RECORD values for Australian timber are underpinning the best business conditions the forestry sector has ever seen.
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New data shows in 2015 to 2016 Australia’s log harvest smashed previous records to hit 30 million cubic metres – a haul valued at over $2.3 billion.
The latest Australian Forest and Wood Products Statistics report, issued by by the Australian Bureau of Resource Economics and Sciences, revealed the highest ever amount of softwood plantation logs were harvested in this time while a bumper harvest of hardwood plantation pulplogs was also completed.
Demand for Australian softwood logs is being driven by China’s booming construction industry where they’re used for structural and framing timber as well as plywood and chip board.
On the other hand, hardwood plantation pulplogs are used for paper, packaging and low-quality sawn products including pallets. Consumption of these products, particularly newsprint, has decreased by 11 per cent in the past decade.
Timber NSW general manager Maree McCaskill said investment in new plantations was desperately needed to keep pace with global demand for softwood logs.
“In the softwood industry we’re already under-supplied by one million tonnes,” she said.
“We need considerable investment in new plantations but this is problematic due to a number of policy settings here.”
She said barriers to investment included the price and availability of suitably zoned land and the persistence of long-term wood supply agreements.
“Australian forestry is one of the most heavily regulated industry’s in the world. Even existing industry finds it difficult to invest because it has no resource security.”
According to one fund manager, institutional investors are flocking to Australian and New Zealand timber assets but they’re mostly interested in cash-yielding, mature plantations.
“We keep our options open but frankly [establishing new plantations] is quite difficult in the Australian context because of the cost of land and planting trees,” said New Forests’ executive director of investor services Radha Kuppalli.
“It would be more viable if there were carbon price signals that could shift commercial outcomes for new plantations.”
New Forests’ is a fund manager for institutional investors. Its investments and operations include more than 780,000 hectares of plantation forestry and land as well as manufacturing and marketing operations.
In November it raised $660 million from six overseas pension funds to invest in a new round of timber plantation acquisitions.
