This report is an output of the project Hardwood Plantations in the Tropics and Subtropics (GCP/INT/628/UK), funded by the United Kingdom and executed by FAO. The overall aim of this project was to contribute to regional and global planning of timber (specifically hardwood timber) supplies in the medium-term. This study covered the case study of long rotation eucalypt plantations in New South Wales, Australia.
Most plantations in Australia have been established and managed by State Government forestry agencies for industrial wood supply to enhance rural employment and long term land use as well as to provide a return to the government. Other plantation investment has been by pulp and paper processors for their own supply and more recently by tax driven investment schemes and overseas pulpwood buyers. Virtually all private hardwood plantation investments are based on short (<20 years) rotations which are not likely to produce large quantities of sawlog or veneer logs.
State Forests of New South Wales (State Forests) has been harvesting eucalypt plantation sawlogs, veneer logs and pulplogs for the last five years. Volumes are anticipated to increase substantially as the existing 45,000 hectare resource matures. New plantings as joint ventures with private landowners are also likely to lead to a long term increase in the plantation resource.
Private investments in pulpwood only regimes or pulpwood components of sawlog regimes are likely in the short term but the State Government is keen to attract investments into the long term or sawlog component as well. Facilitation of these investments include establishing a major operational and research program that is solving many of the impediments restraining private investment.
The growing of native species as plantations will build on the processing and marketing expertise of the native forest industry, and allow a transition to a more environmentally sustainable resource with supply security and economies of scale. These “non conventional” plantation species mean genetic improvement programs, growth models, silviculture and wood quality issues all need long term development, a role that government can greatly enhance, particularly if done in partnership with the private sector.
Cash flow, as well as long term returns, are essential if landowners are to participate and, this is further encouraged if plantations can integrate with existing land uses such as cattle grazing. The ownership and trade of Forestry Rights, which can be held separately from the ownership of the land, facilitates landowner involvement and minimises community discontent from large scale land acquisition by plantation investors. A trained and rewarded workforce in combination with a system of workplace standards will minimise costs and maximise yields but only if the infrastructure is in place to efficiently deliver the wood to the wood buyers.
Current timber pre tax real rates of return are estimated at 3 to 7%/year. These rates have the potential to increase with the sale of carbon credits (adding some 2 to 4% return on current values), increased log prices as native forest supplies diminish, growing costs reduce with economies of scale and increased yields of long rotation hardwood plantations result from genetic improvement.
It is the combination of all these improvements in returns that will attract the private investment required to achieve the long term aims of an estate of 100,000 to 150,000 hectares on the north coast of New South Wales.
