This is my annual summary of Island Specialty Timbers (IST) log tender results.
Island Specialty Timbers is the only source of competitive, transparent log prices anywhere in Australia, including blackwood sawlog prices.
That simple statement tells us a great deal about the dire condition of the forest industry in Australia.
https://www.islandspecialtytimbers.com.au/
IST is a business enterprise of Sustainable Timber Tasmania (STT) which sources and retails raw material of Tasmanian specialty timbers from harvest or salvage operations conducted on State owned Permanent Timber Production Zone land (PTPZl).
IST is not really a “business” just as the State forest agency Sustainable Timber Tasmania is not a business either. Logging of public native forest in Tasmania requires significant taxpayer subsidies every year.
You can read my previous annual tender summaries here:
https://blackwoodgrowers.com.au/?s=tender
IST conducted 10 log tenders during the year with 286 cubic metres of special species logs put to public tender. Tasmania defines “special species” as any native forest timber apart from plain grain Tasmanian oak.
Blackwood Results
This is the important bit……
2022 was another champagne year for blackwood, continuing the strong market demand and prices from 2021.
2021 was the year that plain-grain blackwood sawlog broke the $1,000 per cubic metre price barrier. 2022 continued that trend with a record price of $1,150 per cubic metre.
The chart below shows blackwood sales results for the year.
A total of 15 blackwood logs (21.7 cubic metres) were put to tender this year, all of it plain grain. All logs were sold, for an average price of $643 per cubic metre, or a total of $13,950. Average log volume was 1.45 cubic metres – a good size sawlog!
A stand-out result for the year was a massive 2.46 cubic metre blackwood log that sold for $925 per cubic metre, with a total price of $2,276!
The above chart shows a return to strong demand and strong prices for quality plain grain blackwood sawlogs following the pandemic year of 2019-20, with maximum and average prices showing strong increases.
This is the greatest volume of blackwood that IST has put to tender for quite some time, despite the fact that blackwood makes up more than 90% of special species harvested from public native forest in Tasmania. Generally ~9,000 cubic metres of blackwood is harvested annually with 99.999% being sold at heavily discounted Government prices on long term sales contracts.
The Tasmanian government dominates and undermines the blackwood log and timber market. These log tender results need to be interpreted bearing this fact in mind.
Premium plain grain sawlogs are what can be grown in blackwood plantations.
Will this result capture the attention and imagination of Tasmanian farmers?
The following chart shows the average size characteristics of plain grain blackwood logs sold at IST tender. The target sawlog from a blackwood plantation has a volume of 1.5 cubic metres and a small end diameter (SED) of around 50 cm.
Remember these IST tender sales represent tiny log volumes sold into the small southern Tasmanian market. They represent mill door prices not stumpages.
Imagine if IST put 10 cubic metres of blackwood sawlog at each tender (100 cubic metres per year) to attract mainland and maybe even overseas buyers.
Imagine if State government forest policy was about profitable tree growers and not sawmill welfare.
Imagine what that change would do for the forest industry and Tasmanian farmers!
These positive blackwood log market signals should be resulting in more blackwood plantations being established, helping to build the industry and make Tasmanian farmers more profitable.
One hectare of well managed blackwood plantation has the potential to produce approx 300 cubic metres of premium sawlog after 30 – 35 years. At $1,000 per cubic metre that equates to $300,000 per ha in todays market.
General Results
Overall IST put 286 cubic metres of specialty timbers to tender in 2021-22 of which 13.8 cubic metres was not sold. Total tender revenue was $230,400.
Last year Sustainable Timbers Tasmania sold 8,825 cubic metres of specialty timbers, so these competitive tender sales represent a mere 3% of specialty timber sales from public native forests in Tasmania.
With the exception of the July 2021 and May 2022 tenders, the tender results were poor with maximum and average prices well down on previous years (see chart below).
The July 2021 tender was dominated by Black heart sassafras logs which generally attract high prices, whilst the May 2022 tender was dominated by Black heart sassafras, Tiger myrtle and figured Huon pine, all of which are premium species attracting premium prices. These tender results show that the market is still prepared to pay premium prices for rare, quality logs.
It was at the latter tender that a new record IST tender price was set for a special species sawlog. This log was a 0.94 cubic metre Tiger myrtle log that sold for $6,100 per cubic metre, total price $5,734!
The following chart shows the volume and price summary for 57 log tenders back to 2015.
The tiny volumes and wide variability in species and quality of logs that IST put to tender makes assessing market trends over time difficult.
The next chart shows the average volume of the sold logs. Here there is a clear trend of diminishing log size. If it wasn’t for the occasional large eucalypt log IST throws into the tender mix, this trend of diminishing log size would be even more pronounced. The last 12 months shows a steady decline in log size so it is not surprising that prices have reflected a general decline in log quality.
The following 2 charts show the above data summarised by year:
Continuing the trend from last year 2021-22 saw a “significant” volume of specialty species logs put to tender. Despite the higher volumes, average prices have declined, probably in part due to declining log quality.
The average price for all species put to tender in 2022 was $844 per cubic metre, well down from $1,043 per cubic metre in 2021.
The above chart shows a steady rise over the last 4 years in the maximum price paid for these dwindling ancient timber resources, whilst average and minimum prices remain relatively steady.
The main focus of IST tenders is black heart sassafras (Atherosperma moschatum) which can command very high prices for good logs. It made up 35% of log volume put to tender in 2022.
https://en.wikipedia.org/wiki/Atherosperma
However the tree is slow growing (500+ years to reach commercial size) and is restricted to rainforest and old growth eucalypt forest, so supplies of this species are dwindling.
Blackwood made up just 8% of the volume IST put to tender.
Unfortunately the marketplace continues to show strong support for the plundering of the last of Tasmania’s ancient forests!
Tasmanian Blackwood Growers Cooperative 
Creating a functional wood market in Australia
The Past/Present
For thousands of years humans have been using wood for all sorts of reasons – to hunt, cook, stay warm, build shelter and wage war. And for all that time we have had natural forests to plunder. Whatever wood we could find we used, mostly with plenty of contempt and waste.
But the days of plundering natural forests are just about over.
One of the problems this history has created is dysfunctional wood markets.
Cheap plentiful wood from natural forests has meant no one has ever taken responsibility for the future. Cutting down and sawing up trees is simple. Getting trees planted and managed for the future is the real challenge.
There are thousands of businesses in Australia that rely on wood (harvesting, transport, milling, retail, manufacture, craft, music, art, etc.), and 99.99% of them take no interest or responsibility in the future supply of wood.
There is no relationship in the market between using and consuming wood and a tree being planted and managed.
Third party certification schemes such as Responsible Wood/PEFC and FSC are not building the forest industry and growing more wood for the future. Their goal is to save and better manage existing natural forests, not to grow more new wood resources.
The fact that the forest industry in Australia has never established any commercial credibility hasn’t helped the situation.
There must be a credible, transparent relationship between the price of wood and the cost of planting, growing and managing trees; and that relationship must encourage and support more tree planting to meet future demand.
My focus here is especially the premium solid wood market.
Until we build proper functioning wood markets in Australia most of these Australian businesses will disappear. Some will switch to imported wood when public native welfare forestry is shut down, but many will close. All for the want of a proper functioning wood market.
The Future
There are plenty of challenges that need to be addressed in order to build proper functioning wood markets but they are not insurmountable.
Proper functioning wood markets in Australia must be driven by the market and consumers.
Recent comments in the media by furniture makers and builders in Western Australia (in response to the shutting down of public native forestry) do not provide encouragement. Can you believe they would rather import timber from Indonesia than support local farm forestry?
How the thousands of wood-dependent businesses in Australia will come together to coordinate and plan their future is part of this challenge. Most of these businesses are too small to achieve much by themselves. The Australian Furniture Association could take on this role for furniture makers. Builders, cabinet makers and retailers could possibly join the AFA in this.
https://australianfurniture.org.au/
Is the AFA up to the challenge?
2. The second challenge is getting the farming community on board to plant, grow and manage the trees that the market wants.
I personally think this second challenge is by far the easier of the two.
Once farmers see the market change to being responsible and supportive they will quickly get on board.
There will need to be some serious talking and building trust, and careful management of risk.
Unlike the past where the market could pick and choose from a wide variety of natural forest woods, the market must now decide on which species it wishes to promote and support in farm forestry. Species must be fast growing and command sufficient market price to allow farmers to grow them commercially. Given we are talking 30+ years between investment/planting and harvest/revenue/profit, this will require careful consideration, coordination and planning.
The idea that farmers just randomly plant hundreds of different tree species in the hope of finding a buyer in the future just wont work. Farm forestry for the growing of high quality premium solid wood will require coordination and planning, driven by the market.
This is where organisations like the AFA must play a central role.
Final some discussion about markets.
Will there still be demand for premium quality solid wood in 30+ years time?
Certainly over my 40+ year career as a forester I have seen premium quality solid wood go from a being a common cheap product to a scarce expensive product, with all indications leading to its eventual disappearance from the Australian market entirely.
I think this is primarily a supply issue, rather than one of demand.
I see sufficient evidence that the market is prepared to pay very high prices for quality solid wood.
The problem is that in a dysfunctional wood market, these price/demand signals don’t trigger a supply response as they should. If we had a strong farm forestry culture in Australia and proper functioning wood markets, these price/demand signals would be making front page news. That is where we need to get too!
So dear reader, what do you think?
Comments and ideas welcome.
2 Comments
Posted in Commentary, Cooperatives, Furniture, Markets, Plantations, Prices, Tonewood