Browse > Home / Business / Global crisis hits forestry sector

Global crisis hits forestry sector

Posted on November 11, 2008, 1:01pm

The global credit crisis is hitting the Green Triangle’s economic backbone with the forestry sector feeling the pinch.

ABARE’s Australian Forest and Wood Products Statistics Report, released yesterday, showed a 5pc growth in the nation’s forest exports to $2.5b for 2007-08, driven by woodchip export growth.

But Timbercorp’s forestry general manager Tim Browning said while the sector had performed strongly, “the world changed about two months ago”.

“Whatever statistics happened up until September 30 are totally irrelevant going forward because of the credit crisis emanating from America that has now taken control of the whole global economy, which has depressed consumption and business credit,” he said.

“It will have a big impact on the whole economy and that doesn’t matter what sector you are in, unless you are a lawyer or accountant, in which case I think you will do very nicely.”

Mr Browning said raw material producers in all sectors would be hit hard as downstream processors reduced production.

“The redeeming factor for Australian exporters is the Australian dollar has collapsed by about 40pc, which has made our exports a lot cheaper to our principal trading partners,” he said.

“It’s not going to appease the impact of manufacturers needing to reduce production, but what it will do is take Australia from being a high-cost seller when the Aussie dollar was almost one for one to the American dollar to being a very low cost supplier.”

Mr Browning said a modest prediction of the impact on Timbercorp next year would be a 10 to 20pc cut in exports, but it was hard to quantify how the market would act.

He said the downturn in harvesting was unlikely to cost jobs.

“We need to look at the efficiency with which we use staff, but are not looking at shedding staff — however no-one’s job is ever guaranteed in these types of times,” he said.

Mr Browning said the key factor delaying employment of forestry staff was the lack of export facilities, with blow-outs in construction of infrastructure at the Port of Portland and the Penola Pulp Mill project still being four years away from accepting chips, if it is built.

“Those issue still need to be dealt with regardless of the economic climate,” he said, adding financial hurdles may stop the pulp mill development.

“The Australian banks appear to be struggling,” he said.

He said Timbercorp was in the lucky position of being able to leave its trees growing, increasing in value, but traditional food producers, such as the dairy and viticulture sectors, would not be able to stop production to await an improvement in the economy.

However, bluegum growth requires rain, which has also been falling short.

Mr Browning said that while trees grew last year, they stalled for the previous two years due to extremely dry weather.

“The dry years do impact on yields and we are down a lot on what we planned,” he said.

JASON WALLACE

Tags: , , ,  

Comments

Comments are closed.