Category Archives: Management Plan

A Strategic Growth Plan for the Tasmanian Forests, Fine Timber and Wood Fibre Industry

MACSGP2017

http://www.stategrowth.tas.gov.au/__data/assets/pdf_file/0004/148855/Strategic_Growth_Plan.PDF (1.3 MB pdf)

The Tasmanian Ministerial Advisory Council on Forestry has finally produced a Strategic Plan for the industry.

Yes another strategic plan for the forest industry!!

Our public library shelves are at breaking point, weighed down by the dozens of these plans, strategies and reviews that have been produced over the past 40 years, all to no avail.

Two issues ensure that the use-by date of this Plan has already expired:

  1. The State Government deliberately excluded non-industry representatives from the Advisory Council. This Plan only represents the interests of a small select group of Tasmanians. It is a 100% political document! This Plan is only as good as the next election if that!
  2. The two most contentious issues of a) public forest management, and b) the future management of Forestry Tasmania, should have been dealt with a separate section within the Plan. Instead these issues are woven through the document, fundamentally compromising the entire Plan. If the forest industry cannot unchain itself from these two issues, and focus on profitable tree growing, then the forest industry is doomed.

If the future of the forest industry is to be based on profitable tree growing then this Plan fails completely!

Reviewing the Plan is therefore an academic/intellectual/painful exercise.

As a forester having read many previous forest industry plans and strategies, reading this Plan is painful and frustrating. Besides the poor structure and legibility, much of the contents are straight out of previous plans I’ve read. There are very few new ideas in this Plan.

The surreality of the Plan is overwhelming, in that the Plan completely ignores the current hostile political, social and economic context of the forest industry.

The Pros

“The future growth potential of private plantations is significant”. This statement on page 6 of the Plan says a lot about the future growth of the forest industry. Unfortunately it is not expanded upon anywhere else in the Plan.

“Government involvement will be as an enabler rather than as a commercial participant.” This statement on page 9 of the Plan is the most curious feature of the Plan. It stands alone with no further detail or explanation of what it might mean. It can be interpreted in a variety of ways.

“It is recommended the Forest Practices Act and the implementation of its provisions be reviewed in keeping with progressive developments in forest practices and science”. A review of the FPA is certainly needed, especially around plantation development and management. Forest plantations should exist within the same regulatory environment as any other primary industry, just like in New Zealand – a level playing field.

“While the industry comprises a diversity of often competing interests and business models, individual stakeholders also share a range of common interests. Within this context, there is a need for an umbrella organisation to develop and represent the shared interests of the whole of the value chain on matters of common concern”. The Plan calls for the formation of a new industry representative body. Private forest growers are the future of the forest industry. They need strong leadership and a strong voice.

That’s it! Four statements in the Plan that I think have some merit and potential. The rest of the Plan is padding or worse.

The Cons

The main con is the absence of non-industry representation on the Advisory Council, making this Plan a 100% political document;

The Plan assumes indefinite ongoing access to taxpayer subsidised public forest resource;

The complete absence of profitable tree growers and profitable tree-growing as the basis of any successful forest industry;

Log pricing is not discussed nor are transparent competitive markets;

The Plan is not a response to a review of the forest industry. Firstly we need a document that lists the major problems and challenges facing the forest industry. Then we need a strategy that addresses those problems and challenges. The logic needs to be transparent – problem, solution, outcome! By itself this document provides the reader with no context by which to judge the strategy, let alone any possible outcomes. I would classify this as a major flaw.

These Plans are always about what the Government can do for the industry, never about what the industry must do for itself; and

Hence always involve spending large amounts of taxpayer money;

Private Forests Tasmania is not mentioned in the Plan!!

The Plan retains the stupid rhetoric about “resource security”. The forest industry does not need “resource security”! The very successful New Zealand forest industry does not talk about resource security, because the NZ industry is based on a private forest resource. “Resource security” in NZ only comes from profitability; either pay a good market price or go out of business! “Resource security” is a forest industry euphemism for loss-making, taxpayer-subsidised, politically protected industry. “Resource security” is anti-competitive and against the principles of competitive neutrality. Private forest growers should not be subject to “resource security” so neither should the public forest grower. In my opinion the word “sustainable” has come to serve the same purpose within the industry. The Plan uses the word “sustainable” ad nauseum whilst the word “profit” appears only once!

The inability of the Strategy to recognise and address issues of competitive neutrality, such as the proposal that the State Government fund forest road construction and maintenance (p. 20). Government money must then also go to private forest growers for road construction and maintenance in order to achieve competitive neutrality!

The section on Meeting Community Expectations (p. 13) is a complete joke, in fact it is laughable.

The section on Special Species Timbers (p. 17) is a joke;

The section on Private Forests (p. 14) is completely inadequate. The objective of private forest growers is profitability. Improving profitability and competitiveness is not discussed in the Plan at all.

I could go on, but the patient is already in the Terminal Ward.

The weaknesses and omissions in this Plan mean that it has already been consigned to the dust bin of history. In 3 years time the Strategic Plan of 2017 will be long forgotten. Yet another failure by the Tasmanian forest industry to reinvent itself.

Another 3 years wasted. More subsidies, more politics, more community conflict can only follow.

PS. Another significant omission from the Plan is the subject of a budget and funding. Of course we all know that the long suffering taxpayer will be asked once again to throw money at the forest industry by way of this Plan, to the tune of $100s millions of dollars. Given the billions of dollars that have been wasted on the forest industry over the past 30 years, taxpayers should be extremely wary of supporting any forest industry plan that does not include significant forest policy and industry reform. This Plan contains very few recommendations for policy and industry reform.

PPS. If the forest industry and the Tasmanian community are serious about the future of the industry then I recommend these two reports as a good place to begin:

https://blackwoodgrowers.com.au/2016/02/25/two-significant-forest-industry-reports-that-went-nowhere/.

These reports contain plenty of great recommendations for reform, none of which have ever been implemented.

PPPS.

Speaking of redundant Forestry Growth Plans does anyone remember this one?

http://www.forestrytas.com.au/uploads/File/pdf/corp_plan_2000.pdf

It’s a complete joke!! By December 2003 ………

Complete cloud cuckoo land stuff. And here we are 14 years later still in cloud cuckoo land. Pathetic!

Special Timbers Management Plan April 2016 Update

FTSTS2010

After the embarrassing back down by the Tasmanian State Government over the proposal to log the World Heritage Area, two important reports were quietly released last week with no fanfare from our politicians or forest industry leaders. These reports relate to the forthcoming 2017 Special Timbers Management Plan.

http://www.stategrowth.tas.gov.au/forestry/special_species_timber_management_plan

You can read my previous blogs on the very long drawn-out process to create yet another special timbers management plan here:

https://blackwoodgrowers.com.au/category/management-plan/

Special Timbers Resource Assessment

The first report is a special timbers resource review produced by Forestry Tasmania of the 812,000 ha of the Permanent Timber Production Zone Land (PTPL).

The report does not include forests on private land, or forests on public land that are managed by other agencies (including Future Potential Production Forest).

The report does not speculate about any potential for helicopter harvesting or underwater salvage, nor make any assessment about the commercial viability or costs associated with [management,] harvesting and/or extraction operations.

Given that in 2010 Forestry Tasmania determined that its special timbers operations were no longer commercially viable one must presume that this situation remains unchanged. In other words how much taxpayers money is to be wasted harvesting this wood is not considered important in determining the resource that is available!

As always with State forest policy and practice it is about the volumes of wood to be given away never about the profitability of the forest asset.

One suspects that if commercial viability was considered in the report, then little if any of this public native forest special timbers resource would be available for harvesting!

Centrelink Timbers is a thriving industry in Tasmania.

The blackwood resource figures in this report are from the 2013 Blackwood sawlog resource review. No additional work has been done in this assessment for the north west blackwood production zone.

The significant reduction from the targets set in the 2010 Special Timbers Strategy reflects the smaller landbase that is now available, longer rotations required for some species and more accurate volume estimates resulting from the rainforest modelling work using LiDAR.

So two of the three issues [longer rotation age estimates and more accurate inventory ]that have driven down the estimate of available special timbers resource, have nothing whatsoever to do with any forest industry agreement, but are the result of changes in methodology.

Now to blackwood…

The headline figure which this report uses is not the “millable sawlog” figure that the RFA and the 2010 Special Timbers Strategy used, but now includes outspec wood including craftwood. This outspec wood makes up 55% of the headline blackwood volume. Forestry Tasmania does not have any sales obligations or commitments for outspec wood!!

So in addition to the 3,000 cubic metres per year of millable sawlog from the north-west blackwood production zone as outlined in 2013, there will be another 1,275 cubic metres of millable sawlog per year from the rest of the State up until 2027, when the blackwood resource in the rest of the State will be exhausted.

So much for guarantees! So much for sustainability!

In 1991 with the FFIS, again in 1996 with the RFA, and again in 2010 with the Special Timbers Strategy, Forestry Tasmania guaranteed an annual supply of 10,000 cubic metres of millable blackwood sawlog to industry.

And here we are at the end of the blackwood industry!

These volumes of blackwood sawlog will not be enough to sustain a commercially viable industry. There will not be enough resource to sustain our commercial furniture makers. These volumes will barely be enough for our custom furniture makers.

The Tasmanian blackwood industry now has only two clear choices:

  1. Close down due to the exhaustion of the public native blackwood resource; or
  2. Look to Tasmanian farmers as the future of the blackwood sawlog resource.

Salvage blackwood sawlog from the Hydrowood project may keep the industry going for a few more years, but it too will end. The Hydrowood resource can either be seen as a last gasp for the backwood industry, or as a useful stop-gap whilst relationships with Tasmanian farmers are established.

So what’s it going to be? Extinction or a new future?

Market Demand Analysis

The second report is a market demand analysis for Tasmanian special timbers conducted by Indufor. You may remember I was invited to participate in this market survey:

https://blackwoodgrowers.com.au/2015/04/23/special-species-timber-management-plan-update-1/

Despite my being interviewed by the author of the report, the report contains no mention at all of private commercially-grown blackwood, and no mention of opportunities for private investment and private growers. The reports entire focus is on the Forestry (Rebuilding the Forest Industry) Act 2014 and the public native forest resource!

Clearly the consultant had to appease a very narrow-minded client!

This observation on political bias is further strengthened by the fact that Appendix 1 of the report describes in detail the various sub-sectors of the industry, but Appendix 1 begins with sawmillers. Apparently growers are not a sub-sector of the special timbers industry! Not even harvesting and transport is mentioned as a sub-sector!!

This is yet another failed report into Tasmania’s iconic special timbers industry.

The report contains no mention of blackwoods unique position as the only Tasmanian special species that has the potential to be grown commercially due to its fast growth rate and wide natural distribution. Given the unique and dominant position that blackwood occupies within the special timbers market it should have been given an entire chapter to itself.

The only basis for a successful forest industry is profitable tree growers, and profitable tree growers are conspicuous by their absence in this industry report. In fact discussing special timbers market demand without discussing the economics of tree growing and forest management is completely stupid. Imagine a report that discussed market demand for dairy products whilst ignoring the economics of dairy farming. Anyone would regard such a report as a waste of time.

When I was talking to the author of the report during my interview last year I specifically suggested that the report needed to have a strong focus on the economics of tree growing and forest management. And guess what the report specifically and completely ignores?

For example the report fails to discuss the existing special timbers industry community service business model and the significant taxpayer subsidy that guarantees the survival of the industry. Discussing prices, markets and demand whilst ignoring the business model and taxpayer subsidy is completely fallacious.

From a blackwood growers point of view the parts of the report most worth reading are:

Resource Supply on Page 4.

It’s a carefully selected view of the historical blackwood production from public native forest. Certainly no comparison of production with sustainable yield. In fact no mention of blackwood sustainable yield at all!

Blackwood Markets on Page 14.

Throughout the Report and especially in this section there is a lot of veiled criticism of the forest industry’s lack of market competition and transparency. The fact that most blackwood is “sold” outside normal competitive market processes is particularly relevant, ie. log prices are NOT market-based.

Anyway the report notes that of all the special species, Tasmanian blackwood is sold into the widest range of high value markets.

Resource supply and substitution

According to the report survey the biggest constraint on the industry is the uncertainty of log supply. Section 4.8 (p. 38) talks about survey responses to possible falling supply from public native forest. The option of “shifting to alternative growers” (ie. Tasmanian farmers) is not mentioned. And yet Table 4-5 on page 41 analyses the market’s willingness to pay for the various timber grades of the various species. Blackwood comes out extremely well in this analysis. The market says it is prepared to pay good prices for access to quality blackwood.

So given the dire situation of the public native forest blackwood supply why isn’t the industry asking Tasmanian farmers to grow quality blackwood timber? What is preventing this fundamental market process from being realised? In every other primary industry the combination of high prices and willingness to pay would lead to investment. Why does this NOT happen with the forest industry? The report fails to address this fundamental question!!

This situation provides the perfect opportunity for the TFGA to step up and demonstrate leadership. The TFGA needs to organise a forum between farmers and blackwood industry representatives and let’s start rebuilding the blackwood industry.

The report makes no mention of New Zealand farmers and what they are doing regarding blackwood and other special species. No mention in the report of the handful of Tasmanian farmers who are actively growing commercial blackwood.

One thing is perfectly clear in the report – the Tasmanian Government does not want Tasmanian farmers to grow commercial blackwood!!

The Special Timbers Market Demand report is fundamentally flawed. It certainly cannot be used to help justify the continued logging of our public native oldgrowth and rainforests in Tasmania.

Commentary

Neither of these reports offers much hope to the special timbers industry. Both reports show that the public native forest special timbers industry – including the iconic Tasmanian blackwood industry – is on the verge of collapse due to overcutting and mismanagement of the resource.

So much for declarations sustainability!

The major positive is that the market demand report confirms the continuing demand for premium timbers at good prices.

What is perfectly clear is that these two reports are especially designed to keep the forestry wars at the forefront of Tasmanian politics. The reports avoid discussing alternatives outside the public native forest resource and the taxpayer-funded community service business model.

That Tasmania cannot work positively towards realising the commercial opportunities around Tasmanian blackwood remains a fundamental continuing failure of our political and business leaders.

Special Timbers Management Plan Update #2

FTSTS2010

http://www.stategrowth.tas.gov.au/forestry/special_species_timber_management_plan

Over at the Tasmanian Department of State Growth website they now have some information about special timbers.

Yet another Special Timbers Management Plan is being prepared.

The Management Plan is required to be in place by October 2017, with the draft Plan available for public comment in early 2017.

So get those pens warmed up. You only have 18 months to wait before you are permitted to have your say!!

Current work to inform the development of the Management Plan includes:

  • A resource assessment of the special timber resource available in existing production forest managed by Forestry Tasmania;
  • Market demand research is being undertaken to better understand demand for special timbers;
  • celery-top pine harvesting trial as part of investigations into alternative harvesting techniques;

It’s an incredibly myopic view of special timbers:

  • No mention is made of the fact that blackwood is by far the dominant special timber, accounting for over 90% of volume harvested each year.
  • No mention is made of the commercial potential of private grown Tasmanian blackwood.
  • No mention is made of the fact that blackwood sawlog supply and Tasmania’s iconic blackwood industry is now in jeopardy due to decades of overcutting and mismanagement by Forestry Tasmania and successive State governments.
  • No mention is made of the current and recent markets for special timbers including price and demand history. For example a summary and review of The Island Specialty Timbers public tender results for the past 5 years would make for very interesting reading. See my annual reviews of IST blackwood tender results as an example:

https://blackwoodgrowers.com.au/2015/06/18/ist-blackwood-sawlog-tender-results-2014-15/

  • No mention is made about possible sales, costs, prices and marketing arrangements;
  • No mention is made of the continuing fiasco of Tasmania’s most valuable timbers being a taxpayer-funded community service.
  • No mention is made of how the ongoing harvesting of special timbers from public forest will be funded, or how much it is likely to cost. One suspects that (as in the past) financial and commercial matters will not be discussed in this forthcoming management plan.
  • There’s no mention of the new Hydrowood project that is going to be supplying the market with significant volumes of salvaged special timbers over the next 5-10 years.

https://blackwoodgrowers.com.au/2015/11/21/hydrowood-update/

  • Unfortunately there is also absolutely no information about the proposal to log the Tasmanian Wilderness World Heritage Area, and the recent visit to Tasmania by delegates from UNESCO. This issue of international importance is completely ignored! I guess the Tasmanian Government does not want the UNESCO delegates to be fully informed, let alone anyone else who has concerns about World Heritage management.
  • They can’t even provide a Table of Contents, an indication of the scope of the management plan.

Would I be correct in guessing that State government special timbers policy is all about politics and supporting a handful of woodworking mates?

There is nothing here about commercial opportunity or industry development.

There is absolutely nothing here for existing and prospective commercial blackwood growers.

Once again its totally pathetic!

https://blackwoodgrowers.com.au/2015/04/23/special-species-timber-management-plan-update-1/

When will Tasmania get a fully commercial and profitable forest industry?

Special Species Timber Management Plan Update #1

FTSTS2010

Continuing on from my previous blog:

https://blackwoodgrowers.com.au/2015/04/19/an-invitation-to-participate-in-the-special-species-timber-management-plan/

and the invitation from Minister Paul Harriss to participate in the Special Species Timber Management Plan, I was contacted by Mr Blair Freeman from the consulting firm Indufor. We ended up talking for about an hour over the phone.

Here are some brief comments:

A survey form was sent out by Indufor to selected members of the special timbers industry to provide critical information with regard to industry preferences, demand for wood, drivers of demand and sensitivity of customers to market change.

SST Market Demand Survey Sawmillers

My one comment about the survey form was the obvious omission from the survey of any opportunity for stakeholders to make comments on strategic, political or policy issues. If special timbers stakeholders had any questions or concerns about any of these issues then the Minister and the Special Timbers Sub-Committee of the Ministerial Advisory Council are just not interested!

If logging the Tasmanian Wilderness World Heritage Area at taxpayers’ expense is of any concern to stakeholders the Minister Paul Harriss doesn’t want to know about it!

So much for accurate and relevant information!

Given that just about all of my comments relate directly to strategic, political and policy issues around special timbers I found the survey form frustrating. Luckily Mr. Freeman anticipated my frustration and instead we opened up the conversation to address broader issues.

I see my business as being in direct competition with the Government/Forestry Tasmania. And I’m not short of criticism of my competitor.

Putting aside for one moment the political/policy issues, the one primary objective of the proposed Special Species Timber Management Plan should be to clearly demonstrate that growing and harvesting special timbers is profitable within normal competitive, transparent market processes.

The primary purpose of the Plan should not be to demonstrate the existence of a resource, nor of demand, nor analyse current employment or the characteristics of the special timbers marketplace. These issues are completely irrelevant without the fundamental commercial foundation of tree-growing profitability.

Value-adding begins in the forest or plantation and not at the sawmill or the furniture factory.

As far as I’m aware no study is being conducted into the profitability of growing special timbers as input into the proposed management plan. Using the “horse and cart” analogy, this proposed Management Plan will say much about the cart and tell us nothing at all about the horse! Just like the 2010 Special Timbers Strategy.

Mr Freeman indicated in our conversation an awareness of the politically-charged nature of their assignment, and Indufors limited ability to influence the outcome. Why they chose to take the job in the first place is an interesting question.

As I say on (too?) many occasions I think Tasmanian blackwood has a great future as an iconic profitable, farm-based industry; but not until we get the politics and ideology out and get the policy settings working properly.

Thanks to Mr. Blair Freeman for his time and interest. Good luck!

Only another 2 years before the Management Plan is completed/released.

Stay tuned!

An invitation to participate in the Special Species Timber Management Plan

stsmp email

This email arrived in my inbox on Friday from Minister for Resources Paul Harriss. This may be interesting. Or else it will be the same old stuff we’ve seen before – or worse!!

I am not holding out much hope.

But I do pity the poor consultants who sign up for these jobs. Imagine helping to justify logging the Tasmanian Wilderness World Heritage Area at taxpayers’ expense whilst we are sacking teachers and nurses. How on earth do you keep any sort of professional integrity or reputation in all of that?

I’m looking forward to having a discussion with “Mr Blair Freeman or one of his team”. I wonder if they understand that forestry is a business not a division of Centrelink Australia?

This management plan is not due to be completed/released before 2017 in time for the next State election.

One thing is absolutely guaranteed. This management plan will not contain any discussion of commercial issues. Nor will it consider the possibility of Tasmanian farmers growing special timbers.

The idea that Tasmanian farmers are already growing and harvesting special timbers, and would likely grow more if given the right market signals, will be completely ignored in this management plan.

The fundamental assumption will be that special timbers can only come from taxpayer-subsidised Tasmanian public native forests.

In other words it will not be a business plan but a glossy political/marketing document, like the 2010 Special Timbers Strategy.

I shall keep you informed as this proceeds.