1 The state forests of New South Wales eucalypt plantation program

1.1 History

Eucalyptus species dominate Australian native forests and historically have been the principal hardwood species supplied to the domestic sawmilling industry. Desirable features include high strength and attractive appearance suited to a wide range of uses. Some 20 of the 700 or so eucalypt species have been processed for pulpwood, with two species (Eucalyptus globulus, E.grandis) now among the premier kraft pulping species worldwide.

Whilst extensive areas of native eucalypt forest remain in Australia there has been a move to source more wood from eucalypt plantations. This has been driven principally by a reduced supply of large (>40 cm small end diameter) logs, a conversion of timber production areas into conservation reserves and wood quality issues. Community concern over the harvesting of native forests is maintaining this trend and encouraging the continued establishment of plantations.

Some 170,000 hectares of eucalypt plantations are currently grown around Australia, expanding at a rate of about 25,000 hectares per year. Pulpwood plantations predominate; 120,000 hectares expanding at about 18,000 hectares/year are ostensibly being grown for pulpwood only, principally for the Japanese pulp and paper industry. By contrast, State Forests has pursued integrated regimes based on sawlog production (Appendix 1).

State Forests has been planting eucalypts for over 50 years and currently manages a eucalypt plantation estate of about 45,000 ha. Originally used as a method of re establishing native forests after harvesting, plantations are now established by State Forests on cleared grazing land. There is an estimated 47,000 ha of eucalypt plantations in New South Wales, of which about 12,000 ha was established by Australian Paper Manufacturers (APM) in the 1960s and 1970s. Over the same period State Forests established about 15,000 ha. A small area (<1500 ha) of E. nitens plantation is grown near the Victorian border by Harris Daishowa Australia Ltd (HDA).

The APM and HDA aim was to produce pulpwood, while State Forests aim has been to produce sawlogs and veneer logs although until recently they have not been intensively managed. APM sold their estate to State Forests in 1975 when they decided not to proceed with a pulpmill at Coffs Harbour. State Forests has gradually been thinning the estate leaving a valuable sawlog resource. In addition a further 15,000 ha has been planted by State Forests since 1993.

The bulk of the older resource (planted in the 1960s and 1970s) occurs in the Coffs Harbour and Wauchope areas. The State Forests sites being predominantly ex forest, were often burnt, cleared, planted and fertilised with a small amount of fertiliser. Cultivation (ripping, ploughing), weed control, or use of genetically improved seed was generally not undertaken. The main species planted is E. pilularis (blackbutt), a valued sawlog species.

The ex-APM resource is predominantly E. grandis (flooded or rose gum). APM purchased cleared farmland and used similar establishment techniques to that of State Forest except some grasses were scalped off prior to planting.

Whilst weed competition, unimproved genetic material and delayed thinning have reduced potential yields, these older plantations have been invaluable in gaining knowledge and industry acceptance of hardwood sawlog rotations.

1.2 Current situation

Partly as a result of government decisions to reduce harvesting of native forests (in response to community demands), a program to expand the plantation estate on cleared land has been initiated. Since 1994, a joint venture program between State Forests and landowners has seen about 5,000 ha planted on cleared land already owned by 160 landowners. Another 10,000 hectares has been established by State Forests on land it has purchased or owned, partly to establish the nucleus of an expanded joint venture estate. Expansion of the plantation estate will most likely be joint ventures between private landowners and State Forests with investors. State Forests currently plants between 5,000 ha to 10,000 ha/year on a range of tenures. Government funding for the plantation program is being phased out as private investment arises.

The current eucalypt processing industry on the north coast of NSW is based on a range of sawmills, a veneer/plywood mill, several pole/pile/girder mills, and a range of secondary processors including parquetry and tool handle factories. There are limited markets for the pulpwood component with only one major outlet (woodchip export) and one minor outlet (hardboard) but this is set to improve with considerable market interest in plantation grown pulpwood for export.

1.3 State forests marketing

State Forests marketing approach is to complement the native forest resource, with the plantations providing economies of scale, consistency and a secure long term supply. This will allow processors to undertake long term investment and marketing programs. A major competitive advantage is that processors are familiar with processing and marketing eucalypt and there is generally good domestic market acceptance of eucalypt wood products.

1.4 Geographic areas

Due to rainfall, soils, markets and land availability, the north coast of NSW represents one of the best areas for eucalypt plantation potential in Australia. In addition small areas of irrigated eucalypt plantation are being established in the south west of NSW (Riverina) by State Forests, but a number of technical and market aspects are still to be resolved. The north coast of NSW is thus the focus of this document.

Initial calculations from State Forests estimate approximately 980,000 ha of land potentially suitable for eucalypt plantations north of Newcastle to the Queensland Border and east of the Dividing Range. The principle criteria for land suitability are that the land is predominantly cleared, less than 18 degrees slope and has greater than 900 mm average annual rainfall. All the land is privately owned and generally within 100 km cartage distance of a processing centre such as a sawmill.

Landholdings range in size from 1,500 ha approximately 100 kilometres inland to 50 ha near coastal urban areas. Average planted parcel size on private land (joint ventures) is in the region of 25 ha but ranges up to 400 ha. State Forests planting areas are usually in the range of 200 to 2,000 ha.

1.5 Infrastructure and markets

State Forests recognises that a constraining factor to plantation investment on the north coast has been the long cartage distance to ports for the “pulpwood” component.

The two ports suited to the cartage of export pulpwood (logs or chip) are Brisbane and Newcastle. They are the only ports able to dock and load 440,000 DWT/3 million cft grain capacity which are the minimum size for competitive cartage to northern Asia, the dominant location of hardwood fibre importers. Rail extends from the port of Brisbane to the port of Newcastle about (900 km) and passes through the centre of the plantation suitable area with several sidings available for loading (Figure 1). There is also a good road network parallel to the rail line and extending inland into other plantation areas.

Figure 1. Supply zones of at least 10,000 plantable ha within a 100 km radius of a logical processing or distribution point (supply zone centre) form a continuous chain along the north coast.

1.6 Physical environment

The north coast of NSW has a subtropical climate with a year round average rainfall in the south (near Newcastle), to a defined summer rainfall maximum in the north. It includes much of the natural distribution of E. grandis (Flooded gum). Other important timber species include E. pilularis (Blackbutt) and Corymbia maculata (Spotted gum formerly named E. maculata) both important sawlog, veneer log and pole species. These three species along with E. dunnii (Dunn’s White gum) form the principal species of State Forests plantation program on the north coast along with smaller areas planted to other species

Below, are the climatic requirements of the principal eucalypt commercial species planted by State Forests (Table 1). The north coast generally averages between 1000 and 1800 mm annual rainfall with few or no frosts near the coast.

Table 1. Climatic requirements of four eucalypt species estimated by Booth and Pryor (1991)

¹u, uniform or biomodal; s, summer. Na = not available

²E dunnii data from State Forests

³E maculata includes E henryii and E maculata ssp grayii now called Corymbia maculata, C varigata

Table 2. The product versatility of four eucalypt species

The eucalypts species planted have the ability to produce biomass rapidly in the first few years which makes them eminently suited to economic plantation yields. The wood properties of these species are summarised in Appendix 2.

1.7 Growth rates

The resource established in the 1960s and 1970s is principally E grandis and E pilularis on coastal sites in the Coffs Harbour and Wauchope areas. The growth rates of these stands represent the genetic and silvicultural inputs of 20 - 30 years ago as well as the limited markets to allow timely thinning. Yields have also been reduced by delayed thinning (due to a lack of markets) and discounts to harvestable areas resulting in rotational yields (35 to 40 years) in the region of 10m³/ha/year.

The growth rates of more recently planted stands appears significantly higher, some over 30 m³/ha/year, depending on the silvicultural treatments, degree of genetic improvement and site quality. Average yields are regarded as growth of 15 m³/ha/year over a 20 year period but are improving with each new planting. The aim is to keep minimum harvestable tree size at least 0.1 m³. An example of a growth model scenario based on more recently planted stands is shown in Table 3.

Table 3. Growth model scenario for eucalypt plantation in NSW

The data above is indicative only

1.8 Log product size and value

Product specification and log royalties are shown in Table 4. This data represents industry averages as at June 1998 and represents native forest eucalypt regrowth values as well as eucalypt plantation values.

Table 4. Product specification for eucalypt

(*) For plantations 15 cm may be possible

In the last few years 20,000 to 50,000 m³/year of plantation eucalypt sawlogs and veneer logs have been sold to the domestic processing industry and this is expected to increase as older stands are harvested. This has allowed the processors to learn how to handle plantation logs which tend to be smaller in diameter and more prone to splitting and drying stresses than native forest logs. A number of processors have now retooled to process smaller logs which are also arising from re-growth native forests following earlier harvests. The State Government has tied some future wood supply and grant money to this retooling in an effort to smooth the transition away from large “old growth” logs.

1.9 Wood security

The system of land titles in NSW recognises the creation of a Forestry Right providing for a document to be registered establishing the right to plant, maintain and harvest a crop of trees to someone other than the landowner. The forestry right legislation is based on the ancient concept of profit á prendre. Profit á prendre is a right in the trees which can be freely traded as something separate from the ownership of the land.

The Timber Plantations (Harvest Guarantee) Act 1995 seeks to remove impediments to the harvesting of plantation timber. This is principally through the removal of environmental and development consents if harvesting activities conform to a code of practice.

1.10 Landowner support

Convincing landowners to participate in long rotation (up to 40 years) joint ventures has been a major challenge particularly where the returns from the joint venture are not received until each harvest (crop share joint ventures). This has been easier for landowners with non farm income to accept as they are better able to afford to set land aside for at least ten years. In recognition of this, State Forests has introduced another joint venture agreement that makes annual payments to landowners as “rent” for the first ten years of the rotation. After this time the stand is thinned and an increase in cattle grazing is possible. The ability to integrate grazing (after about age 2) in the plantation has been an important factor in landowner’s minds.

Further incentives to landowner participation are the ability to include the sowing of shade tolerant pasture species, planting of non harvestable areas such as creek banks and narrow (>50 m) shelterbelts as part of the joint venture arrangements. Crop share joint venture partners can purchase some or all of State Forests’ share of the plantation and can also increase their share of the harvest by undertaking some of the establishment and maintenance tasks.

The majority of pulpwood joint venture arrangements are of the annual “rental” form with the landowner having little or no equity in the trees. Most industrial investors have sought a mix of joint ventures with farmers and some land they own themselves.

1.11 Community support

There is widespread community support for plantations because of their employment and wealth generating values, as well as the positive environmental attributes such as reduced weed infestation and improved water and soil protection. Both the forests products industry and the green movement are supportive of the expansion of plantations in New South Wales and recognise that an attractive investment environment is essential for this expansion to take place.