This briefing paper presents an overview of plantation forestry in NSW. Plantation forestry characteristics covered in this paper include: legislative, policy and administrative arrangements; industry facts and figures; research into plantation species and products; and forestry education and training.

An historical overview of plantation forestry

Plantation forestry began in NSW in 1882. The Forestry Act 1916 was introduced as part of NSW's timber self-sufficiency policy. [2.1]

More recently, significant plantation forestry reforms commenced with the 1992 National Forest Policy Statement. In 1997, the Commonwealth Government launched Plantations for Australia: the 2020 Vision. The Vision aimed to treble the plantation estate between 1997 and 2020. Legislation instrumental to achieving the Vision includes the Commonwealth Managed Investments Act 1998, the NSW Plantations and Reafforestation Act 1999, and several recent amendments of Commonwealth income tax assessment legislation. [2.2]

Commonwealth policy and legislative framework

Commonwealth involvement in forestry regulation and administration is based on its participation in several international environmental instruments. Several Commonwealth policies provide a framework for plantation forestry. These include: Plantations for Australia: the 2020 Vision; the Farm Forestry National Action Statement; and the National Climate Change and Commercial Forestry Action Plan. Three areas of Commonwealth law are also of particular importance: the Environment Protection and Biodiversity Conservation Act 1999; the Corporations Act 2001; and income tax assessment legislation. [3.0]

NSW legislative framework

Forestry in NSW is regulated according to forestry type and land tenure. There are three categories of plantation in NSW. Each is regulated by one or more of three key Acts. First, plantations on public land are regulated by the Forestry Act 1916 and the Plantations and Reafforestation Act 1999. Second, plantations larger than 30 hectares on private land are regulated by the Plantations and Reafforestation Act 1999. Third, plantations smaller than 30 hectares on private land, otherwise known as farm forestry, are regulated by the Native Vegetation Act 2003. Several other statutes also impact upon plantation forestry. [4.0]

Administering plantations in NSW

All three plantation types are administered by one or two key plans. Each plan must be consistent with relevant regulatory instruments, including: inter-governmental agreements; regulations; policies; codes of practice; and, in some cases, voluntary non-government certification standards. First, plantations on public land are administered by two plans: a regional-level Ecologically Sustainable Forest Management Plan; and a local-level plantation plan. Second, plantations larger than 30 hectares on private land are administered by a plantation plan. Third, plantations less than 30 hectares on private land are administered by a Private Native Forestry Property Vegetation Plan. This Plan is a legally binding agreement between the landowner and the NSW Department of Environment, Climate Change and Water. [5.0]

Plantation forestry in NSW: location and characteristics

Forests cover 33% of NSW. Of the total 26.5 million hectares of forests in NSW, 393,182 hectares are plantation forests. Six Australian plantation areas are located at least partially in NSW: Northern Tablelands; North Coast; Central Tablelands; Southern Tablelands; Murray Valley and East Gippsland-Bombala. In 2009, the NSW Government owned 247,015 hectares of the total plantation estate, the remainder being privately owned. Accurate data on farm forestry in NSW is more difficult to obtain. As of 2007, there were 27,950 hectares of farm forestry in NSW. [6.1]

In 2009, 287,820 hectares of NSW plantation forests were softwoods, the majority of which were Radiata pine. Growth in plantation forestry since the late 1990s has primarily involved hardwood species. A large proportion of hardwood plantations are located in the North Coast region of NSW. Eucalypts make up the majority of hardwood plantation forests, the most common of which are as follows: Blackbutt, Dunn's white gum, Flooded gum and Spotted gum. [6.1]

Plantation forestry in NSW: volumes, values and forecasts

Roughly two-thirds of all logs harvested in NSW in 2008-09 were sourced from plantation forests. Plantation logs were worth $220 million in 2008-09. Although NSW log production between 2002-03 and 2008-09 was roughly constant, there was a significant decrease in hardwood logs sourced from native forests (463,000 m³) that was only partially covered by an increase in plantation hardwood logs (97,000 m³), During this same period, the volume of softwood plantation logs harvested rose by 401,000 m³. [6.2.1]

Forests NSW generated $263 million in forest sales revenue in 2008-09. Between 1999-00 and 2008-09, Forests NSW has reduced its reliance on native forests for forest products such as sawlogs, veneer logs and pulpwood. This reduction has been offset by increased production from hardwood and softwood plantations. Forecast future plantation log supply varies substantially between regions and by year. Future log supply is also highly dependent on rates of plantation establishment. [6.2.1]

Timber production in NSW: producers and products

Forest products are made into an assortment of timber products. For example, in 2007-08 approximately 50% of all Forests NSW hardwood was made into floorboards, and over 70% of Forests NSW softwood ended up as house framing. [6.2.2]

In the last five to ten years, different sectors within the wood products industry have experienced varying fortunes. In 2006-07, there were 184 hardwood sawmills and 26 softwood sawmills in NSW. The majority of the hardwood sawmills are quite small, processing less than 3,000m³/yr, and are located in regional areas of NSW. Whilst sawnwood production from softwood logs rose by 346,200m³ between 2003 and 2008, hardwood sawnwood production fell by 110,400m³ during the same period. The pulp and paper sector is one of the largest sectors in the wood products industry. However, the following sector-specific economic indicators have declined Australia-wide since 2005: the value of exports and domestic demand; the number of establishments; and total employment. [6.2.2]

Timber production in NSW: imports and exports

In 2008-09, Australia had an export deficit of $2.1 billion in forest and wood products. Of $4.4 billion in imports, $2.867 billion was spent purchasing paper products. The largest NSW imports were sawnwood products (totalling $104.5 million) and miscellaneous forest products (totalling $177.3 million). [6.2.3]

In 2008-09, Australia exported $2.3 billion in forest and wood products, down 5.2% relative to the previous year. The most important NSW exports were wood chips ($108.4 million) and sawnwood ($69.8 million). Only 6% of exported Australian sawnwood was the value-added dressed sawnwood, the remainder being roughsawn. [6.2.3]

Plantation forestry in NSW: domestic and overseas markets

Australia's annual log harvest volume fell by 10.7% in 2008-09. Domestic demand was weak. For example, total dwelling commencements fell by 17%. As a result, sawnwood and wood-based panel consumption and production declined in all categories except veneer production between 2007-08 and 2008-09. [6.2.4]

The value of Australian forest and wood product exports fell in 2008-09, largely as a result of a significant drop in the value of woodchips, packaging and industrial paper. According to ABARE, uncertainty surrounds future demand from Australia's major trading partners. Japan ($860.5 million) and China ($390.4 million) are Australia's two most significant export markets. Other important markets include: New Zealand; South Korea; Malaysia; Taiwan; and Hong Kong. [6.2.4]

Plantation forestry in NSW: employment

According to the 2006 census, 38,410 people were employed in forest product related industries in NSW. A total of 2,511 businesses were operating in the industry at the time. The largest employers were wood structural fitting and component manufacturing, and paper product manufacturing companies. [6.2.5]

Plantation forestry in NSW: current issues

Private investment in plantation forestry sharply declined in 2009-10 due to the collapse of four Managed Investment Scheme companies. Together, these companies had owned a significant proportion of the NSW plantation estate. As a result, industry and government stakeholders are currently debating the suitability of the Managed Investment Scheme approach to plantation forestry. Proposed investment alternatives include: tax-based incentive mechanisms; government investment; and indirect government policies such as market regulations. Other issues facing the industry as identified by industry stakeholders include: the general failure of farm forestry to become a significant contributor to the supply of softwood and hardwood timber; and inadequate investment into expanding softwood plantations, long rotation hardwood plantations for sawlogs, and value-adding industries. [6.3]

Plantation forestry in NSW: research and development

Several Commonwealth and NSW government bodies invest in forest and wood products research. However, State government R&D investment has generally declined in recent years. For example, between 2007-08 and 2008-09, Forests NSW R&D investment fell from $7.6 million to $4.6 million. Current government-funded research topics include: forestry and climate change; forestry and water quality and yield; biosecurity; and product development and use. [7.1]

Between 1981 and 2002, the focus of tree species research changed from exotic plantation species to native plantation species. Exotic species research has focused primarily on pine and, to a lesser extent, cypress species. No recent research has been conducted on exotic species such as Douglas fir, Californian redwood or Western red cedar. Two types of research are currently conducted: genetic improvement programs; and species trials. [7.2]

Genetic improvements can be achieved by two methods: breeding for certain traits; and creating hybrid species. A literature review identified research on improving over 20 species of eucalypt and several native and exotic pine species by selective breeding in the eastern States of Australia. At least 17 eucalypt species have also been crossed to create hybrids with superior combinations of qualities than the parent species. [7.2.1]

A large number of species have been trialled for large-scale plantations and farm forestry. A literature review identified 39 native and exotic species that had been, or are currently being trialled for large-scale plantations and farm forestry. An additional 76 native and exotic species had been, or are currently being trialled for farm forestry plantings. [7.2.2]

A 2001 study of the economic viability of plantations in NSW estimated that the amount of NSW land suitable for plantation establishment ranges from 160,000 hectares to 425,000 hectares. Plantation viability depends on a large number of factors. It can be improved by such factors as: alternative species; improved genetic material; advanced establishment techniques; and markets for environmental services. [7.3.1]

The economic viability of farm forestry also depends on a large number of factors. For example, market opportunities differ substantially by region and by forest or timber product. A large number of potential and current farm forestry products are identified in the literature, including: bioenergy; biofuel; carbon sequestration; engineered strand timber; pulp & paper; and veneer. [7.3.2]

Plantation and farm forestry management involves engaging with several environmental issues, including: biodiversity; carbon sequestration; pesticide use; and water consumption. Issues such as pesticide use require compliance with the relevant regulatory regime. Water use falls under this category in South Australia. However, other States, including NSW, currently do not regulate water use by plantations. Issues such as carbon sequestration and biodiversity are positive environmental outcomes from plantation forestry. However, verifiable and rigorous accounting methodologies and an appropriate and stable policy framework are required in order for plantation owners to benefit economically from these environmental services. [7.4]

Education and training for the forestry sector

In NSW, there is a current skills shortage in the forest and wood product industries. Three categories of forestry education are identified in the literature: community education; knowledge based education (primary, secondary and tertiary); and vocational education and training. Each type of education currently exists in NSW. However, according to the industry, each type of education needs improvement in order to address the shortage of skilled workers and raise community awareness of the benefits of forestry. [8.0]