Blackwood Plantation Financial Model


This is a financial model that calculates the Internal Rate of Return (IRR) from an investment in one hectare of commercial blackwood plantation. The model is setup in an Excel spreadsheet:

Blackwood financial model.xlsx

Here’s the link to find out more about the IRR function in Excel:

This model is a work in progress and is designed to encourage feedback, comment and updating.

You can download the model and use your own numbers if you wish.

Contact me if you want help modifying the model to your personal requirements.

To begin with I went back to the New Zealand Blackwood Growers Handbook that contains an financial model on page 77. I set this model up in a spreadsheet and came up with the same values as shown in the handbook. handbook

I then modified the model according to my own recommended simplified plantation regime. This simplified plantation regime reduces the initial establishment and management costs, and reduces the workload required in the first 10 years.

I also changed some of the values in the model to better reflect what I consider are current costs.


  • A 35 year rotation length;
  • In 35 years time there will still be a high demand for quality appearance-grade timbers. Technology is rapidly changing many timber markets, including construction-grade timbers, but I think there will always be a demand for premium solid appearance-grade timbers;
  • The objective is to grow the plantation to an average stem dbh of 60 cm, with all trees pruned to 6.2 metres. This should produce approx 300 cubic metres of premium blackwood sawlog;
  • The plantation is established on a site suitable for growing commercial blackwood;
  • The land is already owned (ie. no land purchase costs are included). But go right ahead and add land costs and see what it does to the investment;
  • The simplified plantation regime is used planting 200 blackwoods per hectare;
  • One of the largest costs in blackwood plantations is protection/fencing to protect the trees whilst they are young. Blackwoods are highly palatable to a wide range of domestic and wild herbivores, so good protection is essential. Protection costs will vary considerably according to plantation size, shape and location/terrain.
  • Annual weed control (spot spraying) is essential whilst the trees are becoming established. Blackwoods do not like competing against heavy grass/weed cover. After 5 years I have included a general weed control (slashing) every 5 years for general maintenance. By about age 20 years the blackwoods should have the site under control with little need for ongoing weed management.
  • Actual costs will vary according to individual circumstances. Most of the costs are my best guesses. If anyone has some real data to contribute that would be appreciated;
  • No harvesting or transport costs are included;
  • Other costs can be included fairly readily, such as rates and other overheads, and management costs;
  • The sawlog price is my current best guess at a competitive market price for a large parcel of quality blackwood sawlogs. For example the December 2015 Hydrowood log tender had 14 quality blackwood logs sell for an average of $625 per cubic metre.


The model shows an internal rate of return on Tasmanian blackwood plantation investment of around 10% over 35 years.

For a 35 year investment that is a decent return. Fixed term deposits are currently offering around 3.00% over 4 years (updated Feb 2016).

If a very good site is planted and hence the rotation shortened to 30 years the return on investment increases to 12%. Alternatively if the value of the plantation after 35 years is only $100,000 per hectare the rate of return is still 9%.

In other words the investment is quite robust to changes in conditions and markets.

Commercial blackwood plantations are a profitable investment under current market conditions.

I wouldn’t recommend buying land just to grow commercial blackwood. Blackwood is not a broad-acre crop but requires certain site characteristics to grow successfully.

Many Tasmanian farms have areas that are currently underperforming or neglected; covered in weeds, bracken and blackberries. These areas are not contributing to farm income, but many of these areas are suitable for growing commercial blackwood.

If a farm has a number of these areas, the investment and the workload can be spaced over time, for example by planting an area every 5 years. After 35 years a set of periodic incomes is achieved from regular harvesting and replanting of plantation blackwood.

Now the one major feature missing in the forest industry is greater market and price transparency to help encourage this investment.

14 responses to “Blackwood Plantation Financial Model

  1. Hi Gordon
    I don’t know the answer so hopefully you can clarify it for me. Stu has commented previously that a basal area of 45 is the limit for Blackwood growth, unless an exceptional site. Based on your figures, you are suggesting a basal area in the mid fifties by age 35. Is there any data that you’re aware of to show that this is a reasonable expectation?

    • Hi Floyd,
      Currently available data suggests that a basal area in the mid 50s can only be achieved on good sites (NZ data).


      1) The financial model shows that investment returns are fairly robust even if final volumes are below this, and

      2) There is still much to be learnt about growing blackwood. Just one extraordinary example is the plantation I reported on in Margaret River, Western Australia:

      This unthinned plantation has a very high basal area at age 20. Many people would be surprised to learn that Margaret River qualifies as a good quality site for growing commercial blackwood, myself included!!

      Where I see things is that we now know enough to be confident to start planting and developing a commercial plantation blackwood industry in Tasmania. But there’s no 100% guarantee. We still have much to learn. But we wont learn unless we start.

      What I do have confidence in is that there is good market demand for premium appearance grade timbers for which the market is prepared to pay very good prices if given the chance. And I don’t see this demand changing anytime soon. If anything all the risk is on the upside as they say in economics.

      And when put into context with all the political and forest industry rubbish that is holding us back, some uncertainty about basal area is, in my opinion, of relatively small consequence.



  2. Hi Gordon
    I’m presuming then that your growth expectations are for the best quality sites only. I have a property in the north near Sheffield, mudstone soil, southerly aspect and cold and wind exposed in winter / spring. There are some good sized blackwood around the area but no idea how old they are.

    • Hi Floyd,
      Sheffield is on the boundary of commercial blackwood country in terms of average rainfall, so local conditions become important.
      Mudstone soil I’m not sure about, as long as its not a heavy clay.
      Southerly aspect is good! Wind exposed is not so good. Would need a shelterbelt of some kind.
      Good size local blackwoods also sounds promising. Even better if we can get a look at a stem cross-section/disc.
      I use local blackwoods a lot to tell me what the site may be like.

      What are the local forest species?
      Brown stringy? White gum? Peppermint?

      If you are interested I’m happy to come up and have a look – no charge!



  3. G’day Floyd
    I’ve got experience with managing blackwood in the Sheffield Area. Rainfall is OK for good growth (1000+mm/year), cold during winter and spring yes but summer and autumn temps are adequate. Southerly aspect is ok but wind will be the major restriction to good growth and form. A shelterbelt will help trees in close proximity but unless the shelterbelt is well designed and growing faster than the blackwood the benefit is limited. I’ve had excellent results with a nurse crop of nitens that were stem injected from age 6-8 to slow their growth and intimately kill them. The additional shelter from the nitens was hugely beneficial. Mudstone soils vary in quality. As Gordon suggests, take note of the surrounding native forest (stringybark or white gum of a good size indicate a reasonable site). On a good site in the Sheffield area I’d expect 150-200 cube of pruned sawlog on a 35-40 year rotation.

    • Thanks Stu,

      If you put your figures into the financial model (150 cubic metres of sawlog per hectare at 40 years at $500 per cubic metre) you still get 6.75% return on investment which is still not shabby. But I would regard those estimates as being on the lower side of possible outcomes.

      I don’t recommend nurse crops (too much work and risk).

      There are plenty of options in designing a good shelterbelt that would help keep the blackwoods growing tall and straight out of the wind.

      A bit of fertiliser never goes astray either!!



  4. Hi Gordon
    Given what Stu has said about wind being the big threat to growth and form I feel a shelterbelt on its own would be insufficient. Please pass my email to Stu, I would like to have a look at the plantation he has had success with having used a nurse crop. Just wanting to fully explore my options.

    • Hi Floyd,
      The picture at the top of the Financial Model blog is a plantation at Paradise which sits very happily behind a cypress windbreak on top of a hill. Form is excellent (thanks in part to the commitment and efforts of the owner) and growth will pick up now that the plantation has been thinned. I can arrange for you to visit this plantation if you wish.

      I have passed your email address on to Stu.



  5. We have some enormous blackwoods in our area in the Strzeleckis. Some of them ~1m or so DBH. Average rainfall is over 1000mm with wet years up to 1400mm+ and dry years around 900mm. The big blackwoods seem to grow in sheltered gullies near water. But I’ve seen big trees that may date back to when the bush was cleared 100 or so years ago. One very large tree not far from us is on a gentle SE facing slope 100m or so from water. The tree is now quite exposed – and senescent – but still partly alive. On a side note, these old paddock trees provide magnificent habitat with lots of hollows. To date we’ve left a few dead silver wattles and blackwoods for this purpose although there is danger from dropping limbs and trees falling over.

    We’ve got blackwoods planted on north facing slopes in shelterbelts as well as some on south facing slopes. We’re also planning to plant blackwoods:
    – on creek flats and gullies
    – slopes with some shelter facing other than northerly

    I agree with Gordon that nurse trees are too much farnarkling. Haven’t the Kiwis have moved away from that approach in farm forestry? I think Heartwood trials (might have been Woollybutt? then) also looked at nurse trees in Victorian blackwood plantations. Jon Lambert published some stuff from memory.

    Growing high-value trees quickly on farms is an interest of mine. Similar considerations as to shelter, aspect and water apply for sequoia, western red cedar, silver wattle and other species that will benefit from careful site selection and management. I was at a Gippsland Agroforestry Network day at Lardner some months ago. They have some young sequoia (13 years from memory) doing very well on a wet spot.

    Now I just need to find species for our north facing slopes that will do well and get a good price at harvest. I’m thinking cypress at the moment as a class 2 durability timber with good markets. Proseed in NZ have some cypress seedlines selected for farm forestry – hopefully with a lower branching habit than unimproved selections – and I’ve found a nursery who will do quarantine growing.



    • Hi David,

      “farnarkling”! That’s a good technical term. I like that! es

      Yes, planting trees is one thing. Getting them to grow well is another. And then finding good paying markets after ~30 odd years is the final challenge.

      I would be sticking with premium markets, but what that means in terms of species (besides blackwood and perhaps cypress) I don’t know. I’m not yet convinced that redwood is a premium market.



      • Dunno either about redwood but it’s niche, high name awareness, good timber etc

        Within some defined parameters – including site suitability, durability, growth rate, silvicultural demands, existing or likely premium markets – we’re growing a wide range of species to see what works and all going well attract customers down the track.

        Farm Forest Growers Victoria and Gippsland Agroforestry Network are both interested in premium markets that may exist for farm grown timber, posts, poles and so on.

        Anyone who has information on premium markets that may be interested in farm grown timber please feel free to contact me. Gordon can pass on my email address



  6. This article has some useful information on redwood. “the most valuable timber in California” but “has a unique niche for fencing, decking, and paneling, and is tied in with homeowner remodelling.” That sounds like a pretty restricted market to me. But as you say it does have a reputation and a name that counts for quite a lot.


    • The Radial sawmill in Yarram is making a good business out of selling niche species timber into those markets. The sawmill is in the process of expanding to about 3x their current size by annual volume milled.

      We don’t need very large markets to make farm forestry profitable. We just need markets that are big enough for what will always be a relatively small volume compared to commodity pulp and timber and with buyers prepared to spend a premium on high-value timber.

      It’s quite different compared to industrial forestry which is all about scale, volume and commodity markets.

      • Agree with you except that the markets can be small as long as they are valuable.

        Also small specialist markets will take greater effort to organise and supply.

        That is certainly good news about Radial Timbers.


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