Economy

The forest and wood products industry plays a vital part in the Victorian economy, creating jobs and opportunities for the state.

The industry is a major driver of economic activity and jobs in Victoria, generating approximately $7 billion in sales and service income annually. Much of the income generated by the industry remains in local communities, particularly so in regional Victoria.

The Victorian timber and forestry industry directly employs over 15,000 workers in forest growing and management, harvest, haulage, primary and secondary processing. For every direct job generated by the industry in Victoria up to the point of primary processing, a total of 3.1 jobs were created in the region through a combination of production-induced and consumption-induced demand (FWPA 2018).

Victoria’s forest, fibre and wood products industry supports crucial infrastructure in the regions producing many economic and community benefits, including fire management and suppression, recreation and tourism.

Operating in a high-cost economy is a business challenge that is especially demanding for trade-exposed industries in Australia, such as the forest and wood products industry.

 

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Regional Forest Agreements

The management of Australia’s forests is guided by the 1992 National Forest Policy Statement (NFPS) which outlines agreed objectives and policies for the future of Australia’s public and private forests. Following the introduction of the NFPS, Regional Forest Agreements (RFA) were developed. RFA’s are designed to balance the economic and environmental demands on naturally regenerated forests.

In Victoria, five 20-year RFA’s were established between 1998 and 2000 to guarantee protection of the most significant biodiversity values within Victoria’s native forests. New RFAs for Victoria are due to be in place in early 2020.

More information on Regional Forest Agreements is available from the following websites:

Department of Environment, Land, Water and Planning – Victorian State Government

Department of Agriculture and Water Resources – Australian Federal Government

Investment, Innovation and Growth

Investment and innovation is key to any successful industry: to continue to grow the forest, fibre and wood products industry in Victoria, investment is vital.

Stable and clear policy settings allow for investment and innovation in products, processes and technology. There is the need to drive efficiencies in the value chain to increase productivity, lower costs and increase international competitiveness.

Research and Development

Research and Development (R&D) drives innovation, and improves productivity in the industry. R&D is critical to the innovation required to power the value-adding operations, productivity gains, and international competitiveness of the forest, fibre and wood products supply chain into the future.

Forest and Wood Products Australia (FWPA) is the industry-owned research and development not-for-profit company that provides national, integrated research and development services to the Australia forest and wood products industry. It provides a means for coordinating private and government investment in the industry.

Climate Change and Carbon

Wood is a renewable resource that stores carbon. Both the United Nations Food and Agriculture Organization and the Intergovernmental Panel on Climate Change have stated that the sustainable management of forests for wood products may be one of the most effective ways to achieve reductions in carbon dioxide emissions.

The practice of sustainable harvesting and regeneration stores carbon in wood products, as well as in regrowth forests. It also allows for the production of low emissions timber products which reduce demand for alternatives, such as steel and concrete, which embody far greater carbon emissions in their production and manufacture. This role was recognised by the state government’s draft Climate Change Framework, where investment in jobs, skills and innovation in the forestry sector was listed as a potential for reducing Victoria’s carbon emissions.

Bio-economy

The world is transitioning to a bio-economy – an economy that uses biological resources from the land and sea, as well as waste, as inputs to food and feed, industrial and energy production. It also covers the use of bio-based processes for sustainable industries. As the world’s population continues to grow, the consumer expects and demands renewable and recyclable resources that will help society. Changes in technology are enabling the forest, fibre and wood products industry to be this resource.

This bio-economy future will build upon the unique strengths and properties of forest fibres – from their renewability and carbon sequestration capacity to their recyclability. Australia is well placed to address this global transition, and Victoria can lead the charge.

Imports and Exports

Trade Deficit

Victorian forest, fibre and wood products industry participants produce a wide range of product types from superb quality appearance and structural grade timbers through to woodchips and all paper types for the Australian and international markets. 60% of respondents to the 2016 VAFI Members Survey export their products.

The international trade of forest products is a key influence on Australia’s forest and wood products sector. Overall, Australia imports more forest products than it exports, with an average trade deficit of $1.8 billion in value per year. The total value of wood and paper product exports in 2016–17 was $3.5 billion and the total value of imports was $5.25 billion (ABARES, 2018).

While imported forest products increase competition for Australian manufacturers, they will remain a key part of the industry. Imported products provide an important resource for construction and other applications, particularly where products in demand are not, or cannot, be processed or manufactured in Australia.

It is in Australia’s long-term interests to increase local production and to be less reliant on imports. The Commonwealth Government has stated that reducing the balance of the current trade deficit in forest and wood products may be achieved through changes in the industry but should be market-led.

To best serve the domestic forest and wood products industry, negotiated international trade agreements need to be transparent, balanced, equitable and contain provision for the continuation of a strong anti-dumping and countervailing measures regime enforceable in Australia.

The Victorian Association of Forest Industries (VAFI) is the peak body for the Victorian forest and wood products industry.

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