It’s time for my annual summary of Island Specialty Timbers (IST) log tender results.
http://www.islandspecialtytimbers.com.au/
This is the only competitive market forest log price data publically available anywhere in Australia.
General
During the year Island Specialty Timbers conducted 7 tenders putting a total of 154 cubic metres of special species logs, craftwood and sawn wood to tender.
Total sold volume was 99.8 cubic metres (65%).
Total tender revenue was $90,900.
The above chart shows the log volumes and log prices paid per tender. Craftwood and sawn wood are not included in this chart.
The large volume of unsold logs at the April 2018 tender was mostly due to a large parcel of Silver wattle (Acacia dealbata) logs.
The above chart shows the average volume of logs sold at tender by IST. For some context to this chart, the target plantation blackwood log is 1.5 cubic metres in volume (DBH 60 cm pruned to 6 metres). So it can be seen most of the IST logs sold at tender are small to very small in size.
The highlights for the year were a) a tiny black heart sassafras log (1.1m length, 30 cm small end diameter, 0.07 cubic metres volume) that sold for $3,800 per cubic metre. Indeed at this August 2017 tender 5 small BH sassafras logs totalling 0.54 cubic metres sold for a total of $2,025; and b) a very large huon pine log (4.3 cubic metres) sold for a total $4,623.
Two species attracted strong demand and high prices during the year, these being black heart sassafras (BHS) and huon pine, with average log prices well over $1,000 per cubic metre. BHS and huon pine made up 21% and 13% respectively of the sold volume. Blackwood and feature eucalypt/tas oak were the other major sellers at 18% and 23% of sold volume.
In fact 2 tear-drop grain tas oak logs sold for over $1,700 per cubic metre, an extraordinary price for a wood that the market generally regards as a cheap commodity.
Celery top pine sold for an average $580 per cubic metre (3.7 cubic metres total sold).
Silver wattle and blackwood made up 76% and 15% respectively of the unsold volume for the year.
So what can we say with three years of IST tender results in the chart?
Answer: Not much!
There is no apparent trend in price over the last 3 years. Sure the volumes are small, the market is restricted and the quality of produce is highly variable.
What can be said is that even given these limitations the market will pay very good prices for quality wood when it wants to, with maximum prices averaging $3,000 per cubic metre, even for tiny logs!
These tendered log volumes represent less than 1% of the special timbers annual harvest, and a mere 0.01% of the wood harvested annually from public native forest in Tasmania. The rest is sold at Government (non-market) prices on long term, perpetual sales contracts.
According to Forestry Tasmania’s Annual Report in 2016/17 IST sold a total of 829 cubic metres of product [tender and direct sales]. The annual report does not give separate accounts for IST so their income and costs are unknown.
Blackwood
In general the IST tender results provide little information that is useful to the marketplace with the exception of blackwood. Tasmanian blackwood is the only Tasmanian “special species” that has the potential to be grown commercially; the other species being too slow growing.
Sixteen blackwood logs (23.5 cubic metres) were put to tender in 2017-18 of which 10 were sold (16.3 cubic metres) for a total of $12,210.
Five of the sold logs (7.6 cubic metres), described as having figured grain, sold for a total of $7,460. These logs averaged 5.2 metres length, 57 cm small end diameter and 1.5 cubic metres volume.
The 5 plain grain logs (8.7 cubic metres) sold for a total of $4,754, an average price of $545 per cubic metre. These five logs averaged 6.0 metres in length, 54 cm small end diameter and 1.7 cubic metres volume. In other words these were good size, quality logs equivalent to what can be grown in a well managed blackwood plantation, which would produce approx. 300 cubic metres of high quality sawlog per hectare at harvest.
This is a very good price and a substantial increase on the last three years.
The stand out blackwood results for the year were a) $1,300 per cubic metre for a 1.76 cubic metre log containing tear-drop figured grain, and b) $2,467 total price for a very large (2.53 cubic metre) figured log.
The unsold blackwood logs consisted of a) one huge figured grain log measuring 5.7m length 75 cm small end diametre and 3.4 cubic metre volume, and b) 5 plain grain logs averaging 4.3 metres length, 46 cm small end diameter and 0.8 cubic metres volume.
Remember these are tiny volumes in a small market (southern Tasmania). Whether they represent the broader blackwood market is unknown.
Remember these prices are “mill door” equivalent prices with harvesting and transport costs already “included”. They are not stumpage prices.
Also remember that Sustainable Timbers Tasmania/IST is a taxpayer funded community service organisation bringing these timbers to market from Tasmania’s public native oldgrowth and rainforests:
Tasmanian regional forest agreement delivers $1.3bn losses in ‘giant fraud’ on taxpayers
Tasmanian Blackwood Growers Cooperative 
NSW Forestry Minister Paul Toole responds
So the NSW Forestry Minister Paul Toole rushes in to confirm that the forest industry IS a taxpayer and ratepayer subsidised loss-making community service.
The forest industry IS NOT a primary industry at all!
It’s knowingly anti-commercial and anti-competitive!
https://www.oberonreview.com.au/story/5599831/think-about-the-affect-of-a-rates-change-on-forests-land-toole/
Firstly comes the threat of job losses from the Minister.
Yes the forest industry has been subsidised for so long that job losses are inevitable. The forest industry needs to become competitive in global wood markets otherwise it will wither and die. Subsidising the forest industry wont save it!
But once the industry becomes fully commercial and competitive comes the opportunity for growth and expansion, and more jobs. Curious that the Minister only focuses on the negative, not on the opportunities.
Second comes the idea from the Minister that State forest is Crown land and is not rateable. The fact that private forest owners are immediately disadvantaged by this situation is completely ignored. If anyone (Government or private) grows trees for wood production then that is a business and must be treated as such, and treated equally. A level commercial playing field is absolutely essential.
Talking about cemeteries, parks and racetracks is deliberate obfuscation!!
Finally the Minister tries to convince his readers that the NSW Forestry Corporation is a community service NOT a business.
Another furphy!
NSWFC’s primary purpose is to manage forests for wood production AS A BUSINESS!! Why else is it called a corporation? And as a corporation it must be managed like any other private tree growing business and pay rates.
The Oberon mayor Cr Sajowitz said last week that she wanted to stress that a “vibrant, expanding timber industry is absolutely vital to the economic stability, growth and prosperity of our towns”.
But she said “government profit at the expense of local communities is not tenable”.
The Oberon Mayor is completely correct but she could provide a broader, more forceful argument.
If the forest industry can’t operate in a fully commercial and fair manner then it’s future is indeed grim.
How is the forest industry going to remain competitive in global markets if it relies on increasing subsidies?
How is the forest industry going to attract private investment if private investors have to compete against a subsidised competitor?
These basic matters of proper commercial management need to be resolved if the forest industry in Australia is to have any future at all.
Unfortunately there are very few people who understand and even fewer who are pushing for change.
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