Experts to assess forest overcutting

By Philip Hopkins, The Age (article), 19/3/2001

The review comes amid fears of mill closures and job losses resulting from miscalculations by the Department of Natural Resources and Environment of the sustainable yields in areas designated for timber harvesting in the state's five regional forest agreement areas. New data from satellites has shown evidence of overcutting.

According to the Victorian Association of Forest Industries, there is potential for regional Victoria to lose 1200 jobs and as many as 20 sawmills, many in towns where the sawmill is the only employer. VAFI's executive director, Graeme Gooding, said the full extent of the timber shortfalls was not known. While some areas appeared to be operating on sustainable supply, millers in other areas such as Central Gippsland, which is part of the Central Highlands Regional Forest Agreement, had been told by forestry officials they may have to reduce by 20 per cent or more.

Another area of difficulty was the Midlands, which could face further reductions of more than 10 per cent. The Midlands sustainable yield was cut back 30 per cent to 40,000 cubic metres of sawlogs in the West RFA.
Mr Gooding said the Central Highlands was an area of particular concern because it was arguably the most important value-adding hardwood centre in Australia. The department had guaranteed that current production levels would be maintained in the Central Highlands RFA, he said.

Ms Garbutt said the group would work quickly to review and confirm the levels of resources needed for licence renewals. The government has just begun a review of the state's 15-year sawlog licences.
Ms Garbutt said data and analysis were not yet completed on sustainable yield, the cost to industry of obtaining the timber available to it, and the specific types and grades of timber the industry now wanted, compared to what it took under old licence arrangements. "Long-term contracts entered into a decade or more ago provided essential resource security for the industry," she said. "However, they were based on fixed-volume contracts which could not be varied to reflect new changes in sustainable yield as new information became available or to take account of changing market demands."

The five RFAs expanded Victoria's conservation reserves by more than 900,000 hectares, or 36 per cent, creating a forest reserve system of about 2.86 million hectares - more than 50 per cent of the total public land across all the regions. A total of 1.2 million hectares of forest was set aside for timber production. Not all state forest was included in the RFAs.

Mr Gooding said both the federal and state governments should fund restructuring packages to help those hit by additions to the reserve system and the miscalculations of the timber resource. VAFI has suggested a $45 million package shared equally between the state and the Commonwealth. Victoria already has a $42.6 million Forest Industry Structural Adjustment package. Mr Gooding said industry remained committed to the RFAs, and reopening the RFA process was not considered as a way of solving the problem.

The worst option for industry would be for each mill in a designated area to take a proportional cut in its allocation, he said. This would result in mills trying to buy each other out. A few mills would survive with their current allocations intact, but they would have wasted valuable money that would be better used to invest in value-adding, kiln-drying equipment. Mr Gooding said other strategies included expanding the resource by planting extra trees, as well as plantations and reafforestation.

However, the best option was to do more with the smaller volume of wood available. A government package would enable operators to invest in kiln-drying equipment. For example, Mr Gooding said Bob Humphreys at Cann River in East Gippsland had suggested closing one of his two mills and converting the other to a dry mill that only did kiln-drying. He would hand back some of his licence and no one would lose their job because the value-adding would soak up the jobs lost in the mill that only produced green structural timber.

Victoria's native hardwood industry has a turnover of $1.4 billion and directly employs 7730 people, and indirectly another 14,600, giving an employment total of 22,340.
More than half current timber production is for the structural market, where, despite the big inroads of softwood into the housing market, hardwood is unrivalled in load-bearing functions because of its strength. However, Mr Gooding said this percentage was reducing all the time. "Some companies are moving to 100 per cent appearance grade," he said, creating products such as furniture, high-quality flooring and parquetry.

A model for this development has been the Gould timber mill at Alexandra in the Central Highlands. The company closed its green mill and bought a factory that was converted to a dry mill. The total workforce was increased by 45 per cent and the value-added product doubled. The company now produces 100 per cent dry product. Value-adding is where mills can make most money. At the mill, appearance-grade timber fetches $1000 a cubic metre-plus and a glued furniture blank $2000 per cubic metre.  A finished furniture product is valued at about $10,000 a cubic metre, and parquetry at $12,000-$13,000 a cubic metre. A dried structural product fetches about $700-$800 a cubic metre and unseasoned house framing about $300-$400 a cubic metre. Other lower-grade timber fetches progressively less, with waste converted to woodchips earning about $20-$30 a cubic metre.

Unseasoned green timber is sent directly to the house site from the mill, but timber for higher quality use is air-dried for a year before being kiln-dried. Other more sophisticated kiln-drying equipment enables drying to take place in two or three months, but is a big investment. Such investment has been difficult for many mills, which are small, family-based businesses with not a big call on capital.

The Federal Opposition called on the Commonwealth to help financially with Victoria's timber industry.  The shadow minister for forestry and conservation, Laurie Ferguson, said the Forestry Minister, Wilson Tuckey, could not portray himself as a hapless, innocent bystander. "Despite Wilson Tuckey's attempts to wash his hands of the matter, the fact is that Victoria is required to implement this revised sustainable yield system as a condition of its regional forest agreements with the Commonwealth Government," he said.