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Environment Forest Ecosystems Forest Industries Forest Management Forest Products Greenhouse Gases NAFI Submissions Policy and Politics Renewable Energy Sustainability |
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Addressing the Claims of the Judy Clark Report"Australia's Plantations" was a report prepared for the environment lobby by green economist Judy Clark. It erroneously claims that Australia's planation timbers could replace wood supply from native forests.Executive Summary This response to the Judy Clark report is provided in two parts. The first part is a combined response on behalf of NAFI members involved in both the plantation and natural forest sectors. The second part of the response consists of comments specifically on behalf of NAFI members involved in harvesting and processing wood from natural forests. Part A - Natural Forest and Plantation Members Combined Response The release of the Australia's Plantations report has been accompanied by claims from the conservation councils that the report is the first comprehensive study of the plantation industry and serves to focus attention on plantations rather than natural forests. These claims are extremely misleading. While industry welcomes the acknowledgement of success in the plantation industry and agrees that the growth of the plantation wood supply and associated industry has been of benefit to Australia, there are some serious discrepancies in both the analysis and conclusions of the report. Furthermore, the continued growth of the industry, an objective that all Australians should be able to agree on, is ignored in the report. Future predictions of wood supply are difficult and are greatly influenced by the assumptions made. The predictions of plantation wood supply in the Australia's Plantationsreport, while based on some accurate data contain a number of misinterpretations and inappropriate assumptions. The claim that the report has been prepared in consultation with industry is misleading. Many companies provided raw data on plantation areas, growth rates and processing capacity, but this information has been misused, distorted and exaggerated in the analysis. Industry was not consulted at any stage beyond the provision of raw data. Disagreement with the actual figures and method of analysis aside, industry agrees that a future increase in the volume of wood from plantation forests presents an exciting opportunity for growth in the plantation processing sector. However, to achieve the full potential of the plantation industry requires the consideration of a number of key points that were given insufficient emphasis in the Australia's Plantations report: Part B: NAFI Natural Forest Industry Response The report is biased The Australia's Plantations report collates data from a number of publicly available sources, little of which is new. It provides no analysis before drawing conclusions, many of which are incompatible with the data presented. The report fails to acknowledge three of the most important issues in the forest industry today: the international supply and demand of forest products; current Australian forest policy initiatives and; the need for continued establishment of plantations. The Australia's Plantations report has been heralded by the conservation councils as the untold story of the plantation industry. In the foreword, it highlights that media coverage has concentrated on the native forest debate and implies that the report will change the focus to the plantation industry. Despite this claim, the report, and the associated media releases from green groups, have concentrated on the future of the natural forest industry not the plantation industry, thereby missing an important opportunity. A large proportion of the report consists of data collected from various publicly available sources and industry. While it is useful to bring this information together, little new knowledge is presented and what analysis there is, lacks rigour. The report draws a number of "conclusions" from the data without any attempt at real analysis or consideration of options. The conclusions are not justified and in many cases bear little resemblance to the data from which they are supposedly drawn. It appears that the report has been prepared with a single objective in mind: the closure of the natural forests sector of Australia's forest industry. However, it has ignored three of the most crucial issues affecting the forest industry today: The first two of these issues have been covered in the Combined Plantations Australia and NAFI response, the third is explained in more detail in this part of the response. It has ignored these three issues because consideration of them would lead to a greatly different conclusion than the predetermined objective of the report. While some of the base data in the report, compiled from other sources has validity, the discussion and conclusions ignore or distort the issues presented below. The report lacks understanding of timber utilisation Natural forests and plantations play complementary roles within the industry. Plantations cannot completely substitute for wood from natural forests. The report ignores the interaction between the natural forest and plantation sectors and the technical difficulties of substitution of plantation wood and fibre for those from natural forests. The report has been written with the objective of stopping harvesting in natural forests. To achieve this aim it has ignored the international context of the forest industry as noted above. It has also assumed that there is complete substitutability between natural forest products and plantation products. This is in disagreement with expert information and observed practice. While plantation softwoods now supply a significant proportion of the domestic framing market, this has allowed the hardwood producers, based on natural forest supply, to move into higher value-added processing. This trend will accelerate when the process of Regional Forest Agreements provides additional security to hardwood processors. The softwood plantation resource was established to meet the rising demand for building materials. It is successfully achieving this aim. The hardwood resource is now available for the production of those products which cannot be processed from plantations. The closure of the natural forest industry would not suddenly create additional markets for the plantation industry. It would be more likely to create opportunities for the import of hardwoods from natural forests in Asia and the Pacific. It is worth noting that the majority of large plantation owners in Australia are also involved in the management or processing of wood supply from natural forests. Despite the claims of the report, the linkages between the two sectors are strong, the closure of the natural forest sector would have a significant negative impact on plantation investment by many companies. The report claims that the best plantations grow 14 times more wood per hectare than the average native forest used for wood production. This statistic is an irrelevancy. Natural forests are managed for multiple uses, of which timber production is only one. Maximisation of wood production is not the prime objective of management of natural forests. Average growth rates are not the measure of success of natural forest management. Growth rates in plantations are a result of species selection, breeding, and silvicultural techniques which cannot appropriately be applied to natural forests while maintaining other objectives. The natural forest industry has clearly demonstrated that it can competitively produce high quality products consistent with sustainable forest management principles and compatible with other objectives of forest management. In comparing wood production from natural forests and plantations the report completely fails to compare the costs structures between the two. The report also fails to assess whether previous investment in plantations by governments has been an effective investment, financially or economically. The report implies that competitive production of wood from native forests would require them to be converted to plantations. This statement is completely without justification and is not supported by current practice, evidence or the conclusions of any independent study into the forest industry. It is a blatant and biased attempt to generate public fear about the natural forest industry It has long been acknowledged that many paper and pulp products require a mixture of softwood and hardwood fibre for different paper qualities and products and that consumer preferences will always create a demand for high value hardwood flooring, panelling and furniture components. A forest industry producing a wide range of products from plantations and sustainably managed natural forests provides the greatest benefit to Australia. The Australia's Plantations report ignores the findings of the Industry Commission Inquiry into "Adding further value to Australia's forest products" particularly the relative competitiveness of different sectors of the forest industry. If fails to acknowledge that an efficient forest industry may be an importer of some products and an exporter of others and that some of our greatest opportunities for relieving the trade deficit in forest products may come through the export of high value forest products from sustainable harvesting of natural forests. The report has a predetermined objective Self-sufficiency in forest products is not an appropriate aim for the forest industry and could never be achieved. It appears to have been included in the report in order to "prove" that plantations can replace natural forests. Another key assumption of the report, in pursuing its apparent aim of stopping harvesting in natural forests, is that our forest industry should produce all Australia's wood needs. This assumption is necessary in order to "prove" that there are sufficient plantations to meet our demand for wood products. However, no other industry in Australia is subject to such an artificial constraint or objective. As noted earlier, the assumption ignores the impact of international market forces. The current trend in trade policy is to remove or lower the barriers to free trade. The Australian market for forest products has never been reserved for Australian producers. In fact, the report demonstrates the high level of imports of forest products in Australia (35% of Australia's paper consumption is met by imports). These imports will not automatically be replaced through increased domestic production. Irrespective of the size of the Australian forest industry we will never reduce the level of imports of forest products to zero. Statistics produced by ABARE in 1994 show that while Australia exported $122.4 million of packaging and industrial paper we also imported $369.9 million of product in the same category. Similarly our exports of hardwood sawn timber totalled $14.4 million while imports totalled $66.3 million. This demonstrates the error in assuming that we can achieve self-sufficiency in wood products and that apparently similar products are substitutable. Through the efficient utilisation of our forest resources and expansion of the plantation estate we may become net exporters, but we will still import some forest products because of specialty products and the size of the Australian market. Our objective should be to achieve the commercially appropriate level or production for each product, developing both domestic and export markets. This will result in the import of some forest products, the export of others and, given our forest resources, a net surplus in our forest products balance of trade. This objective can be achieved by utilising the available supply of logs. This includes the log supply from plantations and the sustainable supply from natural forests determined through an appropriate process such as Regional Forest Agreements. The removal of any portion of this supply will have a negative impact on the balance of trade in forest products. Conversely, the expansion of the wood supply, such as through increased plantation establishment will have a positive impact. The report repeats previous mistakes The natural forest industry is not in decline. It is processing a relatively stable volume of resource and continually finding higher value markets. The report repeats a previous prediction about the demise of the hardwood industry in Victoria. Since that time the industry has defied the prediction, undergone significant growth and expanded into value-added markets. The report repeatedly states that plantation timber has displaced native forest timber in the market place and that the native forest industry is in decline. However, objective analysis of the data, including Figure 9 and Figure 10 of the report, demonstrates that the level of production from the native forest industry has been relatively constant over the last decade, not experiencing a rapid decline. While the natural forests have provided a consistent base level of supply, the plantation supply has increased along with the demand and at the expense of imported timber. As already noted, this was the specific objective of the establishment of the plantations through the sixties and seventies. Figure 9 from the "Australia's Plantations" Report The report portrays this trend for softwood plantation timber to take an increased share of the market as an unexpected outcome. However it has been known for decades that the natural forest resource would not be able to meet increased domestic demand. The plantations were established to fill the gap. Figure 14.2 from the RAC report shows that the softwood resource has played an expanding role in Australian sawntimber supply in the last ten years. However, the figure also confirms that this expansion has been built on the stable base of supply from natural forests and has been the result of changes in demand and fluctuating levels of imports. Figure 14.2 from the RAC Report The level of harvesting in native forests is determined with respect to the sustainable yield from those forests. Therefore, no substantial increase in the production from native forests would be expected, even if demand increased. Furthermore, the reduction in the natural forest area available for wood production, as a result of the creation of new national parks, would be expected to lead to a small reduction in the production from natural forests. This is apparent in the data presented. Hardwood producers based on natural forests can increase the total value of output only by increasing the unit value of that output, i.e. through higher levels of value-adding. This is the course of action that has been taken by many hardwood producers and will happen on a larger scale when Regional Forest Agreements supply greater security of resource supply. In 1992 Judy Clark, in a similar study of the Victorian Industry, predicted the demise of the hardwood industry. Since that time, the hardwood industry has repositioned itself into value-added markets and experienced a renaissance. Over 100 drying kilns have since been built and export markets are now being supplied. The increase in supply of plantation timber in the next two decades provides an opportunity for expansion of wood production in Australia. However, it will not lead to the demise or even a decline in the natural forest industry. A recent study by the Centre for International Economics has shown that a small shift towards value-added processing in the hardwood industry could lead to an increase in the value of output of $250 million by the year 2000. The report is incompatible with current and future forest policy The National Forest Policy Statement and Wood and Paper Industries Strategy are the accepted cornerstones of current and future forest policy in Australia. The report ignores several key elements of these documents and acts only as a distraction to the formation of policy. Forest policy development in Australia has been characterised by numerous government inquiries, polarised debate and conflicts between the Commonwealth and State Governments. The signing of the National Forest Policy Statement (NFPS) in 1992 by the Commonwealth Government and all states except Tasmania (who have subsequently signed it) created an opportunity for co-operation between all stakeholders. Some of the key elements of that policy and subsequent initiatives including the draft Wood and Paper Industries Strategy (WAPIS) include a commitment to continued wood supply from natural forests, a Regional Forest Agreement (RFA) process to determine the appropriate level of harvesting from natural forests and the need for a substantial expansion in the plantation resource. The NFPS states "The wood products industry is drawing and will continue to draw from a mix of sustainably managed softwood and hardwood plantations and native forest" The WAPIS states "Industry will continue to have access to native forest..." and that the Commonwealth Government "remain committed, in line with the NFPS, to a single comprehensive regional assessment process..". One outcome of this process is to "provide industry with certainty as to which areas are available for its use subject to guidelines on the ecologically sustainable management of these forests."The Australia's Plantations report ignores all these elements and attempts to return the forest policy debate to pre-NFPS issues. It calls for the preparation of a plan for Australia's wood products industry, but ignores the Wood and Paper Industries Strategy which is currently being developed. The implementation of the NFPS, development of the WAPIS and progress towards RFAs are all at critical stages. By ignoring these initiatives in the preparation of the report the conservation councils have chosen to create a distraction to the implementation of forest policy rather than participate in the process. The appropriate level of harvesting in natural forests should be determined through a process which considers all values and objectives of forest management such as the Regional Forest Agreement process. The draft Wood and Paper Industries Strategy states "the Commonwealth sees a national framework of Regional Forest Agreements which protects environmental values, while providing the industry with a predictable and secure investment environment: this is necessary if we are to have high value-added and internationally competitive wood and paper industries." Domestic production from sustainably managed natural forests should be encouraged given the standard of forest management practices in other countries and the environmental effects of alternative products such as steel, concrete and plastic. It is worth noting that more than 90% of the world's wood supply is derived from natural forests. In a global context, attempts to move wood production out of natural forests are impossible. Environmental groups and other organisations are placing increasing emphasis on "sustainability" with respect to natural forest and plantation management. The report refuses to acknowledge that wood can be grown sustainably in natural forests despite international recognition of this fact. There is increasing acknowledgement internationally, and particularly amongst environmental groups that the key issue of forest utilisation is "sustainability". Whether wood is produced from plantations or native forest is of far less importance than whether the forest management practices are sustainable. In some European countries there is increasing concern that wood production from plantations may be less sustainable than from natural forests, depending on the management techniques adopted. However, the Australia's Plantations report does not acknowledge that wood production from natural forests can be sustainable. It adopts the simplistic approach that wood production from natural forests must be completely ceased and that all wood products should be harvested from plantations. Nowhere in the report is this view justified, despite it being in obvious contradiction to international scientific thought and global practicalities. The report fails to acknowledge the full potential of the industry The benefits of an integrated plantation and natural forest industry based on the principles of sustainable forest management are substantial. However, the report refuses to even consider the option of such an industry. The report attempts to show that the loss of employment and income from stopping harvesting in natural forests will be compensated by increased activity in the plantation sector. However, because of its inherent bias, the report does not acknowledge that all these benefits from increased activity in plantation sector could still be achieved while maintaining the level of activity in the natural forests and therefore not reducing employment or income from that sector. Australia will generate more employment, greater rural incomes, greater potential for export income and a more diverse and secure forest industry through the processing of wood from both plantations and natural forests than from a plantation only industry. This can all be achieved while maintaining other forest values such as wilderness, water quality, biodiversity and old growth values through the implementation of sustainable forest management principles. The draft Wood and Paper Industries Strategy noted that there were approximately 1200 hardwood sawmills in Australia, based predominantly on natural forests. Within the plantation industry, the issue of greatest concern is the need to expand the plantation resource to provide long term supply. The report fails to address any issues with respect to the future resource for the plantation industry. While acknowledging the potential of the existing plantation resource, the report fails to address any issues relating to continued plantation establishment. The last 6-7 years have seen a dramatic drop in the rate of plantation establishment in Australia. The key to the establishment of any new processing industries is access to long term wood supply. If it is not reversed, the fall in establishment rates will act as disincentive to further investment in plantation processing. Any report attempting to seriously examine the prospects of the plantation sector needs to examine the question of future establishment rates and their effect on industry investment and output. The failure of the Australia's Plantations report to raise these issues is a symptom of its bias. The prime objective of the report is not an examination of the plantation industry but an attempt to close the natural forest processing sector, as such it has no interest in future plantation establishment. The forest industry has the potential for significant growth, both in value of output and employment. This can be achieved through a number of initiatives including increased value-adding of the hardwood sawlog resource, further processing of chip residues and increased plantation establishment. The report considers only one growth option for the industry and condemns other value-adding initiatives. The Australia's Plantations report restricts its analysis to further domestic processing of the existing plantation resource. While there is considerable potential for increased value of production in this area, it is only one of a number of initiatives which can provide increases in value of output and employment in the forest industry. A recent report by the Centre for International Economics (CIE) "Projections of revenue and employment growth in the forest industries: 1995-2030" demonstrated the variety of options for increased value-adding in the industry The CIE report estimated the value of output, employment and net exports of forest products under a scenario consisting of a similar level of domestic processing as the existing industry. The report also modelled a series of "value-adding" scenarios with the following results: Not only does the Australia's Plantations report fail to consider the variety of options for growth, it actually criticises studies intended to promote value- adding industries On pages 70 and 71 the report criticises the funding of two studies into the production of medium density fibreboard (MDF) from natural forests. These initiatives are attempts to undertake domestic processing of hardwood woodchips, an objective which all stakeholders within the forest debate have expressed a desire to achieve. One can only assume that the report's criticism of these initiatives is motivated by its desire to close the natural forest sector of the forest industry, irrespective of its benefits. References Australian Bureau of Agricultural and Resource Economics (ABARE) 1994, Quarterly Forest Products Statistics, Canberra, December. Centre for International Economics (CIE) 1995, Projections of revenue and employment growth in the forest industries: 1995-2030, Canberra, August. Commonwealth of Australia, 1992, National Forest Policy Statement, A new focus for Australia's forests, Canberra, December. Commonwealth of Australia, 1995, Wood and Paper Industries Strategy, A Discussion Paper, Canberra, March. Neilson, D. A. and Associates 1995, The Future Management of Australian Native Forests: An International Perspective, Canberra, April. Resource Assessment Commission (RAC) 1992, Forest and Timber Inquiry, Final Report, vols. 1 and 2, Canberra, March. |
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