John Lord
I despair.
Industry is calling on our governments to fix its woes, a lack of resource, asking them to plant the trees industry needs.
Other sectors don’t do this. They get on with coping with material supply issues and let the marketplace drive whatever incentives are needed.
Why is industry making this call? It’s because governments here in Australia have traditionally provided most of the native timber and softwood plantations.
Will governments plant more plantations, the plantations the nation needs if we are to move towards self-sufficiency in timber? I don’t think so, for two reasons. First, I expect the governments’ economic advisers will say it’s not the governments’ job and that the market should sort it out. The second is the governments don’t have the land on which to plant the necessary plantations, even if they wished to help.
It is widely acknowledged that the only land available for more large scale plantings to help Australia provide its own timber resource is that held by the private sector, principally by the nation’s farmers.
Will the nation’s farmers in suitable climates be interested in providing parts of their farms to be planted to trees?
They should, for lots of environmental, farm economic, family succession and risk amelioration reasons. But will they do this at the present time?
My belief is no.
Farmers, generally speaking, are riding a wave of a few wonderful seasons together with some unprecedented prices. They are making lots of money. The typical view expressed to me is a short term one: what I plant this year I want to harvest at a profit next year.
So, what could cause them to change their minds?
Only one thing I think, and that’s economics.
The MLA says red meat will be carbon neutral by 2030. When the supermarkets request their meat suppliers demonstrate that the stock they are supplying come from a carbon neutral farm the proverbial will hit the fan. Some farmers are measuring and tracking their carbon balance but where I live they are in the minority.
To me a more fundamental economic matter is that industry, having grown up on a diet of cheap logs provided by governments, are not paying enough for logs for serious private sector investment in growing them. Rob de Fegely AM set this out clearly in his article in the June 2021 edition of Australasian Timber.
A professor of economics once told me that when governments make grants or provide subsidies, it’s like a seesaw. The grant or subsidy, helping part of a sector, is seen. However, the other end of the seesaw, which goes down, is not visible. This is the harm done to other parts of that sector. The professor said that governments making grants or providing subsidies is, actually, worse for that sector than if they had done nothing at all.
We all know material prices have climbed dramatically over the past two years.
I haven’t researched the various material groupings, but we all know about energy, and I do know about steel. From September 2020 to May 2022, 20 months, prices for structural, plate and hollow sections have risen between 86% and 97%.
There may be lots of reasons for these rises, which no doubt can be debated, but the fact is that steel prices have risen by these amounts, and the customers are paying.
What about timber prices, log prices?
How much have they risen?
Isn’t there right now an opportunity to address the looming log shortage and at the same time transition to a more sustainable log supply? Didn’t someone say that where’s there’s chaos there’s opportunity?
Our family are private foresters in northern Tasmania, and we’ve been managing native forest and growing hardwood and softwood in plantations for over 30 years. We have managed our forests with the wish that they be value added here in Australia, rather than overseas.
Some years ago, we started processing very small quantities of logs. In the last year, our quantities have been larger, but still only a few hundred tonnes were sawn.
Our experiments over the past few years have not been with the view our family starts a timber processing business – we are tree growers – but to investigate what our logs are useful for – and worth. It will be no surprise that the stumpages that are embedded in our costings match Rob de Fegely’s advice. Some product has been sold locally as green but most is sold to the mainland, kiln dried, mainly moulded, as final product or as joinery feedstock.
Why am I telling you this?
For two reasons. First, we are by and large, recovering our embedded stumpages. We do not wish to sell into commodity markets. The only thing that sells a commodity is price, and this doesn’t suit a small-scale producer.
The other is that a couple of years ago I cold called a mainland-based wood products manufacturer whose products appealed to me. I found a family business, using kiln dried, moulded softwood. They were wishing to find another supplier, and could we potentially help? Yes, but with our somewhat fragmented supply chain a likely price was double their then buying price. The owner said such an increase would not be accepted by his customers, but could we keep in touch? We’ve kept in touch, speaking every few months and a couple of days ago he called. His buying price has gone up, but his concern now is obtaining a reliable supply.
Our value proposition includes not only provenance, safety and quality, but also reliability – and we’re interested in long term relationships. This manufacturer told me he’d looked at his costings, realised his timber costs were a relatively small part, and that he was considering approaching his customers to discuss a price rise that would enable him to reliably obtain supply, in other words pay a higher price such that we could potentially become his timber supplier.
Should not this be the approach taken by the timber industry generally so that industry can send a signal to tree growers like our family, and potential tree growers, that growing trees, actually, is not a bad business to be in?
So, if it’s unlikely governments will wish to or be able to plant the plantations Australia needs, and if the private sector is the nation’s only hope, planting trees on farmers’ land, isn’t there an opportunity, with prices for everything else skyrocketing, for a reset, right now, to put this critical industry on a sustainable footing for the future?
Industry leaders, a time for leadership?
John Lord is a tree farmer at Longford in Tasmania and was National Treefarmer of the Year in 2005 and Tasmania Treefarmer of the Year in 2006.
