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Even after chipping, angelic mulch
retains a visible glow, as seen here.
Since a moisture level over 20% or so must be present in wood for fungus to live, you need to use wood that's either fresh-fallen, or that stayed in moist conditions. To help the process along for some of the dryer pieces I had, I cut the top off of an old 55 gallon drum and built a large-scale compost-tea maker with the bubbler from an aquarium. Actually, at first I just put all the wood in the drum with water, but unsurprisingly that starts to stink after a bit due to anaerobic growth, which is the opposite of what I want anyway. So a cheap aquarium bubbler keeps the water oxygenated, and adding some compost to the vat creates a nice environment for getting the wood saturated and also colonized. None of this is essential, of course, but it seemed to help, and meant the wood would leach less moisture from the soil as it "charged" initially, reaching equilibrium with soil moisture (to avoid both dry dirt and dry wood, I'll also water everything a lot.)
So now I'm starting to stack the wood. It's all deadfall, especially easy to get since Hurricane Irene knocked down a lot of trees and branches. I also laid down dead leaves and other detritus. To build the mounds, I'll just continue to stack more branches, larger stuff on the bottom. I'll intermix it with dead leaves, the dirt I dug out initially, and aged manure. The aged manure comes from a farm rescue, where it is produced continuously as a side effect of taking care of lots of abandoned ponies, donkeys, and so forth. They pile it up on the edge of the farm, where it ages and breaks down into excellent rich soil amendment. It's not a necessary part of a hugelkultur mound, but given that it's not only free, but I'm helping dispose of what would otherwise be a "waste" product, and I can stop by the farm on the way home from a weekly out-of-town appointment anyway, it's hard to come by a more perfectly permacultural way to stack functions and multiply effects.
soil nitrogen for way more information on this topic than you probably wanted. The hose snaking through is a homemade drip-irrigation hose; it involves finding a discarded old garden hose, then drilling lots of tiny holes in it. For now, it's saturating the lower soil level before I add more stuff on top.
Finally, this is the top mound, after its construction a week later. Same process, same results. Now, both mounds are seeded, swales are constructed, and on the top right of the photograph, you can see the new dwarf cherry that's below the curve of the hillside, at the corner of the retaining walls. All of the swales drain into its basin, where the hugelkultur mounds around it and its own thirsty roots deal with water overflows. At this point, it's just a matter of letting the mounds "cook" during the winter. The rye grass and the earth itself provide enough insulation that the deeper logs will stay above freezing for quite a while, allowing bacterial and fungal and other small life to begin turning logs into soil wealth. By the time spring rolls around, this area should be ripe and ready for planting. Also, having now observed for a while, I will be slicing the plastic wrapping off of the top of the retaining boards, because it is holding moisture against the wood. At the bottom I think it still serves a net benefit, keeping the wood from constant soil contact, but the top should be open to allow evaporation to keep the timbers dry.