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  • Securing the Future Victorian Forest Industry Review 2014

  • www.vafi.org.au

    Front cover photo credit: Arthur Rylah Institute

  • I am sure that all VAFI members are as proud as I am to be a part of an industry based on a truly sustainable and renewable natural resource, providing employment to tens of thousands of people, contributing significantly to the economic welfare of our State, and delivering environmental outcomes that no other industry can match including carbon sequestration. Across the three dimensions of sustainability (economic, social and environmental) VAFI members’ contribution to Victoria cannot be beaten.

    Of course we cannot, and do not, do it alone. The policies and practices of Government in both private and State- managed forests are vital to having a sustainable forest industry in Victoria. For the first time in a long time we have a Prime Minister who has been prepared to acknowledge that people who work in the forest industry are the ultimate forest conservationists. And this should be no surprise – our futures depend upon us taking good care of this wonderful natural resource.

    I hope you enjoy reading this report and that it provides a useful insight into the tangible contribution to sustainability that the forest and wood products industry deliver for all Victorians.

    Julian Mathers President

    Forewords

    Message from the President

    Message from the Chief Executive Officer

    With the release of VAFI’s 2014 Victorian Forest Industry Review, it is clearer than ever that the forest and wood products industry is vital to the Victorian economy, creating both jobs and opportunities.

    Our industry directly employs more than 21,000 Victorians and more than 40,000 indirectly. In addition to employment, Victoria’s forest and wood products industry support crucial infrastructure which produces many economic and community benefits, including fire management and suppression, recreation and tourism.

    It is essential therefore that an industry that sustains economic growth and job opportunities in the State’s regions be maintained and supported. Economic security for regional communities means ensuring that the forest and wood products industry is able to operate with certainty and grow.

    In a global economy, VAFI continues to support local forest and wood products industry businesses, both in response to resource security and market access for the industry. VAFI continues to encourage greater uptake of productivity enhancing measures, including new technology, workforce skills and capabilities, industry collaboration and market support.

    Ours is the industry of the twenty-first century. This Review highlights its importance.

    Tim Johnston Chief Executive Officer

  • Contents

    Executive Summary 1

    Industry Snapshot 1

    About this report 2

    Economy 3

    Community 8

    Sustainability 12

    About VAFI 17

    Governance and stakeholders 18

    Endnotes 22

    Source: Australian Sustainable Hardwoods

  • The forest and wood products industry in Victoria is a dynamic sector of the economy that uses wood, a renewable, biodegradable, recyclable product, to create materials for new homes, buildings and furniture, paper and fuel for green energy.

    Victoria’s forests provide a sustainable resource base for the sector. Australian, State and Territory governments share an objective of an industry based on the sustainable management of forests to integrate environmental, commercial and community values and uses.

    Prime Minister Tony Abbott reflected to industry participants earlier this year:

    I came to appreciate the forest wasn’t just a place of beauty, but it was a

    source of resources; of the ultimate renewable resource, of the ultimate biodegradable resource.

    So when I look out at an audience … of people who work with timber, who work in forests, I … see people who are the ultimate conservationists. That’s what I see and I want to salute you1.

    Jobs, training, self-supporting communities, local manufacturing and exports are all maintained and furthered by a secure local Victorian forest industry. The industry directly employs more than 21,000 people and indirectly supports another 40,000 to 50,000 jobs, providing a sustainable future for suburban, rural and regional communities across Victoria.

    The Victorian Association of Forest Industries (VAFI) is the peak body for the Victorian forest and wood products industry and it represents the entire lifecycle of forestry products, including forest growers, harvest and haul businesses, wood and paper processors, and associated businesses across both the native forest and plantations sectors.

    VAFI proudly champions the forest industry’s environmental values: managing a renewable resource, which both stores carbon and is recyclable. The forests and plantations of Victoria available for timber harvesting are highly regulated and well managed. They conserve all three sustainability values: economic, social and environmental.

    Executive Summary

    2011-12 2012-13

    Direct industry employment 23,745 21,2222

    Additional jobs supported 42,000 – 52,000 39,000 – 48,0003

    Value of the industry4 $6.53 billion $6.58 billion

    Area of timber plantations in Victoria 433,600 434,0005

    Total forest area in Victoria 7.8 million hectares 8.2 million hectares6

    Area available and suitable for harvesting by VicForests 493,000 hectares (6% of total Approx. 490,000 ha7 area of native forest in Vic)

    Area of public native forest harvested by VicForests 4,296 hectares (0.05% 3,339 hectares8 (0.04% of total area of native of total area of native forest in Vic) forest in Vic)

    Volume of logs harvested9 Hardwood native 1549 1338 Hardwood plantation 1489 2021 Softwood 3381 3545 Total 6.419 million m3 6.904 million m3

    Value of logs harvested

    The gross value of logs harvested (at mill door prices) across Australia was $1.5 billion in 2012-13, around 6.9 per cent lower than in 2011-12.

    Victoria Hardwood native 123 110 Hardwood plantation 97 115 Softwood plantation 227 239 Total $447 million $463 million10

    Area of Australian forests and plantations independently AFS: Approx 10 million ha AFS: c.10.4 million ha12 certified (AFS/PEFC and FSC) *Some areas of forest have both certifications11 FSC: Approx 965,000 ha FSC: 1.2 million ha

    Number of chain of custody certificates (Australia) AFS/PEFC: 216 AFS/PEFC: 235 *Some chain of custody certified companies have both certifications FSC: 250 FSC: 318

    Industry Snapshot

    1

  • The Victorian Forest Industry Review 2014 looks at the economic, community and sustainability aspects of the forest and wood products industry and the activities of VAFI as its peak industry body. Annual reviews have been conducted by VAFI since 2005 as a tool for dialogue, a method of recording improvements and as a resource to support decision-making by industry stakeholders and government.

    This review covers the 2013-2014 financial year and measures progress against indicators where possible. A draft of this

    About this report review was provided to VAFI members and the Sustainable Forestry Council for review and comment, as well as to a number of organisations and government agencies for data and information verification.

    The VAFI Members Survey 2014, reports, studies, websites and papers of other industry participants, Sustainable Forestry Council members and the Victorian and Commonwealth State of the Forest Reports 2013 have been lead sources of information for this report. Terms used are those defined in the Glossary to the Victorian SFR 201313.

    Your comments All comments on this review and the methodology used are welcome. Your feedback will provide an important input into further improvement of VAFI’s future industry reviews. Comments should be sent to:

    VAFI Industry Review, Level 2, 2 Market Street, Melbourne Vic 3000

    Email: [email protected]

    VAFI supports initiatives to increase plantation and private forest investment.

    Forest area

    Victoria has about 8.2 million hectares of forest across both Crown and private land14.

    About 6.3 million hectares (75%) is in State forest, parks and conservation reserve.

    Between 1988 and 2013, forest cover has either increased or remained the same across all 11 Victorian bioregions. Changes in public land forest area are associated with both human and natural processes, including forestry operations (harvesting and regeneration) and bushfires (crown defoliation and post-fire regeneration)15.

    In 2011/12, there were 434,000 hectares of commercial hardwood and softwood plantations in Victoria, up from 319,000 hectares in 2000. Hardwood plantations (mostly bluegum) covered 207,000 hectares (47% of plantations) while softwood plantations (mainly radiata pine) covered 226,000 hectares (52%).

    Plantations play an important role in supplying timber locally and to export markets. Due to the long term nature of plantation investment the establishment of plantations has often required government assistance and regulatory supports. There are important differences between the hardwood plantation, softwood plantation and native forest sectors16. Plantation trees are either for a ‘short term’ rotation of 8-15 years or a ‘long rotation’ of over 25 years. Short rotation timbers are generally used for woodchips or pulp