Monthly Archives: June 2020

Timber supply chain constraints in the Australian plantation sector

pine2

https://www.aph.gov.au/Parliamentary_Business/Committees/House/Standing_Committee_on_Agriculture_and_Water_Resources/Timbersupply

On 26 September 2019, the Standing Committee on Agriculture and Water Resources received a referral from Assistant Minister Duniam for an inquiry into timber supply chain constraints in the Australian plantation sector.

The Committee invites submissions addressing any or all of the terms of reference for the inquiry.

Submissions are requested by Monday, 17 August 2020.

The Committee is dominated by conservative Government members so the chances of anything useful coming from the inquiry are very limited.

Nevertheless here is my submission

Submission

Yet another inquiry into the forest industry in Australia!!!

I think it would be useful for the Committee to do a quick review/summary of every other forest industry inquiry/report. There have been hundreds over the past 50 years, with most of their recommendations having never been implemented.

The Committee could seek to answer the question why have so few previous recommendations been implemented?

Terms of Reference

To inquire and report on:

  • the nature of wood supply from Australia’s plantation sector including:
    • Projected timber volumes available over the next 30 years and the potential grades of logs available.

The question needs to be asked, does current and projected wood supply from Australia’s plantation sector meet current and future needs? Answer. NO!

The next question needs to be asked, if growing timber in Australia is profitable why doesn’t everyone (farmers) know about it? If it is not profitable, then what is the point of this inquiry?

Another relevant question is, what’s wrong with imported timber? If New Zealand farmers can grow timber cheaper than Australia then good luck to them I say! We do not need to be self sufficient in wood products just for the sake of self sufficiency!

 

  • The plantation wood supply available for domestic softwood processors including:
    • Current and future demand for logs for domestic processors; and
    • Any shortfall in current processing industry demand for logs.

This TOR definitely smacks of protectionism and market manipulation. Do you want farmers to invest in trees? If so then get rid of this protectionist bullshit. Domestic processors must compete in open competitive transparent markets, otherwise the domestic processors become increasingly high cost and uncompetitive, which has negative impacts throughout the supply chain from growers to retailers and consumers.

 

  • The competitiveness of log pricing between domestic and export market.

Who in Australia knows what the domestic and export log prices are, let alone whether they are competitive? I’m a forester with 40 years in the industry and I have never ever known!! What does that tell the Committee?

A former Director of Forestry Tasmania once said:

The lack of price transparency for forest products, particularly from hardwood forests/plantations [in Australia], represents an impediment to the uptake of farm forestry. Unlike other commodities, price information for forest products is not published through the newspaper or accessible online. Better price transparency is required to encourage smallscale investment in trees.

Curiously Forestry Tasmania has never ever supported price transparency.

New Zealand has a REAL forest industry with excellent log price transparency. Australia has a completely dysfunctional forest industry.

 

  • The term of log supply contracts needed to support the processing sectors.

This TOR, like the second TOR above, is all about destroying the forest industry through market manipulation and protectionist policies. Local processors must compete in open competitive transparent markets. It is NOT the job of dairy farmers to subsidise cheese makers NOR is it the job of tree growers to subsidise local industry.

 

  • Opportunities to increase Australia’s wood supply, including identifying and addressing barriers to plantation establishment.

There are abundant opportunities to increase Australia’s wood supply, but they are vastly outnumbered by the barriers to plantation establishment. Many previous forest industry reports have addressed these issues, with all those previous reports now collecting dust on library shelves around Australia.

I have to ask why we need yet another report when the answers are already known! The forest industry in Australia is completely dysfunctional. Does it behave like a commercial business desperately wanting a future? No it does not!

 

  • The role that state governments could have in assisting in addressing any problems identified by the work of this committee.

All State Governments that engage in public native forestry (WA, Vic, NSW and Qld) are all engaged in industry-destroying Welfare Forestry. Welfare Forestry is all about subsiding processors and “saving jobs”. It has nothing at all to do with real commercial forestry.

The forestry industry in Australia has no future whilst Welfare Forestry continues to undermine the industry.

State Governments should be encouraging profitable tree growing, but all of them refuse to do this.

 

  • Make any recommendations around any code of conduct or management mode that could assist in addressing any problems identified by the work of this committee.

Please read all previous reports and inquiries and implement the recommendations!

But as just one example, New Zealand has a single set of environmental regulations that apply to all primary producers. The regulations do not discriminate against the forest industry. Similarly to overcome differences between local Council regulations, the NZ forest industry implemented a single set of plantation management guidelines that work across the entire country. Contrast this with Australia where the industry faces a mountain of diverse changing regulations across the country.

How can Australia hope to compete with NZ? We can’t! It is not possible!

 

Blackwood

Blackwood (Acacia melanoxylon) is Australia’s premium appearance grade timber. It can be grown successful in plantations, as NZ farmers are doing, and potentially it has a very high market value. But most blackwood comes from Tasmania where the State government and the forest industry work to undermine the market and supply the market with cheap taxpayer subsidised blackwood. Transparent competitive markets for blackwood do not exist because neither the Government nor industry want transparent competitive markets.

Attempting to establish a Tasmanian Blackwood Growers Cooperative is therefore impossible due to Government and industry policy.

Conclusion

I’m a forester with 40+ years experience in the industry. And for all that time, after hundreds of forest industry plans/strategies/inquiries and reports the industry in Australia remains moribund and dysfunctional.

New Zealand has a real forest industry, one of the most successful in the world. But we choose not to learn from their example. Up until 1990 the NZ forest industry was run by the Government, including public native forestry, plantations and sawmills. In the early 1990s the New Zealand Government decided to get out of the forest industry entirely. Public native forestry was shut down, and plantations and sawmills were sold. Since then the NZ industry has gone from strength to strength, and is now one of New Zealands major industries; fully private, commercial and profitable!! Do they still have challenges and opportunities? Absolutely! But they are committed and capable of resolving every one!!

The NZ forest industry is now 30 years ahead of the Australian forest industry and pulling further ahead of us every day. Will Australia even have a forest industry in another 30 years time? Not if we keep going the way we are!

Good luck with your Committee and its report and recommendations.

 

Sincerely,

 

Dr Gordon Bradbury

Hobart

Tasmania

Salvage Timber Markets and their Destructive Impact on the Forest Industry

If we had a real forest industry in Australia and properly functioning timber markets then salvage timber would be just another option in the marketplace. But neither of these conditions applies.

Australia does NOT have a real forest industry NOR does it have proper functioning timber markets.

So when I go to buy macrocarpa cypress timber for a project and pay a price that is ridiculously cheap I realise that, as a consumer, I am helping to destroy the forest industry that I am so passionate about.

The chart below shows the price list for green macrocarpa from the retailer I went to.

The chart shows that regardless what size timber you buy, you are paying the same very low price by volume.

This is salvage macrocarpa from old farm trees around Tasmania. The quality of the salvage timber is variable. But good quality macrocarpa is a premium timber.

Macrocarpa

Cypress is also an ideal farm forestry tree as New Zealand farmers are well aware. It is quick growing, easy to grow on a wide range of sites, and produces a premium timber.

https://www.nzffa.org.nz/farm-forestry-model/species/cypress/

But I know of only 4 farmers in Tasmania who are growing macrocarpa in small plantations.

This is despite the fact that the timber is in high demand.

So when sawmillers and log traders buy old farm trees and pay next-to-nothing for them, and timber retailers sell the timber for bargain prices, who gets the message that demand and prices are high? What farmers are going to invest in growing this premium timber when the marketplace fails as it clearly is?

If I had to pay the real (replacement) cost of growing this wood, plus a premium for the fact that I am buying a premium product, I would expect to pay MUCH MORE than $2,780 per cubic metre.

Never mind that the price list shows no price premium for large sizes as there should be.

If it was Tasmanian oak I’d be paying over $10,000 per cubic metre for my pieces of timber!!

This is a typical salvage timber price list.

The price list is designed to reflect the fact that no one is deliberately growing this wood in Tasmania.

In other words the price list is designed to prevent investment in tree growing.

Tasmania could have a thriving, valuable macrocarpa industry, but it chooses not too; as if Tasmania has a super abundance of commercial opportunities from which to choose.

Sawmillers and timber merchants traditionally take no responsibility for their own future. It is someone else’s job to encourage and support tree growers.

Would any of my New Zealand readers like to share their local price of macrocarpa/cypress timber?

Within Australia I would include public native forestry within this same “salvage” category since the market price for public native forest timbers does not reflect the cost of growing the wood.

It is the responsibility of the marketplace to support and encourage tree growing otherwise there will be no timber in the future.

How do we fix timber markets in Australia so they support commercial tree growing?

How do we stop the salvage timber market from undermining the forest industry?

When will Australia get a real forest industry?

Hydrowood Timber Price Update

The forest industry, including timber traders, are notoriously secretive about timber prices, including Hydrowood.

So I stumbled upon some updated prices for Tasmania’s premium timbers from Hydrowood.

https://www.hydrowood.com.au/

They are an eye opener to say the least.

I did a review of Hydrowood blackwood prices back in 2016:

https://blackwoodgrowers.com.au/2016/08/03/hydrowood-blackwood-prices-at-uptons/

There is little information on the updated prices, but what they do show is worth a story.

Hydro2020

Prices for select blackwood and myrtle have increased by 28% over the last 4 years to $6,160 per cubic metre, whilst prices for plain sassafras have increased by 35%!

Hydrowood select blackwood and Myrtle is still significantly cheaper than Tasmanian oak at Bunnings Hardware. Premium timbers at heavily discounted prices!

But then we get to the gold!

Prices for Huon pine and fiddleback blackwood have increased by 158% to a massive $26,700 per cubic metre.

The Hydrowood price list in 2016 showed a flat uniform price-by-volume regardless of timber size. There are indications that Hydrowood has moved away from this to better reflect cost and recovery.

So what does this mean for current and prospective timber growers?

It means giving away public assets to create welfare jobs while undermining the forest industry is not a good strategy.

It means selling Tasmania’s premium timbers at heavily discounted prices sends the wrong message to the community and the marketplace.

Does the forest industry want a future? Apparently not!!

Dysfunctional timber markets is just one of the many issues that the new Tasmanian Forest Products Association has to deal with.

In the mean time we can definitely grow premium plain-grain select blackwood in plantations, in the hope that one day all this great bloody mess will be sorted out!

And this great quote from a former Director of Forestry Tasmania:

The lack of price transparency for forest products, particularly from hardwood forests/plantations [in Australia], represents an impediment to the uptake of farm forestry. Unlike other commodities, price information for forest products is not published through the newspaper or accessible online. Better price transparency is required to encourage smallscale investment in trees.

Do I need say anymore?

The Very Last Bunnings Tasmanian Oak Price List

Bunnings

It has been two years since I last updated the Bunnings timber price list.

https://blackwoodgrowers.com.au/2018/05/12/bunnings-timber-price-list-update/

Since then Bunnings, Australia’s largest hardware chain, has taken an increasing socially responsible position regarding its product sourcing.

All of Bunnings Tasmanian oak comes from the logging of public native forest, which has been the focus of bitter community conflict in Tasmania over many decades, and cost the Tasmanian community billions of dollars:

https://www.theguardian.com/environment/2018/mar/29/tasmanian-forest-agreement-delivers-13bn-losses-in-giant-on-taxpayers

With politicians and the forest industry unable to resolve the decades-long forestry wars in Australia, Bunnings has decided to take matters into its own hands. From 1st January 2021 they will no longer sell public native forest timber that does not have FSC Certification.

https://sustainability.wesfarmers.com.au/our-principles/sourcing/suppliers/

As there is no chance of certification happening between now and the end of the year this is the very last Bunnings Tasmanian Oak Timber price list.

https://www.bunnings.com.au/our-range/building-hardware/timber/dressed-timber/hardwood

The chart below shows the changes in price over the last 5 years. Large price increases in 2016 have been followed by minor price increases since then. The larger range of bigger sizes in 2020 shows Tasmanian oak prices breaking the $10,000 per cubic metre barrier!

None of these prices make for profitable public native forest harvesting, since 80% of the volume harvested is sold as low value woodchips. Never mind that no Government forest agency in Australia is run on a commercial basis. It is and always has been Welfare Forestry.

BunningsTA2020

Bunnings is making the correct decision.

It’s time to end destructive, wasteful welfare forestry in Australia, and build a real, commercial forest industry.

So get your Tasmanian oak while you still can!