Forestry needs plan to meet global demand

Australia's forestry and wood products sector requires more investment and planning if it is to take advantage of growing global demand for fibre, paper and packaging, construction materials and bio-fuels.

Consumers will want more processed foods, which require paper packaging, and hygiene products, such as tissues and paper towels, according to the report by accountancy and financial consultancy firm Ernst & Young.

Demand for timber for housing is also set to grow and there is expected to be increased demand for food fibre to supply new energy and bio-chemical products.

Choosy customers are expected to seek sustainable forestry products.

Ernst & Young said Asia would experience a growing lack of wood fibre as the region's middle-class population exceeds 3.2 billion within 15 years.

Asia had limited opportunities to expand domestic wood fibre supplies, and accessible land would be increasingly directed to food production.

"The strong growth in domestic and regional fibre demand has not led to a commensurate growth in fibre sources within Australia," the Ernst & Young report said.

"Australia has not been able to create needed investment to expand plantations in key wood supply areas to maintain industry competitiveness."

Australia's domestic processors had also been unable to capture opportunities to add value to wood fibre that is currently shipped in unprocessed forms such as woodchips and logs.

Ernst & Young said state governments continued to reduce the area of public native forests designated for wood supply, and the establishment of plantation forests had declined over the last decade.

Many plantations established under managed investment schemes had returned to other land uses.

There are currently no large-scale planting programs in place and no government frameworks to foster such programs.

Ernst & Young recommended that Australia develop a nationally co-ordinated strategy to improve the international competitiveness of its forests and wood products sector.

Governments and industry should also develop regionally-based plans to identify opportunities for new domestic processing, and consider expanding the productive forest estate in each supply region.

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