The forestry industry in Australia has suffered over the past five years with the collapse of managed investment schemes and the exits of several major players according to a new IBISWorld report. Source: Timberbiz
The updated report is called Forestry industry in Australia.
IBISWorld expects industry revenue to decline at an annualised 3.0% over the five years through 2013-14.
Some growth in timber demand, driven by housing construction growth, is expected in future years and will benefit the Forestry industry.
According to IBISWorld Australia’s forestry industry derives most of its revenue from managing native forests, plantations and timber tracts.
About 51.0% of Australia’s plantation area is comprised of softwood species while the remaining 49.0% is hardwood.
The plantation segment has been boosted by the increased preference for non-native timber in Australia and overseas.
“Amid difficult growing conditions, forest managed investment scheme problems and restrictions on the availability of water, the forestry industry has attracted attention due to its irrigation practices and investment levels,” said IBISWorld industry analyst Alen Allday.
Australia’s native forest area was estimated to total 148.0 million hectares in 2013-14, down from 153.0 million hectares in 2008-09.
In 2010-11, plantation forests accounted for 76.1% of harvested logs in Australia, while native forests accounted for 23.9%.
In 2013-14, IBISWorld estimates that these ratios will change to 80.0% and 20.0%, respectively, as plantation log harvesting increases.
This is a major change from a decade ago, when 13.4% of the total logs harvested in Australia were from plantation forests, while 86.6% were from native forests.
IBISWorld estimates that Australia’s Forestry industry will record revenue of $1.5 billion in 2013-14, down 3.5% from the previous year after some large fluctuations in previous years.
Forest managed investment schemes (MIS) increased in popularity in the years through 2007, as investors received an up-front 100% tax deduction.
“The MIS boosted demand for forestry services, until several companies heavily involved in the schemes collapsed between 2008 and 2010,” said Allday.
The industry exhibits a fairly low level of concentration. Notable operators include Forestry Corporation of NSW, Hancock Victorian Plantations Holdings Pty Limited, VicForests, TFS Corporation Ltd and Forestry Tasmania.
