What are woodchips worth?

Woodchips are worth about $80 per green metric tonne loaded onto a ship bound for the Japanese paper industry. There may be some premium depending on quality and prices vary according to global supply and demand and the exchange rate. Domestic processors usually offer less than this value. If all of the Blue Gum resource was exported at present value, it would contribute $200 million to the national economy.

What will private forestry do for the local economy?

The Blue Gum industry is currently contributing approximately $45,500,000 to the local economy through the establishment and management of the plantations. Within a decade, this is expected to rise to more than $145,000,000 per year including harvesting. Plantations are established using mainly local contractors and labour for cultivating the land, weed and pest control, planting, fertilizing and fire break management. The cost of these operations is in the range of $1,000 to $2,000 per hectare depending upon the site and the intensity of management. The current rate of planting of approximately 20,000 ha per year contributes approximately $30,000,000 to the local economy. Management of the existing private forestry estate of 110,000 ha of Blue Gum is estimated to cost $5,500,000 every year. In addition, it is estimated that half of the land planted to Blue Gum is on leased land, most of which is owned by local farmers. The rental paid to these landowners is estimated at $10,000,000 per year. Within a few years there will be 2 to 3 million tonnes of pulpwood available for harvest. Harvesting costs comprising the logging contractor and log haulage will typically contribute $20.00 to $30.00 per tonne harvested depending on difficulty, size and distance. Chipping, rail haul to port and port handling costs of $10 to $20 per tonne means the harvest of Blue Gums will add more than $100,000,000 to the local economy. Other income from the sale of the woodchips will be distributed as taxes and contributions to government infrastructure, returns to growers, land purchase values and profits for the industries involved.

What will the employment effect be of private forestry?

The employment patterns in our region change with the demand on rural commodities. Unlike conventional farming, most of the labour in the newer industries like viticulture, horticulture and forestry does not live on the farm, but commutes from towns. There is a real concern for the rural community in accessing skilled labour as the industries develop and workers become more dependent on urban locations for their lifestyle.

How many people are employed by the private forestry industry?

It is difficult to accurately assess the number of people employed in the private forestry industry because much of the labour is seasonal contract labour and statistics are not collected separately for the industry by the ABS. Our estimates are that there are approximately 840 full time equivalent jobs directly engaged in silviculture, harvesting, chipping, transport and export operations. These jobs involve operators of modern tree harvesting (130) and log handling equipment, truck drivers (80) and supervisors. The equipment requires maintenance (10) and supplies of materials (5). Roads require upgrading and maintenance (5). Transporting woodchips to port and loading the ships (20). There are also increased jobs in planning and managing the new operations (40). Employment in modern forest harvesting is challenging and rewarding work. Extensive training is involved to ensure operators are aware of the environmental and safety aspects of their work as well as being skilled in the efficient operation of the machinery.

How is forestry investment regulated?

Forestry is controlled by a wide range of Commonwealth and State legislation. Corporations offering plantation investments for public subscription are required by the Corporations Laws to submit a prospectus to the Australian Securities and Investments Commission (ASIC). Amongst many requirements, the prospectus must outline what the investor will receive for the investment. It also requires independent expert reports on the investment and a compliance committee to be established to supervise the delivery of the undertakings made in the prospectus. This provides protection for investors. At all costs when entering into an agreement for a forestry investment, legal advice is essential.

Why are plantations subsidised by tax payers?

Plantations are treated the same as any other agricultural crop for the purpose of taxation. The costs of establishing the crop and the interest and rental paid on the investment in cropping are deductible expenses. The income from the crop when harvested is taxable. Profitable crops are therefore net contributors to public revenue. There is no compensation or indexation of costs over the life of the crop. Because forest crops often involve a long period between establishment and harvesting there is an opportunity to delay a tax liability by off-setting the cost of establishment of a forest crop against other taxable income. However, at the end of the crop tax will be payable on the revenue from the crop. There is no tax subsidy on plantations.