Anne Ruston
The Queensland timber industry says the sector has benefited from the rising housing market, but the challenge of competing with cheaper imports is ongoing. Source: ABC Rural
The most recent Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Australian forest and wood products statistics report for the March and June quarters of 2015 shows some signs of improvement in the forestry sector, but highlights areas of concern before the sector can be declared to have enjoyed a turnaround.
The forestry sector employs about 19,000 people in Queensland, and is estimated to contribute about $3.8 billion to the state’s economy.
Timber Queensland’s chief executive Rod McInnes said the local industry still struggled to compete with imports.
“The industry sort of has to be world’s best practice, and world’s best efficiency if you like, in order to compete with imported product,” he said.
“And that’s being produced in overseas countries by big inefficient sawmills which produce hundreds of millions of tonnes of timber at very low cost prices.
“If we’re going to compete with that product in Australia we have to equally operate our mills so that they are as efficient and that requires big volumes of log into a relatively small number of mills to get those efficiencies of scale.”
While the value of Australia’s trade in wood products rose in both imports and exports on the previous year, imports continued to outstrip exports, resulting in the trade deficit in wood products widening by $219 million, to $2.3 billion.
Mr McInnes said there was demand for soft and hard woods domestically, but Queensland’s biggest challenge was finding the land to expand plantation forests to support its growth.
“Our projection is that we probably need another 100,000 hectares of plantation forest in Queensland right now to maintain our current 80% self-sufficiency,” he said.
“Even if it was planted today, it would be the best part of 30 years before that forest would be grown to a size that we could start harvesting.
“So our problem becomes one of getting enough resource to meet the developing demand for the product.”
He said competition with other farming industries for productive land was an issue, but foresters were working on creative solutions to overcome it.
“In the dairy industry we’ve encouraged farmers to grow plantation timber on their properties on the hills and run their reduced herds on the flat so they’ve got multiple activities happening on the same property,” he said.
“(It) creates a better property management environment as well as keeping the farmer and his family in their traditional home.
“Those sorts of things need to be explored and their need to be planning initiatives brought in by governments, both local and state, to facilitate that sort of thing happening.”
ABARES forestry economist, Beau Hug, who worked on the latest report, said there had been gains in both domestic production and trade data, though competition from imports was still a concern.
“There were a couple of signs that Australia’s forestry sector has begun to improve after a difficult period that saw lower levels of log harvest and consumption of wood products,” Mr Hug said.
“For example in 2013/14 industry ‘s contribution to gross domestic product increased for the first time since 2010/11, growing by 10% to around $7.7 billion.”
ABARES estimated growth in the sector in 2014/15 remained strong, with the volume of logs harvested growing by eight per cent in 2014/15 to 27.4 million cubic metres, to a total value of almost $2 billion.
Timber industry benefits from housing rise Mr Hug said that was largely due to gains in new housing, which makes use of the vast majority of soft and hard woods harvested in Australia and is an important driver of economic trends in the forestry sector.
“2014/15 marks three years of consecutive growth in residential construction activity in Australia, with the total number of dwelling commencement 45 per cent higher than in 2011/12,” he said.
“But if we look at the dwelling commencements nationwide … Tasmania, Victoria and Queensland recorded the largest percentage gains in total dwelling commencement.”
But ABARES executive director Karen Schneider fell short of calling the result a complete turnaround, saying production and consumption statistics available later this year would give a clearer picture on how the sector was tracking.
“This may be indicative of a turnaround for the forestry sector,” Ms Schneider said. “This follows a difficult period that saw the industry contract under adverse conditions, including low levels of residential construction, weak global demand for wood products and a high Australian dollar.”
Federal Assistant Minister for Agriculture and Water Resources, Senator Anne Ruston, welcomed the report, saying it seemed to indicate a sustained turnaround.
“This is an exciting time to be in the forest products sector,” she said.
“Now the challenge is to make the most of opportunities for innovation and extend the value chain to the next generation of forest products-like engineered building products, transportation fuels, biochemical and biomaterials.
“Governments need to make sure policy is conducive to a strong and vibrant sector through levelling the playing field for our producers in international markets, fostering innovation and development through strong and coordinated research and development and making sure industry is engaged in the policy-making process.”
Ms Ruston said the newly appointed Forestry Industry Advisory Council was collating 80 submissions on issues in the industry that will form a discussion paper on the opportunities and challenges for the sector ‘s long-term future.
