For at least the last 10 years very little has been done by Australian or State Governments or industry, to expand Australian timber plantations. The 2019/20 major fires and demand for agricultural land has seen the plantation estate decrease over this period.
Demand to expand the plantation estate has been constant in recent years. AFPA, Australia’s peak forest industries association has urged the Coalition and Labor to elevate the forestry portfolio to Cabinet in recognition of the sector’s significant economic contribution and the essential products and services it provides. AFPA CEO Ross Hampton (Timberbiz 30 June 2021) said “all Australian governments should work together on a national timber strategy to ensure we have the forest resource we need to meet our future timber needs”.
Since June 2021 there has been a flurry of actions by the Australian Government with a primary objective of expanding the plantation estate. These actions include:
- creation of 11 forestry hubs across Australia to facilitate regional development
- a review of the plantation method under the Carbon Farming Initiative to streamline carbon investment in plantations, and
- Plantation Development Concessional Loans through the Regional Investment Corporation, announced in November 2021.
- in partnership with state and territory governments and industry, the Australian Government is providing grants for plantation establishment of $86.2 million over five years from 2021-22, announced on 21 February 2022.
- Other actions supporting the plantation sector include funding for product innovation, research and development.
These actions are very positive for the plantation sector and show an acknowledgement by the Australian Government that support is needed at Government level to expand the plantation estate. The prior period of static and reducing plantation areas is a clear demonstration that in the Australian context, at this time, natural market forces have been insufficient to overcome the many hurdles working against new plantations.
While these actions are very positive and most welcome, they are regarded as a starter for what needs to be done to meet our future wood supply needs. The most recent grant announcement appears to have been made with little consultation with the States and industry and details of how the grant scheme will work are yet to be revealed.
There are many complications and obstacles in expanding the plantation estate, which need consideration and documentation in an overarching policy document, as compared to replanting final harvest areas or replanting fire burnt plantations. One current major issue is the acquisition of suitable land for plantations at a time when low interest rates and a booming agricultural sector have driven investment in agricultural land and increased land prices to levels unseen in the past.
Australia’s future demand for timber is a key element of any policy development. There has been a dramatic increase in demand of most types of timber over the past three years partly due to Covid and consequent Government’s stimulation of the economy, including generous grants for new home construction. International timber prices are high and costs of importing timber have also increased. Recognition of timber in the built environment as a carbon store is starting to influence the choice of timber over other materials, further adding to demand.
Some of the influences mentioned above are part of the cyclic nature of the economy. it is highly likely that timber demand will increase in future as Australia’s population expands and the value of timber and wood products in construction increases.
Current policy by the Australian Government, initiated in 2018 and shown in the Department of Agriculture website extract (Oct 2020) “Projected a need for 400,000 ha of new plantations over the next decade (2021-2031) to meet our future demand for wood.” “a billion more plantation trees – the right tree at the right scale in the right places.” “Numerous studies show the need for 400,000 hectares of new plantations over the next decade to meet Australia’s demand for wood”.
Initial actions under this policy included setting up forestry hubs, research and development and working with the farm sector to support more trees on farms. However, until mid-2021 these actions have not resulted in any new plantations.
A very rough estimate of the possible impact over the next five years of recent Australian Government actions is;
- Carbon Farming Initiative – 10,000 ha
- Concessional Loans – 5,000 ha
- $86.2 million grants over five years – 15,000 ha
- A total of 30,000 ha.
New plantations may also be developed for other reasons, including through MIS investors – maybe up to 5,000 ha, giving a total of 35,000 ha for the 5-year period. At the same time, there may be some current plantations converted to agriculture. While this expansion will be most welcome it is a long way short of the target of 400,000 ha over 10 years to 2031, which translates to 200,000 ha for those five years. Even if my estimate of plantation expansion is very conservative, and say it is doubled with leveraged investment from industry, it is still way short of the target.
Information and research needed to formulate a national policy for forestry plantations will include:
- Future demand for timber by major timber types, such as softwood sawn timber and engineered wood products, hardwood products, pulpwood and biomass. This should include new processing options backed by potential new investors. ABARES, HIA and consulting groups are best placed for this work.
- Surveying the timber industry on;
- intentions for future timber processing and related resource needs,
- actions they could take to support an expanded plantation estate including offtake agreements and future price commitments, and
- willingness to establish new facilities in locations suitable for growing trees but away from existing hubs.
- Land information by suitability for softwood/hardwood plantations, proximity to industry, ownership and competition factors, and farm sector data for possible establishment of plantations. The established hubs should be a primary source of information supported by ABARES and other Government land data services.
- Surveying current plantation owners and managers by broad category, namely;
- Corporates, and potential developers,
- State forestry agencies,
- farm forestry sector,
- MIS sector;
- to understand their intentions and what incentives, and assistance, if any, they would need to increase their plantation estate. For example, grant money, loan funds, offtake agreements, taxation reductions, carbon income, infrastructure investment, reforms to state and local regulations, new State government support services etc.
- Consulting with State government regulatory authorities to address obstacles to plantation expansion such as approvals to establish plantations, providing better fire prevention and suppression support, road access and usage charges, etc.
- Consulting with the plantation insurance sector to understand future directions and what actions the plantation industry could take to improve access to affordable insurance.
This information, and more, should enable a national plantation policy for up to 30 years, to be developed. The stated target of an additional 400,000 ha may need to be amended as a result of the analyses mentioned above. Such policy should not be “set and forget” but dynamic with monitoring and adjustments.
Forestry plantations have been controversial and a major education and promotion effort will be needed to bring a policy for expansion to fruition. Success of the farm/forestry groups may be a successful model for extension.
There are limits to policy guidelines in land matters where land can be bought and sold by any sector of the economy, but guidance of the types and localities of land suited to plantations can assist decision making. Problems which arose from the previous unregulated MIS expansion where land prices increased rapidly, should be avoided.
An overriding principle for such a policy is that there is a “level playing field” amongst plantation development parties, in terms of access to tangible incentives, to avoid one sector having an artificial advantage over another sector. In most regions new plantations can be integrated with agriculture enterprises, on land less suitable for farming and with trees on farms forming a significant part of new timber supply.
The relationship between the forestry/plantation sector and agriculture could become a major barrier to expanding the national estate without careful and continuing monitoring of actions. Plans for new plantations need to be integrated with regional development strategies and supported by local communities, and the agricultural sector, as generating new economic opportunities and social and environmental benefits.
The Australian Government needs to work with States, industry, industry Associations, related stakeholders such as Housing Industry Association, and the farming sector to develop a formal policy, and provide sufficient financial incentives to achieve this policy. The Australian Government actions to date are a recognition of this role. Additional capacity within government will be needed to take this forward.
The potential benefits of expanding the timber supply capacity of our plantations and farm trees are enormous in terms of industry development, import replacement, wood security, rural employment, climate policy targets and other environmental benefits.
Ron Wilson is a Forestry Consultant to AgriWealth Group and previously senior manager in what is now Forestry Corporation of NSW.
