A spanner in the woodchip works

What we see going on with Tasmanian woodchips could well set the scene for the rest of us battling to save our forests.

When a 10% drop in orders for Tasmanian woodchips was announced, green groups were blamed. The reduction and subsequent job losses are squarely the result of green groups telling lies to overseas buyers, according to Forestry Tasmania anyway.

Aussie dollar gums glut
So what’s going on? The head of a Hobart market intelligence company, said the drop has more to do with the rise in the Australian dollar from US 50c in late 2001 to US 77c now. It means all Australian woodchips are nearly 30% more expensive for Asian buyers than four years ago. Then add to this economic spanner-in-the-works, the glut of plantation woodchips hitting the world market and it doesn’t bode well for woodchip giant Gunns. Thousands of hectares of hardwood plantations (many of them Tasmanian blue gums) have recently come into production in Chile, Brazil, Argentina and South Africa. They are not only cheaper than native forest chips but better quality. This could soon influence sales of chips from many native forests, including those of our beloved East Gippsland.

Plantations winning the race
Woodchips from young plantation timber are whiter and have a higher cellulose level (the part of the wood that makes white paper) than darker chips from old growth forests. Gunns’ rely on its increased woodchip sales to make a profit. But with the overseas woodchip producers cranking up, Gunns sales were doomed to start shrinking around about now. This is why they were desperate to build a pulpmill last year. They hope to sell the more lucrative pulp rather than raw chips. But overseas pulpmills also have a head start on this sluggish Tasmanian glutton. Even Australian plantation companies are increasing their sales to Asian buyers, taking the woodchip orders that Gunns is losing.

If that’s not enough to make native forest chippers nervous, the Japanese pulp and paper industry invested heavily in Australian plantations ten years ago – and the trees are now ready to cut and use. No wonder Gunns’ shares are dropping.

Forget the price, check the quality
The only buyers for native forest chips might soon be packaging companies or countries with lower standards for woodchip quality.
There have been no rumours suggesting Nippon is feeling the same pain but even though our chips are virtually given away, the quality is still very poor and that makes a big difference.
Bob brown has predicted that Gunns and Forestry Tasmania will use the downturn in overseas woodchip orders to justify paying even less for logs from native forests (royalties).

More money = fewer jobs
East Gippsland had about 20 mills in the 80s; this is now down to six and looks to shrink further still. In Tasmania it’s a similar story – since woodchipping arrived in 1970, over 100 small sawmills have closed.
Millions in government grants to East Gippsland’s mills over the years has achieved nothing but job losses. Despite a recent $150 million of taxpayers’ money injected into the loggers’ domain by Canberra and Hobart this year alone, jobs there are still being lost.
The government, corporate loggers and their various bands of foot soldiers (union, industry groups etc) still avoid looking at market realities. They cry over loss of jobs in native forest logging and blame “greenies”.

Next year, both Tasmania and Victoria go to the polls. The race to woodchip native forests despite market realities will give our politicians a good opportunity to deal with the problem once and for all.
 

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