Northern Rivers Private Forestry Development Committee Web Site

A PROFILE OF THE NORTHERN NSW PRIVATE FOREST RESOURCE AND THE PRIVATE NATIVE FOREST INDUSTRY

7. A Profile of The Northern NSW Private Native Forest Timber Industry

7.1 Introduction

Neither the 1994 nor the 2002 studies dealt in any detail with the industry that relies either totally or in part on the private native forest resource. In fact very little work has been done in the past to attempt to quantify the size of the private native forest industry. Part of the brief for this review of the 2002 study was to incorporate a profile of the private native forest timber industry within the study area. The following criteria were addressed to develop the profile:

(a)The location of the industry (ie, by Local Government Areas).

(b)The size of the industry. This has been measured in terms of the number of sawmills¹, employment levels and annual log intake from private native forests.

(c)The level of dependency of the industry on private native forest resource (given that most of the larger Crown sawmills also utilise the private resource).

(d)The direct economic contribution of the industry (ie, without flow on effects), measured in terms of wage inputs, royalty payments to private forest owners and value of production.

7.2 Methodology

The following information was used to develop a database of sawmills in the study area that are in part or totally reliant on the private native forest resource²:

sawmill licensee databases supplied by Forests NSW;
sawmill contact details available on both the Yellow Pages and White Pages web sites;
information supplied by industry service providers; and
other information held by Northern NSW Forestry Services.

This database was refined to exclude sawmills that were known to be no longer operating, resulting in a final database of 100 sawmills. A phone survey of the these sawmills was undertaken to obtain the following information:

The location of the sawmill (LGA).
Annual log intake from private property.
Proportion of annual intake that comes from private property (ie, the level of dependency on the private resource).
An indication of the main Local Government Areas from which private resource is sourced.
Direct sawmill employment numbers dependent on the private resource.
Details of harvesting and haulage employment levels servicing the sawmill.
Annual production based on private property logs, including the main products produced (green sawn and/or value added).

Appendix 7 is the data sheet used to record information from the phone surveys.

During the course of the phone survey, a further 24 sawmills indicated that they were no longer operating, had not cut timber for more than 6 months or were only cutting on an infrequent basis, or were only cutting timber for on-farm use. This left a total of 76 sawmills that relied in part or totally on the private native forest resource contributing information to the survey. Table 7.1 shows the breakdown of surveyed sawmills by LGA.

7.2.1 Other Sawmills not Surveyed

Despite the existence of several databases, principally the Forests NSW database of sawmill licencees, it is difficult to determine precisely how many sawmills are operating in the study area. Certainly the number of sawmills surveyed is considerably less than the actual number in the study area, for a number of reasons:

The Forests NSW licensing system does not necessarily pick up all sawmills, with many small mobile operations not on that database.
There are also a number of small sawmills, particularly in the northern part of the study area, that restrict their activities mainly to conversion of camphor laurel and occasional salvage rainforest trees into slabs for furniture and internal fittings.
There are small mobile operations that principally confine their activities to processing of timber for “on-farm” use, with occasional cutting to satisfy local orders.
Within the timeframe for this study it was not possible to pick up the many smaller operations for which no contacts were easily available.

Therefore the data presented below in relation to the size and economic contribution o f the industry is based on the best available information at the time the surveys were conducted and can therefore be regarded as conservative.

7.2.2 Confidentiality

Confidentiality was regarded as essential in a survey of this nature. Therefore individual sawmill respondents are not identified in this report and information provided by respondents in relation to average product prices is not reproduced but has been used to determine the value of production across the industry within the study area.

7.3 The Size of the Private Native Forest Industry

The location of the 76 sawmills surveyed is shown in Table 7.1 by LGA.

7.3.1 Reliance on the Private Native Forest Resource

Of the 76 sawmills surveyed, 50 (66%) rely totally on the private native forest resource, traditionally referred to in the industry as private property or “PP mills”. Of the remainder, the reliance on the private resource varied from 5% of annual log intake to 90%, with 14 sawmills (18%) having a 50% or greater reliance on private native forests. Only 12 of the sawmills surveyed (16%) had less than a 50% reliance on private resource.

7.3.2 Annual Log³ Volumes from Private Native Forests

7.3.2.1 Annual Volume of Private Native Forest Logs Processed by Sawmills within the Study Area

About 260,000 cubic metres of logs from private native forests are processed each year by the 76 sawmills surveyed. About 50% of this volume (130,700 cubic metres) is processed by sawmills in the Clarence Valley LGA. More significantly about 90,000 cubic metres of this is processed in immediate area around Grafton (encompassing Grafton, Junction Hill, Koolkhan and Coutts Crossing). Other LGAs where a significant volume of private logs are processed include Coffs Harbour (13%), Richmond Valley (10%), Bellingen (10%), Tenterfield (7%) and Lismore (7%).

Table 7.1 shows the volume processed by sawmills for each of the LGAs in which those mills are located.

7.3.2.2 Annual Log Volumes Produced from Private Native Forests within the Study Area

Of the total annual volume of 260,000 cubic metres of logs processed by the surveyed sawmills within the study area, about 95% (248,000 cubic metres) is actually sourced from private native forests within the study area. The remainder (about 5%) is sourced from outside the study area, mainly the mid north coast and southern New England regions. Of the 248,000 cubic metres, properties within the Clarence Valley LGA provide about 44% (115,000 cubic metres), Richmond Valley LGA 14%, Tenterfield LGA 9%, Bellingen, Coffs Harbour and Kyogle LGAs 6% each and Guyra and Severn LGAs 4% each.

An indicative breakdown of annual log production from private native forests within the study area is shown by LGA in Table 7.1.

7.3.2.3 Logs from within the Study Area processed elsewhere

Apart from the volume of private native forest logs that are sourced from and processed by the sawmills within the study area (Table 7.1), there are a number of sawmills located outside the study area that purchase private native forest resource from properties within the study area. These include at least one sawmill in South East Queensland, several sawmills in the Nambucca, Kempsey and Hastings Shires and a veneer mill in Brisbane.

These sawmills were not surveyed as part of this study and therefore no precise information is available on annual volumes, however anecdotal information suggests that it is probably in excess of 20,000 cubic metres.

7.3.2.4 Sawn timber from within the Study Area value added elsewhere

Apart from those value adding plants within the study area, there are other plants outside the study area that process some green sawn timber produced by sawmills within the study area.

These external value adding plants were nor surveyed as part of this study, so no information is available on annual volumes of sawn material sourced from within the study area.

7.3.3 Employment

7.3.3.1 Sawmills

The survey revealed that a total of 476 people employed in the 76 sawmills are totally reliant on the private native forest resource.

Obviously in those sawmills that are 100% reliant on this resource, loss of access to the resource would result in sawmill closure. However, most mills that are more than 50% reliant on the resource would also be significantly impacted upon by loss of access and generally those with a 70% or more reliance would most likely close if access to resource was lost. Smaller mills with an annual intake of say 2,000 cubic metres or less would be significantly impacted upon even by a partial loss of resource.

Consistent with other data collected through the survey, the Clarence Valley LGA boasts the most significant employment numbers, with more than 60% of the total employment in the study area. Again a high proportion of this is centred in and around Grafton. For some of the other LGAs, Coffs Harbour has 10% of the total employment, Richmond Valley 8%, Bellingen and Tenterfield 6% and Lismore 5%.

Table 7.1 shows the sawmill employment numbers reliant on the private native forest resource by LGA.

7.3.3.2 Harvesting and Haulage

Harvesting and haulage contractors were not specifically surveyed as part of this study. However, in talking to sawmill owners and managers information was sought on what contractors supplied logs to their business and employment numbers for the contractors. As some contractors supply more than one sawmill, it was important that contractor numbers were not duplicated between individual sawmills. Where sawmills used employees from the mill to harvest and/or haul logs, employment numbers were credited to the sawmill rather than the contractor workforce.

The survey revealed that the harvesting and haulage workforce totally reliant on the private native forest resource within the study area totals about 180. However, this figure can be regarded as conservative, mainly because individual contractors themselves were not surveyed and also because some mills provided numbers only rather than contractor details.

The estimated total employment of 180 is included in Table 7.1, however no attempt has been made to apportion harvesting and haulage employment numbers by LGA because many of the contractors operate over a number of LGAs. However it is again evident that a significant proportion of the harvesting and haulage workforce reliant on private native forests is based in and around Grafton and would certainly be in excess of 50%.

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7.4 The Economic Contribution of the Private Native Forest Industry

In determining the economic contribution of the industry dependent on the private native forest resource within the study area, no attempt has been made to apply a multiplier to either employment numbers or annual value of production. No flow on has been calculated for other sectors that rely on the industry such as service providers to both sawmilling and harvesting and haulage, fuel suppliers, finished product transport providers, timber merchants and other regional businesses.

The average values used to calculate economic outputs, such as wages, recovery rate from log to sawn timber and value of green sawn and value added production were determined from consultation with the industry and in all cases the outputs that have been derived can be regarded as conservative.

7.4.1 Royalty Payments to Private Landowners

Royalty refers to the net value of a log to the owner or what the owner is actually paid by the sawmill or contractor and is exclusive of felling, extraction and haulage costs.

As indicated elsewhere, about 248,000 cubic metres of logs per annum are sourced from private native forests within the study area. Notwithstanding the fact that in some cases, where a sawmiller owns a private forest, the value of royalty payments may be treated differently, the total annual royalty payments to landowners within the study area is about $14.9 million. Table 7.2 shows the annual royalty payments by LGA.

7.4.2 Wages to Sawmill Employees and Harvest and Haulage Contractors

The total annual wages contribution from the private native forest industry within the study area is about $26.2 million, comprising $19 million from the sawmilling sector and $7.2 million from the harvesting and haulage sector. Table 7.2 shows the wages contribution by LGA. For reasons explained elsewhere no attempt has been made to apportion the harvesting and haulage contribution by LGA.

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7.4.3 Value of Production⁴

Production from the private native forest resource by sawmills within the study area can be divided into the following categories:

a.Green Sawn Products
These are products that are sold “green off saw” and include timber for a wide variety of applications, including structural (eg, framing, decking and battens), industrial, railways and bridges, mining, landscaping, pallet manufacture, fencing and stakes.

Of the 76 sawmills surveyed, 26 produce and sell green sawn product only. For a further 29 sawmills, part or all of their green sawn production is on sold for value adding elsewhere.

b.Value Added Sawn Products
Most in the industry regard green sawn production as value adding, in as much as you are converting a log into products with a much higher value or in many cases you are using low quality logs that would once have been regarded as having little value for conversion to sawn timber. However the more commonly accepted definition and the one that has been adopted for this analysis is the further processing of green sawn timber to produce kiln dried or kiln dried and dressed products. Sawn material is value added for a range of markets, including flooring, external and internal cladding, external and internal fittings, joinery, furniture, structural and handle manufacture applications.

21 of the sawmills surveyed operate their own value adding facilities, either located at the sawmill site or as stand alone operations elsewhere within the study area. Some of these facilities purchase green sawn timber for value adding from other sawmills. There is also a value adding facility to the south of the study area that purchases green sawn material from a number of sawmills within the study area.

c.Other Products
The private native forest resource also produces logs suitable for transmission poles, marine piles and bridge and heavy industrial girders, as well as logs suitable for rotary peeling to produce industrial and decorative plywood and veneers. For poles and girders, non durable species are treated to prevent insect attack.

It is estimated that the total value of production by the 76 sawmills surveyed in the study area that in total or in part depend on the private native forest resource is almost $84 million per annum, comprising:

green sawn production of about $20.4 million;
value added sawn production of about $48 million; and
production of other products (poles, piles, girders, plywood and veneer) of about $15.5 million.

Table 7.3 shows the value of annual production by LGA.

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7.4.4 Summary

It is estimated that the total direct economic contribution of the private native forest reliant timber industry within the study area is about $125 million. This is summarised in Table 7.4.

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Including both the sawmilling and contracting sectors, it is estimated that the Clarence Valley LGA benefits from almost 50% of this direct economic contribution by the private native forest industry. About 15% of the contribution occurs in Coffs harbour LGA, about 11% in Richmond Valley LGA, about 8% in each of Bellingen and Lismore LGAs and about 6% in Tenterfield LGA.

Notes:

1. Note that for the purpose of the industry profile the terms “sawmills” or “mills” are interchangeable and refer to all primary and secondary processing operations, including green and value added sawn production, pole, pile and girder production and plywood or veneer manufacture.

2.Little if any resource is currently utilised from private hardwood plantations, as the bulk of the plantation establishment on private land only dates back to 1994. Therefore for the purpose of the industry profile only the industry reliant on the private native forest resource has been considered.

3. The term log or logs refers to sawlogs, salvage logs, poles, piles, girders and plywood or veneer logs.

4. Note that by-products of the sawmilling process, including sawdust and woodchip, are sold to a variety of markets both within and outside the study area. These markets include industrial fuels, landscaping, export woodchips and reconstituted wood products such as particleboard. However it was not within the scope of the sawmill survey to determine the volume or value of the by-product market.

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