Blackwood supply set to plummet, prices to skyrocket

With the pending implementation of the Tasmanian Forests Agreement and the unsustainable management of the public blackwood resource over the past 17 years, the supply of blackwood sawlog from State forest is set to plummet. Read the Certification and Supply page (above) for further background on how we came to this unfortunate situation. Following the planned resource review sustainable annual sawlog supply could go as low as 4,000 cubic metres, down from the current approximate annual harvest of 10,000 cubic metres.

This will have a dramatic and positive impact on sawlog prices and provide a significant commercial opportunity for existing and potential private blackwood growers.

The key question in all of this is:

Will the forest industry open itself up to allow greater competition and market transparency so that these changes in supply can be allowed to transparently affect sawlog prices and hence stimulate supply from private growers?

No doubt some market substitution will occur in response to this change in blackwood supply (Economics 101). We will start importing blackwood timber from New Zealand farmers, while some buyers will seek alternative species from mainland and overseas suppliers. Yes even the New Zealand farmers will benefit from the Tasmanian Forests Agreement.

There is insufficient information publically available to get a clear picture, but what parts of the jigsaw puzzle are available suggest that the blackwood market is set for a major disruption. Will market forces be allowed to respond accordingly?

So what do you think?

  1. What changes in forest market behaviour would you want to see happen before you considered the blackwood market “open for business”? Regular market reports in Tasmanian Country? Sawmillers regularly advertising for growers/suppliers? Regular auctions by Forestry Tasmania of blackwood sawlog parcels to gauge current markets and provide greater price transparency?
  2. If you are a farmer/landowner, at what sawlog price would you start considering investing in blackwood plantations? $200, $400, $600, or $1000 per cubic metre? At what sawlog price would you consider better managing your existing farm blackwood to improve its commercial value?
  3. If you are a blackwood buyer/processor what changes would you like to see happen to see the blackwood industry put on a more commercial, sustainable future?
  4. Do you think a Blackwood Growers Cooperative would provide the blackwood industry with the basis for a secure, commercial, sustainable future? What support should the coop receive to help become established?

Give us your thoughts and comments.

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