Maximising the Role of Planted Forests in Sustainable Forest Management – the Australian Experience in Addressing Challenges

By Peter Lawrence and Garry Grant
Forest Industries
Agriculture, Fisheries and Forestry – Australia
peter.lawrence@affa.gov.au; garry.grant@affa.gov.au

For delivery at: UNFF Intersessional Experts Meeting on the Role of Planted Forests in Sustainable Forest Management, 24-30 March 2003, Wellington, New Zealand

Abstract

Plantation forests represent less than 1 per cent of Australia’s forests, yet supply over 50 per cent of wood used by domestic wood processors.

During the 1990s Australia’s plantation forest industry has undergone significant change in response to policy reform and market demand. The plantation estate has expanded from 1.1 million ha to 1.6 million hectares over this period driven, in particular, by increasing hardwood planting and significant private investment. The forest and wood products industry, based on plantation resources, is now the dominant sector attracting considerable investment over the period.

This paper outlines the policy measures Australia has implemented since 1990 to address the challenges of sustainable plantation development and management, and the key policy lessons learned.

The paper discusses five overarching policy challenges:

  • increasing the commercial plantation forest estate on cleared agricultural land;
  • improving the productivity of the existing plantation estate;
  • increasing private investment in growing and processing plantation fibre;
  • encouraging wider community acceptance of plantations in the landscape; and
  • assuring consumers about the sustainability of plantation-grown wood fibre.

To meet these five challenges, the Commonwealth and State Governments have sought to address several second tier challenges or priority issues in their policy responses.

The paper emphasises the key role Government have played in Australia:

  • providing an attractive investment environment for plantation establishment and processing through macro- and microeconomic reforms, and removing impediments;
  • providing strategic incentives;
  • supporting continuing research and development;
  • building effective partnerships with industry and other stakeholders to address issues; and
  • community education and extension.

1. Introduction

Efforts to establish plantations in Australia began with State forest agencies in the early 1900s. State governments initially established most plantations to offset Australia’s limited endowment of native softwoods. By 1940, the States owned more than 90% of plantations.

Major expansion in private planting did not occur until 1950, when large industrial companies began planting to supply pine (Pinus radiata) and eucalypt pulpwood to supplement State resources.

Various schemes to encourage smaller scale, or woodlot, planting on farms and other private land have been undertaken since the 1920s. The rate of planting on farms rose in the 1990s, encouraged by incentives often associated with achieving broader environmental benefits.

The widening gap between demand and domestic supply forecasts became clear after the Second World War. Native forests could not sustain high harvesting rates in the long term, let alone meet rising demands. Increased plantations were seen as the solution to increasing timber supply and reducing imports, and Commonwealth and State governments jointly advocated a significant increase in pine (P. radiata) plantations. In 1966, the Commonwealth provided generous low-interest ‘Softwood Loans’ to the States to increase their annual planting. It also encouraged private growers to plant radiata pine.

Since 1990, the plantation sector has undergone a dramatic shift — plantings of hardwood have expanded while softwood plantings have remained steady.

This paper deals with the period from 1990 to the present. It examines the key forest policy challenges Australian governments faced during that time, and the policy responses they developed and put in place to meet them.

2. Policy Context — 1990 - present

By 1990, the argument for a major expansion of Australia’s plantation estate was gaining broad acceptance and support. From 1985 to 1991, there were many forest-use inquiries at the Commonwealth and State level, culminating in 1992 with the National Forest Policy Statement (NFPS) agreed by all Australian Governments. The NFPS sets out the management of Australia’s forests, and provides the framework and basis for Government action on forests and forestry.

The Regional Forest Agreement (RFA) process took place from 1995 to 2000. It resulted in 10, 20-year Agreements between the Commonwealth and four State Governments that achieved a balance between resource security and forest conservation. While the focus was mainly on native forests and the native hardwood industry, it considered plantations for future industry development and the removal of legislative export controls on unprocessed plantation wood.

The Farm Forestry Program was introduced in 1993 to promote:

  • farm forestry on cleared agricultural land for a range of benefits, including wood and non-wood-products, increased agricultural production and the environment;
  • commercial wood production on cleared agricultural land as an integral part of profitable wood-based industries;
  • development of new products and industries with an emphasis on native species; and
  • sustainable management and use of private native forest and woodland.

The Farm Forestry Program has initiated and supported several national projects, including a framework of Regional Plantation Committees in the major plantation regions and extensive networks of farm forestry groups and activities. As at December 2001, farm forestry plantings totalled 75,000ha compared with a little over 5,000ha in 1990.

Figure 1: Farm forestry plantation establishment rates

(Source: National Plantations Inventory 2001)

In 1997, the Commonwealth Government in partnership with State Governments and industry, released the Plantations for Australia – The 2020 Vision (the 2020 Vision to foster an expanded plantation resource. Its aim is to encourage investment in value-adding, regional development and the long-term growth of an environmentally sustainable plantation industry. The 2020 Vision identified the role of governments as removing impediments that discriminate against plantations compared with other agricultural activities.

In 2000, the Forest and Wood Futures – An Action Agenda to Pursue the Vision for Australia’s Forests and Wood Products Industry (the Action Agenda) was developed. A key impetus for the Action Agenda was Australia’s ongoing and significant negative balance of trade in wood and wood products (in 2001-02 imports were $3.579 billion and exports $1.891 billion resulting in a trade deficit of almost $1.7 billion). The Action Agenda aims to ensure a partnership between government and industry to develop specific actions and aims to create a sustainable long-term competitive advantage for industry with a view to reducing the trade imbalance.

The plantation estate has expanded from 1.1 million ha in 1990 to more than 1.6 million hectares in 2002. With more than 1.6 million hectares, Australia has substantial plantation forest resources and depends increasingly on them as a primary source of wood and forest products, for export and domestic use. Their evolution largely reflects the timber industry’s — and Australia’s — transition from the goal of self-sufficiency underpinned by commercial development with direct incentives, to ecological sustainable development supported and driven by broader micro- and macroeconomic reforms across the Australian economy.

The Government’s program of broad macroeconomic reforms, taken together with targeted plantation sector reforms, were key drivers of plantation development in Australia. Reforms in competition policy, corporations law, taxation, trades practices, transport, and banking and finance have all, directly or indirectly, had an impact on plantation development in Australia. Specific changes to the tax system implemented in response to forestry’s unique long-term nature, in particular, stimulated plantation development.

3. Challenges

The NFPS, the 2020 Vision and the Action Agenda provides an integrated policy package focusing on five overarching policy challenges supporting Australia’s native forest management and expanding Australia’s plantation forest estate, namely:

  • increasing the commercial plantation forest estate on cleared agricultural land;
  • improving the productivity of the existing plantation estate;
  • increasing private investment in growing and processing plantation fibre;
  • encouraging wider community acceptance of plantations in the landscape; and
  • assuring consumers of the sustainability of plantation-grown wood fibre.

Appendix 1 outlines the policy challenges, an integrated matrix of responses and lessons learned.

3.1 Increase the commercial plantation forest estate on cleared agricultural land

The first overarching policy challenge was to increase the commercial plantation estate, on cleared agricultural land.

To achieve this, the Government sought to address several second tier challenges, principally:

  • the development of a national strategy underpinning plantation forestry;
  • the financial and structural impediments to investing in plantation forestry;
  • the development of incentives to encourage investment in plantation forestry;
  • provision of information and extension support; and
  • ongoing R&D support.

3.1.1 Developing a National Strategy

One of the cornerstones of recent plantation expansion in Australia was the development of Plantations for Australia – the 2020 Vision that has provided a practical policy guide and helped build confidence in investing in plantation forestry in Australia.

In tandem with the 2020 Vision, was the development of a national strategy for farm forestry — the Farm Forestry Program (FFP), which has contributed to successful institutional reform, implementation of farm forestry strategies and a significant move towards coordinated private forestry policy. The Program has supported key research and development, especially in low rainfall agroforestry, as well as fostering dissemination of information and research outcomes to all stakeholders.

3.1.2 Financial and structural impediments to plantation development

It has long been recognised in Australia that providing an effective framework for a strong, competitive and secure plantation forest sector, required reforms in the following areas:

  • taxation;
  • export controls on unprocessed plantation-grown wood;
  • multi-jurisdictional planning systems and processes;
  • market transparency;
  • competitive equivalence between public and private enterprises; and
  • legal barriers.

Taxation

The Australian tax system has undergone significant reforms following the Ralph Review of Business Taxation and the introduction of the Goods and Services Tax. While all three levels of government in Australia — Commonwealth, State/Territory and local — impose various taxes, the most significant in revenue terms is Commonwealth income tax.

Non-resident companies are taxed on their Australian source income (apart from repatriated dividends, interest and royalties, which are subject to withholding tax) at the same rate as resident companies. A relevant double tax agreement may provide relief to a non-resident company for tax paid in from Australia.

In addition, the Commonwealth has strengthened the compliance and disclosure requirements of The Corporations Act 2001 administered by the Australian Securities and Investments Commission, and by supporting the Australian Taxation Office’s Product Rulings program. These changes provide a high level of confidence in financial and administrational practices for companies and individuals investing in plantations.

Export controls

The Commonwealth, with the States and Territories, agreed to remove controls on unprocessed plantation wood if the States developed and implemented State-specific plantation codes of practices principally to protect environmental values throughout a plantation’s life. All States and Territories have developed Plantation Codes of Practice, which in most jurisdictions have been implemented, with implementation in remaining jurisdictions expected soon.

Planning systems and processes

The Commonwealth of Australia is a federation of six States and two Territories, each with its own government and underlying local government infrastructures. Under the Australian Constitution, the main responsibility for land use and management (forestry and conservation) lies with State and Territory Governments. However, each level of government has specific interests in, and responsibilities for, forest management. In practice, the Commonwealth, State and local governments share responsibility for policies affecting land use decisions and the environment. In response, governments have developed and adopted the Intergovernmental Agreement on the Environment. This Agreement aims to reduce uncertainty about land-use decisions by adopting a cooperative decision-making process resulting in agreed and durable decisions. The Commonwealth, in several instances, has removed itself from the decision-making process by accrediting State planning systems and processes. It has lead to more efficient resolution of land-use issues and is resulting in more timely decisions about land use, such as plantation development. More needs to be done at the local level to achieve greater consistency across local government boundaries.

Market transparency

During the 1990s and up to the present, States and Territories have assessed the wood pricing and allocation systems of their respective forest management agencies as part of the broader Commonwealth review of competition policy in recognition of the influence of these systems on the structure and efficiency of the wood products industry.

In addition to moving to market-based log pricing, State forest agencies became more publicly accountable through published auditors reports.

Competitive equivalence between public and private enterprises

During the 1990s, most public State and Territory forest management agencies restructured to become more commercially oriented entities with the plantation asset corporatised or privatised. The reform of forest management agencies created a more competitive environment, largely removing commercial constraints often associated with public sector agencies. The key reforms were:

  • separating the business functions of agencies from the workings of Government;
  • making agencies more fiscally accountable;
  • ending of Government grants;
  • imposing taxation equalisation arrangements, which treated corporatised Government agencies in the same way as private companies;
  • developing more efficient silvicultural practices in response to commercial pressures; and
  • pursuing new products, markets and industry partnerships.

Legal barriers

During the 1990s, Governments began to clarify several legal issues considered to be impeding the expansion of plantation forestry in Australia. This lead to the strengthening of the rights and responsibilities of individuals and companies under Australia’s corporation and contract law, and reinforced the rights of plantation owners under common law.

This has resulted in increased sector confidence in the outcomes of the legal system in relation to plantations, and established an environment that defined, under law, legal and corporate responsibilities in wood trading.

3.1.3 Developing incentives to encourage investment in plantation forestry

A desire for self-sufficiency initially drove plantation incentives in Australia. More recently, a broader strategic goal has emerged for an internationally competitive plantation growing and forest and wood products processing industry and to reduce commercial pressures on native forest resources following the declaration of additional conservation reserves. This is to be achieved by developing a significant, long-term and environmentally sustainable plantation resource underpinned by private sector investment.

Specific plantation initiatives focused on creating an environment attractive to commercial plantations and processing facilities, including:

  • developing a secure strategic policy framework with strategic joint Commonwealth, State and industry policies to facilitate forest plantations;
  • opening the economy and increasing foreign investment through changes to the tax system to remove impediments to plantation investment;
  • eliminating market distortions by introducing competitive neutrality principles, leading to progressive privatisation/commercialisation of State plantations;
  • providing resource security for industry investment;
  • removing various structural impediments to plantation development (see above);
  • developing internationally competitive and value-adding forest-based industries; an
  • promoting environmental benefits from plantation, such as land and water restoration, and greenhouse/carbon storage.

Complementary, although coincidental incentives have also arisen from broader national agendas and institutional changes over the past 10 years, which have stimulated plantation development, including:

  • relaxing foreign investment restrictions;
  • expanding rural development and employment opportunities;
  • providing port and transport infrastructure; and
  • moving to free market policies.

3.1.4 Information and extension support

Lack of accurate information and extension support for prospective and new plantation growers and managers was considered as an impediment to plantation forestry development.

Commonwealth and State governments now have extension and information dissemination systems that actively provide information and advice to private industry and landholders on the benefits of plantations, and the best techniques to establish and manage them. An example is the Commonwealth Government initiative to establish Regional Plantations Committees (RPCs) in Australia’s main plantation regions in 1996. The RPCs promote wood production on cleared agricultural land and integrate commercial tree growing for wood and non-wood products with other agricultural land uses. The emphasis is on developing commercial uses of native species through coordinating stakeholder activities and developing strategies for industry development. RPCs have worked with local and regional stakeholders, including landholders, State and local governments, and industry to:

  • address planning, infrastructure and coordination issues;
  • undertake feasibility studies;
  • develop regional plantation and farm forestry strategies to encourage commercial forest-based industries;
  • draw up related marketing, investment and wood flow plans;
  • assist communication between stakeholders with potential to also link to national and regional level communication networks;
  • identify national R&D priorities for the plantation sector; and
  • improve information flows on marketing and management of plantations and private native forests.

The National Plantation Inventory (NPI) and the National Farm Forestry Inventory (NFFI) are further components helping underpin sustainable plantation expansion and management in Australia. The objectives of the NPI are to:

  • develop and maintain a comprehensive database of private and public softwood and hardwood timber plantations at the national and regional levels;
  • map the distribution of the resource;
  • provide accurate and timely Australian plantation resource statistics;
  • provide regional plantation woodflow estimates; and
  • foster grower confidence in the inventory process.

Quantitative information on the plantation resource is essential for informed decision-making and strategic planning, both regionally and nationally. The provision of data to the NPI by growers ensures governments and industry use correct information in management decision-making processes, involving investment and location of processing capacity and supporting infrastructure.

The ANU (Australian National University) Market Report is another initiative providing information to develop the plantation industry. This project aims to contribute towards a more informed forest product market in Australia, and has become an important market information source for small-scale forest growers.

3.1.5 Continuing R&D support

By promoting effective R&D, Australia is seeking to advance an internationally competitive, sustainable and environmentally responsible forest and wood products industry. Much of the growth of Australia’s plantations can be attributed to the well-developed system of forest R&D and an effective extension program to distribute the findings to industry. This research capacity has bolstered the successful establishment of plantations and the subsequent performance and quality of the growing resource.

The global competitiveness of Australia’s forestry, wood and paper industries into the future is being strengthened by R&D to assist resource development and sustainable management, improve wood and fibre performance, improve the efficiency and environmental performance of wood and paper processing, and increase value adding in wood and paper products.

The Forest and Wood Products Research and Development Corporation

As a key initiative under the NFPS, in 1994 the Commonwealth Government, with industry support, established the Forest and Wood Products Research and Development Corporation (FWPRDC) to obtain greater industry involvement in funding and directing research thereby increasing the relevance of research from an industry perspective. The Commonwealth Government and industry jointly fund the FWPRDC under a dollar-for-dollar shared-funding arrangement. This model ensures investment in R&D is effective, coordinated and focused on increasing the profitability, international competitiveness and sustainability of the forest and wood products industry in Australia.

The FWPRDC invests in research for the industry and assists in disseminating, adopting and commercialising its results, particularly in relation to:

  • developing and improve resource sustainability;
  • maintaining and promote environmental responsibility throughout the industry;
  • stimulating profitable value adding;
  • strengthening market opportunities and product marketability for wood products;
  • stimulating effective and profitable use of by-products and residues;
  • promoting international best practice throughout the industry; and
  • improving processing technology to reduce production costs and improve product quality.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO)

The CSIRO — formed in 1949 —while not a recent initiative, its Forestry and Forest Products Division continues a leading R&D role. Current research areas include:

  • Forestry operations – their environmental and economic performance
  • Papermaking and paper quality
  • Risk management
  • Sustainable plantation forests
  • Sustainably managed native forests
  • Value enhancement in the forests
  • Value-added wood products.

Joint Venture Agroforestry Program (JVAP)

The JVAP was established in 1993 by several partner agencies chiefly as a coordinated funding vehicle for research projects aimed at identifying best plantation practice, market opportunities, and the economic, social and environmental benefits of plantations. JVAP’s role also included disseminating information from research projects to promote the adoption of best practice and increase community awareness of the benefits of plantations.

Cooperative Research Centres

In addition, Australia has Cooperative Research Centres, known as CRCs, which bring together researchers from universities, the CSIRO and other government laboratories (including State forest research institutions), to focus research and innovation effort on specific priorities, in partnership with private industry (including industry funding). Two CRCs focus on forestry issues, especially plantation productivity — the CRC for Temperate Hardwood Forestry and the CRC Sustainable Production Forestry.

3.2 Improve productivity of existing estate

The second overarching policy challenge facing Australia was to improve the productivity of the existing plantation estate. In addressing this, governments focused on the following second tier, or priority, issues:

  • improving information base by identifying and coordinating strategic R&D activities;
  • communicating the findings of R&D through a coordinated education and extension program;
  • building a government-industry partnership to address key issues; and
  • reforming State forest agencies to be more commercially focused.

3.2.1 Improve information base by identifying and coordinating strategic R&D activities

Before the 1990s, much of the work on improving the productivity of the plantation estate was underway. The next step was to coordinate existing research and identify strategic research projects.

A key policy initiative governments and industry in Australia have developed on plantations R&D is the Forest and Wood Products Research Development Corporation (see Section 3.1.5).

Similar industry partnership investment in plantations R&D is through the Cooperative Research Centres (see Section 3.1.5).

As outlined in Section 3.1.5, the CSIRO and JVAP are also important elements Australia’s coordinated plantations R&D program.

3.2.2 Communication of the findings of the R&D through coordinated education and extension program

Most R&D projects now include a communication strategy to support adoption of outcomes. Governments have mainly communicated the results of relevant plantation research to smaller private growers through the RPCs (see Section 3.1.4). State Government forest agencies have also played a key role in disseminating relevant information.

3.2.3 Build a government-industry partnership to address key issues

To effectively address the issues affecting estate productivity, governments and industry identified the need to build a government-industry partnership to address the issues — reflected chiefly in the creation of the FWPRDC as discussed in Section 3.1.5.

3.2.4 Reform of State forest agencies to be more commercially focused

Management reforms of State forest agencies under the Competition Policy review (discussed at Section 3.1.2) have also helped raise the productivity of the plantation estate. As forest agencies have become more commercially oriented, they have responded to commercial pressures in a number of ways including, more efficient silvicultural practices to increase the wood recovery from the plantation estate.

3.3 Increase investment in growing, processing and manufacturing of plantation fibre

The third overarching policy challenge was to increase investment in growing, processing and manufacturing plantation fibre. The challenge was to raise significant patient capital for long-term investment in plantation development and processing. To realise this goal, governments had to examine and address the following range of second tier or priority issues:

  • creation of an appropriate investment environment to make plantations an attractive investment option;
  • development of a national strategic and coordinated approach to investment; and
  • creation of a government-industry partnership to address the issue.

3.3.1 Creation of an appropriate investment environment

To make plantation investment more attractive, Governments identified the need for an appropriate investment environment by:

  • aligning policy settings to provide investor confidence and to encourage investment;
  • amending taxation, corporation and other relevant systems, where appropriate;
  • providing resource security (through State/Territory arrangements);
  • reducing sovereign risk;
  • ensuring a high level of coordination of government departments and agencies;
  • providing multifunctional infrastructure; and
  • removing impediments and providing incentives.

3.3.2 Development of a national strategic and coordinated approach to investment – the Action Agenda

Major changes during the 1990s opened up Australia’s economy and introduced a more market based approach. This is reflected in the support programs on offer and has lead to the highest sustained growth and total area in Australia’s plantation development. At the State level, support programs are mostly direct mechanisms and include those initiated by large private companies targeting smaller private landowners. The Commonwealth has moved towards indirect mechanisms.

Overall, the trend has been for governments to reduce direct participation, focusing instead on removing impediments and attracting new and existing investors. An explanation for this trend is the shift from self-sufficiency to the development of an internationally competitive plantation growing and processing industry.

Significant, long-term and environmentally sustainable plantations have been facilitated through major private sector investment. Investment companies, sometimes driven by the tax advantages of various schemes, established many of the plantations during this period. The largest plantation companies have close ties to foreign companies, especially Japanese pulp and paper manufacturers.

The Commonwealth initiated the Action Agenda to encourage industry to develop a strategic framework to exploit its resource and investment potential. Launched in 2000 by the Commonwealth and State Governments and industry, the Action Agenda provides an overarching environment, within which industry can pursue its sustainable competitive advantages in growing, processing and marketing Australian forest and wood products. It identifies six broad themes to address impediments and pursue emerging opportunities:

  • credibility of forest products (e.g. implement an Australian Forestry Standard);
  • intelligence development and diffusion (e.g. establish a consolidated industry database);
  • product development and innovation;
  • market and investment promotion (e.g. an integrated approach to market investment development);
  • human capital; and
  • coordination and collaboration.

A further government initiative aimed at attracting investment in plantation growing and processing is the offshore activity of Invest Australia. Invest Australia is working to promote Australia as a secure investment destination, and in collaboration with the Department of Agriculture, Fisheries and Forestry (AFFA), has produced an industry capability statement outlining Australia’s competitive advantage in terms of effective and efficient governance structures, energy costs, infrastructure and human capital.

3.3.3 Build a government-industry partnership to address the issue

The Government-industry partnership is a keystone of the Action Agenda’s framework. Government and industry recognised they could not fully achieve their goals if they worked in isolation. Along the whole production chain — from growing, harvesting and processing to end use — they saw the need to strengthen partnerships between different levels of government, and between governments, industry, and community and regional interests.

3.4 Encourage wider community acceptance of plantations in the landscape

The fourth overarching challenge for Australian policy makers was the need to encourage wider community acceptance of plantations in the landscape. To realise this goal, governments had to examine and address specific second tier, or priority, issues:

  • development of a coordinated and targeted public education and awareness campaign focused on the benefits of plantations;
  • dealing with negative perceptions of plantations; and
  • development of collaborative approaches between government, industry and landowners.

Improving the community’s acceptance of plantation forestry is an issue consistently discussed in the NFPS, the Vision 2020 and the Action Agenda. Tree plantations are often viewed as providing a wide range of economic, social and environmental benefits to rural regions. Yet, in many regions where plantations have been established, members of rural communities and environmental groups have voiced a range of concerns about the impacts of large-scale plantation forestry on local populations and economies, levels of social interaction, the provision and condition of local infrastructure, public health and the environment. Addressing these negative perceptions is a key challenge for plantation managers.

Changing land use, initiated by land managers responding to changing economic and social pressures, is intended to maintain farm profitability. However, the dramatic and long-term nature of plantations has in some instances accentuated community anxiety for the future.

Governments can counter negative perceptions by working with rural communities and industry to overcome opposition to plantation forestry. Tasmania’s Good Neighbour Charter (GNC) is an example of a formalised response — from industry and government — to negative community perceptions about plantations. The GNC is a voluntary agreement signed by major plantation companies and the State Government containing several guarantees from the plantation industry about the practices it will undertake when establishing plantations on cleared agricultural land. They include plantation establishment, use of local road infrastructure, water intake and forward planning.

Through the Farm Forestry Program, governments have supported demonstration plantings in rural areas as a way of dealing with some of the negative perceptions of rural communities.

As mentioned previously, governments have used extension and public education to encourage acceptance of plantations, especially through Regional Plantations Committees (see Section 3.1.4). The Joint Venture Agroforestry Program (JVAP) has also sought to increase community awareness of the economic, social and environmental benefits of plantations, as well as encourage wider community acceptance of plantations in the landscape.

Through the Landcare movement, Governments have mobilised support for plantation expansion on cleared agricultural land by using the Landcare network to educate landowners and rural communities about the multiple benefits (environmental services) of plantations in the agricultural landscape.

3.5 Assure consumers of the sustainability of plantation grown wood fibre

The final overarching challenge facing the plantation forestry sector and policymakers in Australia during the 1990s was the growing demand for assurances that timber and fibre products are:

  • sourced from sustainably managed plantations forests; and
  • fit-for-purpose, in line with defined technical standards.

There is a clear need to address this demand if Australia is to maintain access to its existing markets and secure access to new markets for future growth. This entails international acceptance of certification schemes that confirm the quality and specifications of products, as well as the sustainability of the forests from which they are sourced. Acceptance will depend on the establishment of equivalence to, and recognition by, other international approaches to certification.

In response, the Commonwealth Government has helped develop the Australian Forestry Standard (AFS) to provide a basis for a credible and verifiable measure of sustainable forest management for wood production from individual forest owners (including plantation forests). The AFS accords with accepted Australian and international practices.

The Commonwealth and State governments have also supported industry initiatives to improve the reputation of, and create a greater confidence within, the plantation industry, including developing State-specific Codes of Practice for plantation management.

Australia’s engagement in the international dialogue on sustainable forest management through processes such as the Montreal Process on Criteria and Indicators and the United Nations Forum on Forests (UNFF) also contribute to assuring the purchasers of Australian wood and wood products that the products they are buying are sourced from sustainably managed plantations.

4. Outcomes – current state of play

By 2002, Australia had addressed many of the impediments to plantation expansion (especially for private investment). It had either removed the impediment (e.g. woodchip export restrictions) or improved the commercial operating environment for private investors to establish plantations. The community has also begun to acknowledge the positive biodiversity and environmental benefits plantations incorporate into conventional agricultural areas, with most plantations being established on what was previously cleared agricultural land. Diverse ownership arrangements now exist, including joint venture and annuity schemes between public and private parties. Of the standing plantation estate of 1.6 million hectares, it is estimated most (54%) are privately owned.

Plantings are changing from softwood to hardwood in response to market demand. In 2001, hardwood plantings, mainly Eucalyptus globulus, totalled 75,100 hectares compared with 10,600 hectares of softwood. Notably, 87% of the total standing hardwood plantation has been planted since 1990.

Figure 2: Plantation forest area in Australia by species group since 1935.

(Estimates derived from various sources.)

Government policies and initiatives have created the framework that has supported the development of an internationally competitive and sustainably managed industry. The Australian forestry sector is entering a period of growth and expansion, with nearly $7 billion invested in the forestry sector since the early 1990s, including more than $1.5 billion in plantations and $2 billion in processing.

Investors recognise Australia’s strong domestic market is a solid platform for investment strategies to increase production, decrease imports and value-add along the supply chain.

It is clear that, without additional domestic processing capacity, Australia will over time increase its imports of forest and wood products. Consequently, governments continue to address issues that may restrict investments and remove impediments to provide the framework that encourages additional and sustainable investment in forest growing, harvesting, processing and manufacturing. Government can only facilitate new investment to exploit the plantation forest industry’s full processing potential by providing an attractive, competitive and profitable business environment.

Figure 3: New areas (ha) of plantation – total for all States

(Source: National Plantations Inventory 2001)

5. New and Emerging Challenges

Australia has largely addressed the five challenges outlined above. However, Australia is on the path to developing an internationally competitive and sustainably managed plantation industry. Accordingly, Australian policy makers face the challenge of continuous improvement particularly in relation to new and emerging challenges that government and industry are working as partners to address, including issues relating to:

  • globalisation and market access;

  • water quantity;

  • product development;

  • sawlog production;

  • low rainfall plantation species;

  • sovereign risk; and

  • commercial viability of small-scale farm forestry.

6. Conclusions/Lessons Learned

The Commonwealth Government supports the native and plantation forest sectors, playing an important, complementary and active role in developing and expanding a competitive, profitable and sustainable industry. Legislative and policy initiatives have increased confidence and stability within the industry. Government support has encouraged investment in growing and value-adding processing, and the development of new and more profitable markets.

Based on Australia’s experiences, conditions which foster forest management and plantation investments include:

  • political and macroeconomic stability;
  • trade liberalisation and open foreign investment;
  • well defined and stable property rights for land resources;
  • adequate institutional capacity with effective and efficient governance structures;
  • availability of relevant technologies and basic infrastructure (roads, electricity, ports etc.) to support investment decisions;
  • availability of commercial knowledge and expertise to establish, maintain, harvest, process and market the plantation products; and
  • critical mass of the plantation resource to support internationally competitive, integrated processing facilities.

These broad conditions, however, need to be given focus and supported by a well-developed forest R&D system. An active extension and information dissemination system is also essential to pass on research findings and advice to private industry and landholders on the benefits of plantations and the best growing and management techniques for the intended market.

6.1 Key lessons

In summary, the key lessons from Australia’s experience in seeking to maximise the role of planted forests in sustainable forest management are:

  • plantations are complementary to, not a replacement for, native forest harvesting, and an expanding plantation resource will increasingly provide the fibre for Australia’s future consumption needs;
  • successful plantation development requires a long-term view, access to patient capital, and support from long-term R&D;
  • direct government subsidies are a costly and less effective long-term option to support the development of plantations. As illustrated in Figure 4 below, while subsidies have an impact, for an efficient and effective longer term outcome, governments must address the underlying structural character of national economies that is, macroeconomic reform;
  • a fundamental requirement for strategic plantation development is a consistent national (whole-of-government) policy agreed to by all relevant jurisdictions and agencies;
  • a long-term continuing commitment to R&D provides an essential base for successful establishment and utilisation of plantations;
  • plantations provide a wide range of social, economic and environmental benefits;
  • sustainable forest management principles are essential for the credibility of plantation products and wider community acceptance;
  • plantation development (site, species and products) needs to be market oriented;
  • a stable and secure government is often a prerequisite to attract investment in processing facilities.
  • there is a need to establish a critical mass of plantations in a region(s) to attract investment in processing; and
  • Governments have an initial role in helping to establish a commercial plantation estate but, ultimately, it is a commercial/business decision.

Figure 4: Average annual increase in plantation area

(Source: National Plantations Inventory 2001)

Appendix 1

Matrix of policy challenges, responses and lessons learned

References

Australian Taxation Office http://www.ato.gov.au/

Commonwealth of Australia (1997) 'Plantations for Australia: The 2020 Vision, An Industry - Government initiative for plantation forestry in Australia.' Canberra.

Commonwealth of Australia (1992). National Forest Policy Statement. A new focus for Australia's forests, Commonwealth of Australia.

Commonwealth of Australia (2002). Impact of incentives on the development of forest plantation resources in the Asia-Pacific region – An Australian case study. Report to the 19th Session of the Asia-Pacific Forestry Commission.

Carron, L.T. (1990) A history of plantation policy in Australia. In: Dargavel, J. and Semple, N. (Eds) Prospects for Australian Forest Plantations. Centre for Resource and Environmental Studies, ANU. Canberra. pp. 11-24.

Wood, M., Stephens, N.C., Allison, B.K. and Howell, C.I. (2001) 'Plantations of Australia 2001 - A report from the National Plantation Inventory and the National Farm Forestry Inventory.' National Forest Inventory, Bureau of Rural Sciences, Canberra, Canberra.

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