Supplier update: Timber

The Victorian state government recently announced a halving of the native timber sold by VicForests by 2024 under the Victorian Forestry Plan. This could mean that timber processors at Longwarry, Noojee and Powelltown may lose more wood supply.

The catalyst for cutbacks was the government's release of the Threatened Species and Communities Risk Assessment, which outlines further new protection areas that will affect forest areas set aside for timber harvesting. This is on top of the extra 100,000 hectares of protection areas put in place in 2019, much of which has since burnt, according to the Warragul & Drouin Gazette.

With the latest cutbacks, the area available for timber harvesting is now less than two per cent of Victoria's public forests.

Currently, VicForests is supplying 253,000 cubic metres of D+ saw logs per annum until 2023-24. Under the plan, this will reduce to 185,000m3 in 2024-25 and to 140,000m3 from 2025-26 until 2029-30, when all harvesting will cease.

The amount of Vic Ash timber that will be harvested over this period is 85,000m3, while the annual harvest of mixed species will go from 100,000m3 in 2024-25 to 55,000m3 from 2025 until 2030.

Australian Sustainable Hardwoods in Heyfield is a major user of Vic Ash timber, while Radial Timber sources timber from VicForests until its own plantations are mature. Many of these, however, will not be mature by 2030, leaving Radial short of timber.

Along with the risk assessment cutbacks, the government delayed the release of VicForests' next Timber Release Plan until after the November 26 state election.

It also announced a new tranche of its "sawmill opt-out scheme" for processors who may want compensation to leave the industry. The government is offering up to $250,000 as a redundancy payment for plant and equipment, and up to $150,000 for the safe retirement and repurposing of mill sites.

Victorian Forest Products Association (VFPA) chief executive Deb Kerr said the state government's actions were undermining any industry confidence that it would be able to guarantee supply timber until 2030, as promised. She told the Warragul & Drouin Gazette:

On the face of it, it appears to be forcing mills to leave the industry they love - all right before the November election. The government's exit package has come at a time when many mills have been operating with very little timber supplies for months, with some mills mothballing operations due to lack of supply.

She said the government had confirmed it was reducing saw log supply by 24% and further reducing the effective harvest area by expanding protection zones for threatened species.

Victoria's sustainable native forest industry operates on just 0.04 per cent of the forest each year and for most of 2022 has been held to ransom through the courts by litigious green groups. Mills and their workers are stressed about their future and have little confidence in the government's promise to guarantee supply until 2030.

Related:

Mectec timber mill in East Gippsland (VIC) closes - HNN Flash #107, August 2022

Plantation expansion

A new softwood timber plantation covering about 14,000 hectares will be established in Gippsland, also as part of the Victorian Forestry Plan.

Agriculture Minister Gayle Tierney said the plantation would be established by Hancock Victoria Plantations (HVP). HVP, which already has extensive plantations in Gippsland, will match the Andrews Labor Government's investment almost dollar-for-dollar to buy, lease and manage the more than 14,000ha of softwood plantations.

Ms Tierney said 16 million trees would be planted and the government would match the company's investment almost dollar-for-dollar.

Plantings of the softwoods will begin in 2023, subject to final approvals, and continue over 10 years. Softwood plantations normally take 30 years to grow to provide quality sawlogs. All going well, these plantations would mature between the early 2050s and 2060s.

Ms Tierney said the plantation would protect timber supply for the construction industry, had the potential bring international processors to the region and would ensure a long-term sustainable future for Victoria's forestry industry. Currently, Gippsland is almost 100% dominated by hardwood processors.

The minister's announcement did not stipulate where the plantation would be located but it will be across various Gippsland locations to reduce water impacts on existing plantations and other land uses including agriculture.

It will contribute to the state's emission reduction targets by removing 7.8 million tonnes of carbon dioxide over the next 25 years.

Ms Tierney said five of every six trees currently harvested in Victoria were from plantations and over time the new investment would make that six out of six.

However, the Forests and Wood Products Association said in an interim report that Australia's manufacturing and construction sectors will face a critical timber shortage and a doubling of the ever-increasing reliance on imported timber by 2050 unless an additional one billion production trees are planted.

The VFPA backed the state government's announcement and said 16 million trees would help close the current supply shortfall. In a statement, Ms Kerr said:

Victoria imports on average 36% of its softwood demand and desperately needs to secure future timber and fibre supplies. This support to establish 16 million new trees is welcomed to close the current shortfall in sovereign timber supplies.

Originally promised as the transition for the Gippsland hardwood industry, with plantings only expected to commence from 2023, it will still leave a future gap in harvestable timber and fibre from 2024.

Ms Kerr also said HVP's participation would enhance Gippsland's standing as a plantation region of major importance while providing immediate jobs in new plantings, tree and land cultivation, and management.

It also opens opportunities in the farm forestry space, for local landholders to participate.

A consultant's report for the federally funded Gippsland forestry Hub found that Gippsland has more than one million hectares of land suitable for forest plantations. Most of these areas' suitability are classed as "high" to "very high". The report said:

Although land costs are high, there is great potential to work with current landowners (including institutional agribusiness investors to integrate plantations on their land.

However, the report warned the Andrews Government's policy to end native timber harvesting - despite growing demand for the timber - would continue to reduce local processing capacity. It said:

Loss of scale threatens the ability of manufacturers to compete in an open economy.

Sources: Warragul & Drouin Gazette and Australian Associated Press