directed to pulpwood)
a)Kannisto & Herajärvi 2006
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Growth predictions... by MOTTI stand simulator
What is MOTTI?
A stand-level analysis tool for assessing the effects of alternative forest management on the
development of stand and treesincomes and costs profitability of forest management
Workbench for modellersmodel building and testing
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
System overview / MOTTI
Growth & Mortality
Stand-levelTree-level
Basal area
growth
Height growth
Mortality
Self-thinning
Tree k
Tree k+1
Tree k
Tree k+1
Tree-dataUpdate
Stand-data
Calculate
Site-index
Predict(in the 1st
round)
Estimate
Update
Optional
Update
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Simulation of stand development in MOTTI
Stand data base at time i
Prediction of site indexCompetition measures
Calculation of the supplementary information
Tree crown ratio
Mortality-individual-tree mortality-self-thinning on stand level
Tree growth-tree basal area-tree height
Prediction of stand dynamicsDominant height
increment
Updating of tree and stand characteristics
Auxiliary models-stem volume-branchiness-stem quality
Tree variables-diameter-height
Stand characteristics-stem number-basal area-dominant height-volume
Updated stand data base at time i + 5 i=i+5
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Planting with 1500 seedlings, no tending of seedling stand, three thinnings, final cut = traditional management
thinnings at biological age of
20 years (pulpwood 34 m3/ha)
35 years (sawlogs 11.0, pulpwood 45.5)
50 years (sawlogs 26.1, pulpwood 34.5)
final cut at age 60:
sawlogs 152.3
pulpwood 104.5 m3/ha
QUESTION 1: Two or three thinnings ?
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Planting with 1500 seedlings, no tending of seedling stand, two thinnings, final cut = present management
thinnings at biological age of
24 years (pulpwood 55.4 m3/ha)
46 years (sawlogs 34.6, pulpwood 77.9)
final cut at age 60:
sawlogs 145.6
pulpwood 94.6 m3/ha
QUESTION 1: Two or three thinnings ?
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
QUESTION 1: Two or three thinnings ?
-500
0
500
1000
1500
2000
2500
3000
3500
4000
2 % 3 % 4 % 5 %
three thinninngs, no pruning
three thinnings & pruning
two thinnings, no pruning
two thinnings & pruning
two thinnings +pruning+small-sizedsawlogs
"what if" we fail in pruning
interpreparation:
the risk for pruning is 417 €/ha
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
QUESTION 2: 1500 or 2500 seedlings ?
when 2500 seedlings planted,
tending of seedling stand required at
biological age of 7 years
thinnings at biological age of
20 years (pulpwood 34 m3/ha)
35 years (sawlogs 11.0, pulpwood 45.5)
50 years (sawlogs 26.1, pulpwood 34.5)
when 1500 seedlings planted,
we do not need tending of seedling stand
thinnings at biological age of
22 years (pulpwood 31.3 m3/ha)
37 years (sawlogs 12.4, pulpwood 43.8)
50 years (sawlogs 29.5, pulpwood 38.8)
final cut at age 60:
sawlogs 159.7
pulpwood 103.8 m3/ha
final cut at age 60:
sawlogs 152.3
pulpwood 104.5 m3/ha
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
QUESTION 2: 1500 or 2500 seedlings ?
-500
0
500
1000
1500
2000
2500
3000
3500di
scou
nted
net
rev
enue
s, €
/ha
2 % 3 % 4 % 5 %
discount rate
1500 seedlings + pruning but NO tending
2500 seedlings+tending of seedling stand+pruningConclusion: the higher
the discount rate, the
better choice planting with 1500
seedlings would be
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
QUESTION 3: South or Central Finland ?
South Finland (Lahti) Central Finland (Kuopio)
thinnings at biological age of
24 years (pulpwood 55.4 m3/ha)
46 years (sawlogs 34.6, pulpwood 77.9)
final cut at age 60:
sawlogs 145.6
pulpwood 94.6 m3/ha
thinnings at biological age of
28 years (pulpwood 42.2 m3/ha)
43 years (sawlogs 13.3, pulpwood 44.4)
final cut at age 60:
sawlogs 134.4
pulpwood 101.8 m3/ha
Measured vs. predicted (MOTTI)
N=3700 N= 4500 stems/ha
G=2.72 G= 3.8 m2/ha
D=4.22 D=4.65 cm
Hdom=7.52 Hdom= 7.3 m
11 yrs
measured stand in Suonenjoki, predicted stand in Kuopio, distance app. 40 km
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
QUESTION 3: South or Central Finland ?
-500
0
500
1000
1500
2000
2500
3000
3500
2 % 3 % 4 % 5 %
South Finland, no pruningCentral Finland, no pruningSouth Finland, with pruningCentral Finland, with pruning
+36 % better
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
QUESTION 4: return on investment (ROI) on pruning ?
pruning at age 16 (Dw 8.2cm)
0
1
2
3
4
5
6
7
RO
I, pe
r ce
nt (%
)
"25%-65%-10%" 40%-50%-10%" "what if 200€/ qualitysawlogs
South FinlandCentral Finland
high productive site, dominant height100= 30-33m
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
…What about curly birch (Betula pendula var. carelica) – is curly birch management financially attractive ?
Concise background
•The most valuable and highest-yielding tree species in Finland
•actually a special variant, ”curled silver birch”, in which the lengthwise cells running parallel to the trunk have taken on winding direction
•2/3 naturally grown, 1/3 cultivated, and during the past 20 years app. 5 000 hectares of curly-birch cultivation areas have been established
•end-use: historically in vernacular tools and implements (due to tough and non-splitting structure) , at present corporate gifts (e.g. briefcase), furniture (chairs, tables); the most famous Finnish artists (Akseli Gallen-Gallela, Alvar Aalto, Tapio Wirkkala) have made works of art with curly birch
•requires intensive management and considerable investments in establishment (compared to other tree species in Finland)
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
curly birch management as business ?
An example of management schedule
•Planting with cloned plants (i.e. vegetatively propagated plants grown in nursery) and standard seedlings
•Planting intensity: 800 cloned plants and 800 seedlings, total of 1600 plants/hectare
•Very intensive early management with e.g. weeding, several herbicides, plant covers, prunings and special cleanings
•Three intermediate thinnings (ages: 16, 26 and 36 yrs), final cut at age of 50 yrs
Source: Jylhä & Hagqvist, a manuscript on the profitability of curly birch management
all analyses on high productive site type (dominant height100= 30-33m)
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
clearing of planting + adjustment of pruning special cleaning pruning pruning thinning pruning thinning pruning thinning final cut
regeneration area+ seedling covers seedling covers of secundary species
2* herbicides
135 €/ha + 1250 + 100 300 300 300 300 300 300
2* 120 €/ha 600
year 0 1 2,3,4 5 7 8 12 20 31
age 16: 1 000 kg of quality
B curly birch (”oksavisa”)
age 26: 6 800 kg of quality
B curly birch (”oksavisa”)
age 36: 6 300 kg of quality
B curly birch (”oksavisa”)
AND 6300 kg of quality A curly birch
(”sorvivisa”)
unit prices
quality B: 1 €/kg
quality A: 4 €/kg
age 50: 48 300 kg of
quality B curly birch
(”oksavisa”)
AND 13 800 kg of
quality A curly
birch (”sorvivisa”)
Source: Jylhä & Hagqvist, a manuscript on the profitability of curly birch management
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Financial assessment on curly birch management
Net present values (incl. bare land value, 1500 €/ha)
0
2000
4000
6000
8000
10000
12000
net p
rese
nt v
alue
, €/h
a
5 % 6 % 7 % 8 %discount rate
IRR= 8.
3% - 9.3
% !
IRR=internal rate of return
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Which one – silver birch or curly birch ?
silver birch
low establishment costs
(< 1000 €/ha)
easy management
robust growth predictions
large variations in stumpage prices
uncertain demand, particularly on pulpwood
average ROIs are low
curly birch
very high establishment costs
(> 5000 €/ha)
intensive and detailed managementrobust price expectations on high quality curly birch
ROIs on management are the highest among the tree species cultivated in Finland !
METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi
Implications ?
..If You are a risk averter and You only expect moderate returns on investment then silver birch,
for risk-takers and investers who desire high-yielding rates choose curly birch ☺