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Australia’s forest sector resilient in 2008, tougher times to come

Throughout 2008 Australia’s forest sector continued to perform strongly according to a new ABARE report released Wednesday. However, current economic conditions suggest difficult times ahead for Australia’s forest sector, with uncertainty regarding investment and employment in many regions.

The bi-annual report, Australian Forest and Wood Products Statistics, describes an industry exhibiting strong investment in new timber plantations and benefiting from continued housing sector and international demand.

“2008 remained a good year for Australia’s forest sector, with more than 70,000ha of plantations established, housing activity increasing by more than 4% in the year to June 2008 and export demand and prices remaining strong,” said Mr Phillip Glyde, executive director of ABARE.

Significant areas of broadleaved (eucalypt) plantations continued to be planted in many parts of Australia in 2008, with the highest rate of planting occurring in Tasmania. However, compared with the previous year, the rate of establishment was down by 16.5%, foreshadowing a slowdown of the managed investment scheme sector.

“The impetus for sawnwood demand provided by the housing sector in the 2007-08 financial year also appears to be less certain for the coming years according to more recent data,” added Glyde. In the September and December quarters of 2008, dwelling commencements were down by 13% compared with a year earlier.

Forest product exports remained relatively strong over the 2007-08 financial year, growing by around 5%. However, this was mostly because of growth in woodchip exports, the value of which increased by almost 13% over the year. Woodchip prices remained firm into the September and December quarters of 2008. All other major categories of forest products recorded a decline in export values and volumes.

“So far, the global financial crisis has not severely affected areas critical to the Australian forest sector, such as domestic housing and woodchip demand. Nevertheless, the effect of the crisis on these variables over the next few months will be critical for Australia’s forest industry,” said Glyde, adding that this will have implications for employment and investment in many regional areas.

Glyde acknowledged the support of Forest and Wood Products Australia in providing funding for the industry survey.