What I want to do today is
present a summary of some
clear opportunities
and challenges facing
Australia's forest
industries and I'm going
to be drawing on about
five recent ABARES reports
and try and bring that
together at the end.
We'll start with the
current status of the
industry and its
importance to the
Australian economy.
Next we'll move to the
short-term outlook for
exports based on the
forecast we're releasing
today in this agriculture
commodities publication.
Moving to longer term,
I want to look at some
preliminary results of our
five-yearly plantation log
supply forecasts and these cover
the period out to 2050.
We've also recently looked
at the potential impacts
of climate change on
forestry over the same
period so we'll have
a look at some of the
results from that work.
And finally, I want to
highlight some broader
opportunities and risks
for the sector by drawing
on the preliminary
findings of an industry
risk analysis we
intend to publish soon.
So forestry contributes
around $8 billion of value
added to Australia's
gross domestic product.
This is about 0.6% of GDP but
it's over 7% of manufacturing.
The value of turnover
is around $22 billion.
We had a trade deficit
in wood products of $1.9
billion in 2010-11 and
that figure's been stable
in recent years.
So while Australia can
produce the majority of
its forest products
domestically we still rely
on forest product imports
to provide for some of our
consumption needs and many
of our processes rely on
export markets.
The Australian Bureau of
Statistic's labour force
estimates for employment
in the forestry,
logging, and wood
manufacturing industry was
65,700 people in 2010-11.
This number goes up and down
and it was over
75,000 in previous years.
Of course there are other ways
to measure and define employment.
The ABS numbers don't
include people employed in
the haulage of logs
for example so ABARES is
currently working on
social economic methods to
understand forest sector
employment more broadly.
I'm turning now to the
Analysis of Trade in
Forest Products.
In the current financial
year ABS forecast the
export value of forest
products to decline by
2.9% to $2.4 billion
driven by a decline in the
export value of all major
forest commodities with
the exception of
paper and paperboard.
Next financial year we
expect a slight recovery
in the value of exports
and this is partly based
on an expected recovery in
demand for wood chips and
increasing supplies of
broadleaf pulp log from
Australian plantations.
We expect the exports to
remain dominated by wood
chips and paper and
paperboard and these two
products in the green
sectors here representing
about a third of
the total each.
The value of wood chip
exports is forecasted to
climb marginally in
2011-12 with a recovery
from 2012-13 as Japan's
paper production recovers
and China's paper production
continues to increase.
The value of paper and
paperboard exports is
largely driven by economic
growth in major markets
and this is forecast to increase
marginally in 2012-13.
The value and volume of
sawn wood and wood-base
panels export is
forecast to decline.
This is driven by a fall
in domestic production.
So in the short term,
ABARES anticipates some
recovery in Australia's
forest exports after a
declining value of
almost 3% in the current
financial year.
But more sustained growth
in the forest sector over
medium to long term is
going to depend to a large
extent on log supply.
Underpinning log supplies
is plantation area and
we'll look at some
recently published
analysis of this area
before going on and
talking of log volumes.
The total area of timbre
plantations in Australia
has increased steadily in
recent years reaching a
peak in 2009.
In 2010 the area decreased
slightly but it's remained
over two million hectares.
Here we can see that
the area of coniferous
plantations has increased
only slightly over the
past 10 years whereas
broadleaf plantation has
nearly doubled
over the same period,
and that's the
orange bars.
The decrease in the total
plantation area we saw
since 2009 is because of
low productivity sites not
being replanted, growers
leaving the industry,
and other land-use changes.
The new plantings have
declined since 2007,
that's the
green line here,
and it shows that we had
24,000 hectares of new plantations
which is the
smallest area of new
plantations established
since the early 1990's.
New plantation
establishment has declined
substantially in all
jurisdictions except the
Northern Territory.
The largest proportional declines
have been in
New South Wales, South Australia
and Tasmania.
Now management investment
schemes funded most
plantation investment in
new plantations for the
past 10 years, but
less than half of the new
plantations established in 2010.
While new plantings have
been declining the volume
of logs potentially
available obviously
depends on the trees
already growing in the
ground and plantations
have supplied 74% of logs
harvested in
Australia in 2009-10.
ABARES is currently
forecasting or finalizing
its forecast of log supply
based on the current
plantations which will
cover the period out to
the 2050's.
Now this is a preview now
of some of the preliminary
results of our log
supply forecasts across
all 15 national plantation
inventory regions and it's
showing on average we
expect the majority of
logs from now to 2050 to
come from three regions,
that's the Green
Triangle, Tasmania,
and Western Australia.
So what this map is
showing is the combined
totals of all logs averaged
over about 40 years.
But of course,
what's equally important,
or more important, is the
type of logs and the time
they'll actually be
available for harvesting.
So here we're looking at
the actual log harvests up
to the 2009 calendar year
and average annual supply
forecasts over five-year
intervals starting with
the period from 2010-2014.
Plantations are expected
to produce just over
29 million cubic metres of 
logs per year from
2015-2019 reaching a peak
of 33 million in 2030.
This would represent a
significant increase
compared with less than
20 million cubic metres of
actual harvests in recent
years like 2005 and 2009.
So within coniferous and
broadleaf log supply we
also look at the breakdown
of sawn log and pulp wood.
Here's the relevant
amounts of each type of log
forecasted out to 2050.
The supply of coniferous
sawn logs is currently over
10.5 million cubic metres
per year and we expect
this to increase to around
12 million from the 2030's.
The major regions
producing coniferous sawn
logs are the
Green triangle,
the Mary Valley and
South East Queensland.
Coniferous pulpwood
supply is currently around
5.3 million cubic metres
per year and we expect
that to remain at the same level
for the foreseeable future.
Most plantation broadleaf
pulpwood is currently
produced in
Western Australia,
Tasmania and the
Green Triangle.
This is expected to
continue with WA and
Tasmania contributing
27% each of the national
total, Green Triangle 22%
and North Coast
New South Wales about 6%.
The broadleaf plantation
sawn logs are predicted to
rise to 530,000 cubic
metres per year by 2015
and then double to
stabilize at 1-1.4 million
cubic metres per
year from about 2020.
The major regions
producing broad leaf saw
logs are Tasmania and North
Coast New South Wales.
All of these forecasts
will be influenced by a
range of external factors
that aren't built into
these predictions.
One of these is climate
change and we've recently
done some separate work
in this area and we've
published an analysis of
the potential effects of
climate change on the forests
and forestry in Australia.
So we looked at six
regions across the country
and a number of species in plantations
and native forests.
So here we're looking at
the modelled effects of
one climate-change
scenario in forest growth
out to 2050.
The results for the number
of species across six
regions show a
generally negative trend.
The black line in the
middle of these coloured
bars represents the median
of a range of modelled
outcomes, normally about 23
models that we ran for each.
They're showing a
generally negative trend
with most of them below
the baseline of zero.
For example, Blue Gum
and Radiata Pine here are
projected to become less
much less productive under
warmer and dry conditions
particularly in the Green Triangle.
Other species could become
more productive and here
we're looking at Caribbean
Pine in North East New
South Wales and
South East Queensland.
Translating tree growth
through to log supply we
see these projections and
with the decreasing growth
rates log availability
from Australia's forests is
also projected to decline.
Relative to the baseline
projections in the
absence of climate change.
Coniferous or softwood
plantations are expected
to be more affected than
hardwood or broadleaf
plantations and the very
small blue bar there is
native forests, and log
availability there is not
predicted to change as
much due to climate change
compared to plantations.
The long rotation length
in native forests exceeds
the time frame we assessed
in this study so there may
be other
effects beyond 2050.
And what does this
mean then for some of the
social economic
effects on the industry?
The declines in log
availability due to
climate change may result
in reduced investment and
log harvest, haulage
and processing capacity,
and reductions in the
value of production,
and levels of employment.
Here we can see a range
of projections from these
potential impacts and
again all of these,
or in this case, all of
them are below baseline
projections in the
absence of climate change.
In some cases these
include projected
increases from our
2005 baseline figures but
they're increasing at a
slower rate than they
otherwise would have.
Another important point to
consider in interpreting
these results is the study
did not take into account
potential CO2
fertilization which could
help the trees grow
faster nor any adaptation
measures that
could be used.
Of course, climate
change is just one of many
factors that could
influence the outlook for
Australian forests and forestry.
ABARES has also been
looking at a broader range
of risks and
opportunities in the sector.
The study we're finalizing
now will examine risks and
opportunities for eight
timbre-based product sets
that make up the largest
proportions of the industry.
These include functional,
structural [inaudible] and
wood chip and sawn logs.
So our approach was to
work with representatives
from industry and
government to develop a
generic supply chain as a
framework to analyze all
eight product sets.
We then designed a pilot
survey to identify and
characterize risks at
various points of each
supply chain and we tested
the survey with a group of
experts, there
was 15 of them.
Respondents identified a
range of risks that the
project team then
aggregated into these 11
major risk categories.
As an example of a risk
the high Australian dollar
was identified and
we'd expect this across a
number of industry
sectors not just forestry.
Lack of innovation was
also identified as a risk
but another way to
express that would be that
innovation is a key opportunity
for the sector.
The survey also identified
a number of types of
information or actions
that could help develop
strategies to mitigate
the identified risks.
Here are six of them
including for example
economic
forecasting innovation.
Looking here at the
supply-chain model we
constructed, although the
sample size in the survey
was too small to report
detailed quantitative
conclusions what we could
do going forward with a
large-scale survey was to
use the framework and the
methodology to identify
risks at each point of
each supply chain.
And also potentially
identify actions or
information needs that could
help mitigate those risks.
So in summary then,
I've drawn as I said,
on quite a few studies
and I want to bring those
together and reach
some conclusions.
We expect forest product
exports to decrease and
then recover slightly
in the next two years.
We see there is
opportunities for growth
in the industry as Australia
[inaudible-audio is lost]
And supply will flatten out over time.
There are other challenges
for the industry such as
climate change that may
begin impact before 2050.
That climate change is
only one factor among a
broader set of risks and
opportunities that will
influence the outlook for
Australia's forests and
forest industries.
00:13:07.208,00:00:00.000
[applause] 
