Issue 92

6253

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issue 92 | 07.09.09 | Page 1

On the right track Industry leaders endorse Government action on complex illegal logging issue

FOREST industry leaders have endorsed the Federal Government’s illegal logging policy direction and action plan.

President of the Australian Timber Importers Federation Norm Long said the Government was moving forward commendably in this complex, demanding and sensitive area of international trade and environmental policy.

“The Government is heading down a track that is supported by timber importers and wholesalers,” he said.

“Requiring legal verification of timber and wood-based products presents a range of challenges that may well have implications for timber-

THIS ISSUE

• Big building growth in Victoria • Forests key to climate change

s How

Bob Pearce .. code a basis for industry compliance.

Norm Long .. careful diplomacy with trading partners.

based businesses. However, we believe Forestry Minister Tony Burke is making significant progress and we unreservedly support the work he is directing.”

Mr Long said advancing the Government’s policy to

eliminate the importation of illegal wood-based products, necessitated careful diplomacy with Australia’s trading partners, particularly in the AsiaPacific region.

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Cont Page 2

everyday Aussies are using wood • Kyoto Forestry Associations welcomes ETS decision • Treasury gets it wrong on forest asset sale • Dr Ian Bevege awarded W. Jolly Medal • NZ must clear road blocks to foreign investment • Capturing the value of R&D

issue 92 | 07.09.09 | Page 1

industry news

Code basis for industry compliance

Ensures timber and wood products are from legal sources From Page 1

“We back the Minister’s multi-pronged approach to the illegal logging policy challenge, including the substantial efforts and funding he is making available through the Department of Agriculture, Fisheries and Forestry to increase the capacity of countries like Indonesia and Papua New Guinea to improve forest management and forest products trade governance and law enforcement.”

In relation to the generic industry code of conduct project being undertaken as part of the illegal policy implementation process, Mr Long said that as far as he was aware, the project team comprised the largest ever consortium of industry associations – from paper right across the board, including the whole range of timber products to manufactured furniture.

Also referring to the code of conduct project, the

chairman of the National Association of Forest Industries Bob Pearce said the project was but one of four under way that would collectively allow Minister Burke to more thoroughly understand the extent of illegal logging, the credible mechanisms available to verify and certify a widerange of wood-based products and the regulatory options available to the Government.

Competent and comprehensive approach to the issue

“The code will provide a basis for industry compliance to ensure that all timber and wood products sold in Australia are from legal sources,” he said.

Mr Pearce said he also endorsed the actions of the Federal Government in making a careful, considered evaluation of the best way forward to curtail the sale of wood products where legality could not be

Big building growth in Victoria VICTORIA’S building industry has experienced significant growth in the value of building permits issued in almost all regions and all building use categories during the first month of the new financial year.

Announcing the latest statistics on Victoria’s building permit activity, Building Commissioner Tony Arnel said the value of permits issued in July 2009 totalled $2.1 billion, an increase of 16% cent from Page 2 | issue 92 | 07.09.09

Tony Burke .. multi-pronged approach to illegal logging.

“Illegally-sourced products not only undermine the wonderful environmental and climate change credentials of wood-based products, but undercut the prices of products from lawful forest operations and trade,” he said.

“I can confirm that NAFI will be continuing to work closely with the Government on this matter and provide whatever assistance is requested.”

Mr Long noted that Minister

$1.8 billion in July 2008.

“All regions, except for Inner Melbourne, experienced growth, with rural areas the strongest. Gippsland, South West, North West and North East all grew by more than 36%t. Total rural building permits issued grew by almost 36%t,” Mr Arnel said.

“When we look at the data for building permit use, hospital/healthcare, public buildings, domestic, industrial and commercial grew 285%, 172%, 14%, 3% and 1%

Keeping the wood legal.

adequately demonstrated.

“Tony Burke is to be applauded for his competent and comprehensive approach to this issue - an issue that has implications for our ongoing relationships with neighbouring countries and important trading partners further afield.”

Mr Pearce said NAFI recognised that implementing a robust policy that would ensure timber and wood products sold in Australia were from legal sources was critical in reinforcing the message that timber and woodbased products remains the building materials of choice.

Burke had been working to put in place bilateral agreements to support the Government’s illegal logging policy.

“He has been able to negotiate agreements with Indonesia, Papua New Guinea and China. This has been no mean feat and he is to be congratulated for his ability to secure such critical agreements,” Mr Long said.

“His diplomacy efforts will assist to improve forest management activity, environmental outcomes and lawful trade with countries in the region that have special relationships with Australia.”

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ifa conference sept 6-10

Forests a ‘fix’for climate change

More than 200 gather for IFA national conference NATIVE forest management is under threat in Australia, the president of the Institute of Foresters of Australia Dr Peter Volker said on the eve of a national forestry conference starting on Queenslands Sunshine Coast this week.

“Forest management is vital to rural and regional economic recovery by providing employment and vital infrastructure such as roads, and an experienced workforce experienced in reforestation and forest restoration,” Dr Volker said.

“There is a threat that we are losing these skills.

“Australian governments at all levels are increasingly focused on achieving large reductions in greenhouse emissions and, as a developed country of the Pacific Region, Australia is committed to assisting developing countries with the impacts of climate change.

“The aftermath of the recent bushfires in Victoria and flooding in Queensland has brought these issues into sharp focus in Australia.

“Foresters are advocating that we should not ignore lessons from the past and that the time for action has come. These disasters have demonstrated that active forest management cannot prevent such disasters but it can mitigate damage.”

The IFA conference from September 6 to 10 has attracted more 200 professional foresters from around Australia and other professionals associated with forest industries, climate

Penelope Wensley .. officially opening IFA conference.

Dr Peter Volker .. adapting forests to climate change.

change, carbon trading and conservation (see Page 12).

Dr Volker said that in an international political environment that was moving rapidly to address previous inaction, the need for rigorous policy development informed by foresters was critical to shaping public and government perception and action.

can provide locally, nationally and internationally to mitigate the effects of global warming. To do otherwise will mean that forestry, and forest industries, will be but

a minor player in determining their future, in this climate of change.”

The conference with the theme, Forestry: a Climate of Change, is being held at the Caloundra Evens Centre and will be opened today (Monday) by the Governor of Queensland Penelope Wensley, AO. Keynote speakers on the opening morning include Professor Roger Stone, University of Southern Queensland, who will outline future climate change scenarios for forest and forest based industries.

• Jolly Medal awarded to Dr Ian Bevege, Page 9.

F O R E S T R Y: A C L I M AT E O F C H A N G E

IFA

CONFERENCE

2009

Topics include: • Climate change scenarios • Climate change impacts and adaptation challenges for forestry • Climate change mitigation opportunities for forestry and forest The venue based industries Caloundra, a premier holiday destination • The changing role of forests on Queensland’s magnicent Sunshine • Reshaping the forestry agenda Coast just north of Brisbane • Promoting innovation in forest The dates management and processing.

6-10 September 2009 Full registration includes: • Keynote addresses from The key speakers well-credentialed forestry and Dr Ian Bevege, Professor Roger climate change speakers Stone, Professor John Innes, Penny • Concurrent sessions featuring over 50 Baalman, Dr David Brand, Kathryn oral papers and poster presentations Adams and Nick Roberts The conference The Institute of Foresters of Australia 2009 Conference - the largest forestry conference in Australia to occur in the next four years

• Climate change and forestry education panel discussions • Diverse eld days and a range of partner day tour options • Welcome reception and conference dinner with rst-class entertainment • Exhibitions showcasing a wide range of forestry services and products.

Day and student registration options available.

Register online att www www.forestry.org.au/conference forestry org au/conf or contact the Conference Manager on +61 8 8125 2200 or email shanna@aomevents.com

“We must provide for sustainable livelihoods from forests, and a rational inclusion of trees and forest products in carbon accounting and emissions trading schemes,” he said.

“We must also recognise how best to adapt forests to climate change and seize the opportunities that forestry

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issue 92 | 07.09.09 | Page 3

promotion

How everyday Aussies are using wood

Sustainable House Day has climate change message ON Sunday September 13, hundreds of people will visit houses throughout Australia to see how everyday Aussies are using wood and other sustainable products to do their bit for climate change.

Forest and Wood Products Australia’s Wood Naturally Better program is sponsoring ‘Sustainable House Day 2009’ to help bring the message of wood and sustainable houses closer together.

“This is a terrific opportunity to highlight the environmental credentials of wood to thousands of people,” FWPA managing director Ric Sinclair said.

“People who attend this event are generally looking for ways to make their

Mr Sinclair said that by educating more people about the environmental qualities of wood, people could make conscious choices about building materials.

Flow-on effect to choices in house construction

Families .. making their houses more sustainable with wood.

houses more sustainable.

They may be looking at extensions on their existing homes, building new houses or retrofitting and renovating old ones.

“We’re really proud to be a sponsor of this nation-wide event because wood plays

such an important role in climate change and many people don’t even realise this. It’s important that we use avenues such as Sustainable House Day to educate consumers on the environmental benefits of wood.”

“This has a flow-on effect to choices such as house construction, flooring, wood panel lining, kitchen cupboards, outdoor deckings and even timber furniture,” Mr Sinclair said.

“It’s all about driving demand for wood products by giving people the right information and knowledge to make educated buying decisions.”

    •  •  •  •  •  •  

 •  •  •  •  •  •  •  • 

 

Page 4 | issue 92 | 07.09.09

     

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events

WHAT’S ON? SEPTEMBER 09

7-10: IFA 2009 Conference – Forestry: A climate of change, The Events Centre, Caloundra, Queensland.Inquires to Shanna Sheldrick or Merilyn Dayman.

Tel: (08) 81252200.

Email: shanna@aomevents.com Visit www.alloccasionsgroup.com 9-11: SawTech 2009 – Sawing technologies to improve mill performance.

Rotorua, NZ. www.sawtechevents.com 13-18: 14th Fundamental Research Symposium, Oxford, UK, Call for papers by October3. abstracts@frc14oxford2009.org.uk 14-16: SawTech 2009. Melbourne www.sawtechevents.com 16-18: World Bioenergy 2009 – Clean Vehicles and Fuels 2009, Stockholm, Sweden. http://www.elmia.se/en/wbcvf/ 16-18: International Panel Products Symposium, Nantes, France. Leading technical conference on wood-based panels focusing on sustainability and sustainable buildings. Provisional program available online.

Call for papers has closed.

Contact conference organiser Caroline Potapa +44 (0)1372 802101.

E: caroline.potapa@pirainternational com

OCTOBER 09 8-9: New Zealand Pine Manufacturers Assn Inc. 19th AGM and conference – ‘Global Storm Clouds: Identifying the Silver Linings’.

Holiday Inn, Wellington.

Tel: +64 3 544 1086.

Fax: +64 3 541 0187.

Email: lawrie@pine.net.nz

8-9: NZ Forest Owners Association/WPA conference.

Seifrieds Winery and Vineyard Conference Centre, Redwood Road, Appleby, Nelson. Inaugural event focuses on global trends, the challenges presented by the current trading environment, and ways to improve productivity, increase energy efficiency and create new marketing opportunities.

Keynote speakers: Minister for Forestry David Carter; Jim Carle, UNFAO; Andre de Freitas, head of FSC International. Register at www.forestwood.org.nz Contact conference manager Kylie Riley.

Tel: 021 300 611.

Email: kylie@forestwood.org.nz 10: Frame and Truss Manufacturers Association national awards dinner. National Gallery of Victoria, Melbourne.

Contact: Kersten Gentle, FTMA Executive Officer 0418 226 242 Web: www.ftmaaustralia.com.au 13: FSC Australia industry breakfast forum. Co-presenters Timber Queensland and WPC Group. Special guest speaker Andre Giacini de Freitas FSC International executive director.

Victoria Park Golf Course, Brisbane.

Contact: Amanda Boyd.

Tel: (03) 8636 2661.

Email: amanda@fscaustralia.org

14: FSC Australia 2nd annual awards dinner. Atlantic at Central Pier, Docklands, Melbourne. Key speaker FSC International executive director Giacini de Freitas.

Contact: Amanda Boyd.

Tel: (03) 8636 2661.

Email: amanda@fscaustralia.org 15-16: FICA Annual Conference 2009, Kingsgate Hotel, Whangarei, NZ. www.fica.org.nz

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16-18: HIA Build Green Expo - Melbourne Convention and Exhibition Centre.

Exhibition and Events Association of Australia. Tel: +61 2 9413 9520.

Web: www.eeaa.com.au

16: Australian Timber Design Awards regional.

Cullity Gallery, Perth. Contact Timber Development Association (NSW) Tel: Laurel Clarke on (02) 9279 2366.

Email: info@timberawards.com Web: www.timberawards.com.au 18-25: XIII World Forestry Congress. Buenos Aires, Argentina. Forestry Department, FAO, Viale delle Terme di Caracella, 00100 Rome, Italy. www.fao.org/forestry/site/18508/en 20: Australian Timber Design Awards regional.

Melbourne Recital Centre. Contact Timber Development Association (NSW).

Tel: Laurel Clarke on (02) 9279 2366.

Email: info@timberawards.com Web: www.timberawards.com.au 31: 2009 Queensland timber industry gala function. World class entertainment and an A-list invite list.

Contact TABMA Queensland (07) 3847 4637 Email: karen@tabma.com.au

NOVEMBER 09 6: Victorian Association of Forrest Industries annual dinner Crown Casino, Melbourne. Guest speaker: Former Chief Commissioner and head of the Victorian Bushfire Reconstruction and Recovery Taskforce Christine Nixon.

Bookings: VAFI, Level 6, 50 Market Street, Melbourne 3000.

Tel: (03) 9611 9000.

Fax: (03) 9611 9011.

SUSTAINABLE. RESPONSIBLE. The National Association of Forest Industries (NAFI) is striving for an ecologically sustainable Australian society achieved through dynamic, internationally competitive forest industries.

NAFI’s mission is to represent the interests of members by promoting the environmental sustainability and the prosperity of Australian forest industries.

National Association of Forest Industries Ltd (Est. 1987) PO Box 239, Deakin ACT 2600 Tel: (02) 6285 3833.

Fax: (02) 6285 3855 Web: www.nafi.com.au

issue 92 | 07.09.09 | Page 5

industry news

re G no ist W er !

Kyoto forestry group applauds NZ ETS decision

Australian Timber Flooring Convention Incorporating the National Timber Flooring Conference & Trade Exhibition

What’s on show • Pre Finished Wood Flooring • Solid Hardwood Flooring • Latest Flooring Trends • Acoustic Treatments • Direct Stick and Floating Systems • Wood Flooring Accessories and Tools • Latest Colours and Finishes • Technical Demonstrations

Who should attend • Floor Sanders • Floor Layers • Builders and Building Specifiers • Retailers • Floating Floor Layers • Timber Merchants • Associations • Distributors • Manufacturers • Flooring Suppliers • Architects • Building Designers

The power of products, people and knowledge all in the one place!

2009

Austr al Floor ian Timbe ing A ward r For fu rther s info rmatio phone n 02 9 GEMS on 744 5252

BrisBane Convention Convention Centre Centre Brisbane Friday, 4th september – 12.00 noon pm Friday, 4th September - 12.00 noon to to 6.30 7.00pm saturday, 5th september – 12.00 noon to 4.00 pm Saturday, 5th September noon 4.00pm FREE exhibition pre registration for visitors available at www.atfaconvention.com.au

To receive the 2009 Conference Registration Brochure Email jmcgraw@gemspl.com.au or visit the official website Association inquiries contact ATFA 1300 361 693 Convention inquiries contact GEMS (02) 9744 5252

CT7395

Page 6 | issue 92 | 07.09.09

THE select committee report recommending that New Zealand pursue an emissions trading scheme as the primary economic mechanism in its response to climate change has been welcomed by the Kyoto Forestry Association (KFA).

KFA spokesman Roger Dickie said the report’s recommendation that international linkages be adopted between a NZ emissions trading scheme and other Kyoto-compliant schemes was also sensible from an economic standpoint and would encourage new forest planting.

Mr Dickie said the committees statement that a price cap in a New Zealand ETS could create a negative incentive for post-1989 forest investors in particular, was also a positive signal for new planting.

The report says the Kyoto Forestry Association has always maintained that a price cap would be a huge disincentive for new forest planting and it is encouraging to see that while the report canvasses a short-term price cap it is not supported by the Labor, Maori, ACT or Green parties.

However, in the long term, price caps stand in the way of market development and shield business from the real price of carbon to the economy, says the report. If a short-term cap is introduced a clear exit strategy is critical for maintaining

Roger Dickie .. price cap huge disincentive for new forest plantings.

market confidence and development.

Mr Dickie said any price cap, even a short-term one, would be a disincentive to new forest planting because it sent a message to forest investors that government was capable of manipulating the market at any time.

This is not a signal that gives confidence to a long-term forestry investor, he said.

The report recommends that certainty for the forestry industry be legislated for as soon as possible to ensure further planting is not inhibited.

Mr Dickie said that while this statement was encouraging, it was probably now too late for seed to be planted in time to provide the seedlings for a significant planting program next winter. He said the importance of forestry should not be underestimated by the New Zealand public in regard to the country meeting its Cont Page 8

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industry news

Treasury gets it wrong

Forest asset sale not off to a good start PEAK industry body Timber Queensland refutes Treasurer Andrew Fraser’s recent assertion that the plantation processing industry is posturing in the lead up to the sale of Forestry Plantations Queensland by highlighting concerns with supply contracts allowing the state-owned company, which holds monopoly supply powers, to set any price it likes for the plantation resource.

Timber Queensland CEO Rod McInnes said the Treasurers further assertion that Queensland’s plantation processors were likely purchasers of the plantation resource [i.e. FPQ] was also wide of the mark.

“The major processing companies in Queensland’s $2.4 billion timber industry haven’t indicated any interest in purchasing the forestry asset. In fact, those few companyies that might be in a position to acquire the asset have specifically said they were not planning to bid,” Mr McInnes said.

“The Treasurer’s statement is a smokescreen to avoid having to deal with the commercial intransigence of the current operators, a 100% state-owned company.

“Industry has been trying for two years to have the royalty (price) decision subject to a merit review by arbitration, a

Andrew Fraser .. challenged on FPQ activities.

but are reluctant to do so with no rights to ensure a fair price for their raw material.

“The Government’s response is to sell the plantation assets, yet while they try to sell they have left the activities of their current managers unchecked, perhaps in the mistaken belief that their current commercial activities will somehow increase the value of the asset.

“Well, we think they are sadly mistaken.

Multinational companies who have contacted Timber Queensland inquiring about our plantation processing industry have been horrified to learn of the commercial activities of FPQ and the deteriorating relationship with its customers.”

The forest asset sale is not off to a good start.

Gala awards night for FTMA Rod McInnes .. Treasurer’s statement a smokescreen.

fair and reasonable process which is vigorously opposed

by FPQ and supported by their responsible ministers proving FPQ and the State Government are neither fair not reasonable with regard to this issue.

“With welcome signs of market improvement increasing timber demand, processors are looking to increase production and employment and invest in new processing capability

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THE Frame and Truss Manufacturers Australia national awards dinner on October 10 promises to be a night to remember, says FTMA executive officer Kersten Gentle.

“The event at the National Gallery of Victoria’s Great Hall features good food, plenty of refreshments, outstanding entertainment while recognising the excellence and innovation within our industry,” she said..

Marty Fields will MC the dinner and premier party

band The Baker Boys will entertain from the happy hour to the end of the evening.

Awards will be presented for manufacturers (small, medium and large), best state manufacturer, national winner, innovation, supplier of the year and a national training award.

“70 tickets have already been pre-booked so early registration is recommended,” Kersten said.

Inquires to Kersten on 0418 226 242. issue 92 | 07.09.09 | Page 7

industry news

Certainty for NZ forests must be legislated: report

Building confidence in forest investment.

From Page 6

international emissions targets.

Each hectare of Kyoto compliant forest can sequester 25-plus tonnes of CO2 per annum; if 1 million ha of forest was planted by 2020 then 25 million tonnes of CO2 per annum could be sequestered shortly after 2020.

New Zealand averaged 65,000 ha of new forest plantings a year from 1992-99

Mr Dickie noted that in 1990 New Zealand had net annual emissions of 44 million tonnes.

Now we have about 55 million tonnes and by 2020 the Government would like our annual net emissions to Page 8 | issue 92 | 07.09.09

be no more than 40 million tonnes and preferably less.

Mr Dickie said that in the eight years from 1992 to 1999, New Zealand achieved an average of 65,000 ha of new forest planting per annum and almost all of this was funded by private investors.

In the peak years, 84,000 ha and 98,000 ha were planted.

This would imply that with the right incentives the planting of 1 million ha in 11 to 14 years was quite achievable.

The KFA represents the more than 30,000 ordinary New Zealanders and forestry companies who each year risk more than $100 million of their own capital to invest in 250,000 ha of New Zealands 570,000 ha Kyoto forestry estate.

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awards

IFA’s Jolly Medal to Dr Ian Bevege Presentation at conference RESPECTED forester Dr Ian Bevege of Batemans Bay, NSW, has been awarded the Norman W. Jolly Medal, the Institute of Foresters of Australia’s highest and most prestigious honour for outstanding service to the profession.

He will be presented with the award by IFA president Dr Peter Volker this Thursday at the IFA national conference in Caloundra.

Dr Bevege (BSc For Hons (Qld), PhD (UNE), Dip For (Canberra)) studied forestry at Queensland University and the Australian Forestry School Canberra as a Queensland Government Fellowship holder (19571961).

He retired in 2002 after 30 years in professional forestry in Queensland and New South Wales and 15 years in overseas aid management.

He was a recipient of the Schlich Medal of the Australian Forestry School (1961), the Hedges Prize of the IFA (1965) and of the IUFRO Scientific Achievement Award (1981).

Dr Bevege spent five years (1967-71) on post-graduate research under scholarships from the Rural Credits Development Fund of the Reserve Bank and Nuffield Foundation respectively, at the University of New England Armidale and CSIRO Division of Soils Adelaide on nutritional physiology and mycorrhiza of Araucaria.

His last domestic forestry appointment was as chief, wood technology, at the

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NSW Forestry Commission’s forest research division (1982-86).

From late 1986 until mid 1991, he was an Assistant Director General with the Australian International Development Assistance Bureau (now AusAID) the organisation responsible for delivering official Australian overseas development assistance.

From 1991 until retirement in 2002 he was principal advisor with the Australian Centre for International Agricultural Research (ACIAR) leading the team that established the Centre for International Forestry Research (CIFOR) in Indonesia for the Consultative Group on International Agricultural Research (CGIAR).

He served as a director of the Forest and Wood Products Research and Development Corporation from 1997-2000 and on the selection panel for the Scientist Assistance Programme for the IUFRO XXII World Congress in Brisbane in 2005.

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issue 92 | 07.09.09 | Page 9

industry issues

NZ must clear roadblocks to foreign investment in forest, wood industries

Challenge to Government to re-ignite growth THE New Zealand Ministry of Agriculture and Forestry (MAF) is holding workshops with selected industry and regional groups to both gauge the pulse of the industry as well endeavouring to ascertain what Government, and MAF in particular, can do in order to ensure the industry realises its full potential.

This follows the recent release of MAF’s Forestry Sector Study (FSS).

At a recent MAF workshop, the executive council of the NZ Pine Manufacturers Association, rather than give the politicians a list as long as your arm, determined there was more chance of a listening if only the critical roadblocks were identified – and then stand back and see what capability (and inclination) government has to deliver.

The question posed by MAF – how can government help? – didn’t take too long

Page 10 | issue 92 | 07.09.09

to answer! If New Zealand’s future prosperity rests upon a strong exporting community, then government needs to quickly implement strategies that will lead to a relatively stable economy.

The major factor that has held the NZ forest and wood products industry back is a lack of investment in wood processing and manufacturing capacity. It would seem that if you have international choices then it is unlikely that investment dollars will come New Zealand’s way. This has been borne out by a recent ranking of New Zealand as a FDI [foreign direct investment] destination; it is among the most lowly ranked of the OECD countries.

For the forest and wood products sector to grow it must have investment and because of the quantum involved, the bulk of that money will need to come from offshore.

By

LAWRIE HALKETT Chief Executive New Zealand Pine Manufacturers Association

The NZ Government must address the reasons why and then set about unlocking this roadblock to re-ignite growth. One of the factors turning investors away is the volatility in the NZ economy.

That means a job for Treasury. The volatility in the dollar, which for an exporting nation like New Zealand, is proving very detrimental

to growth and the overall economic welfare.

Industry suggestion: have New Zealand move to a US dollar economy.

The alternative, as the current Government knows only too well, is that without stability and the implementation of appropriate financial mechanisms people (international investors) would rather invest in seaside properties, than in processing, manufacturing and exporting businesses.

The next question put by MAF was “is there anything MAF can do to give industry a leg up?” This was a harder question to answer, but in the end the executive council considered a benchmarking exercise might be a useful.

There are some really successful organisations working in the primary sector – dairy, horticulture and wine – that are internationally competitive. A comparative Cont Page 11

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industry issues

Most NZ wood products destined for overseas Issues are tariffs, trade barriers and shipping costs From Page 10

study against these sectors may lead to some serious contemplations by our sector. Over the last 10 years forest and wood product exports have stalled, and despite increasing harvest levels annual forex earnings have sat on $3 billion.

The suggested bench marking study could then be placed in the hands of Woodco, the industry peak body, to see whether its current strategic plan needs some life-saving reconstructive surgery.

In addition to seeking ideas on direction by Government and MAF, feedback was also sought on the key drivers that underpinned MAF’s FSS report.

MAF saw the drivers as being: • Forest is more than wood – growing recognition for biodiversity and habitat values, mitigation of erosion, improved water management landscape and recreational values and (possibly) carbon sequestration/emissions offsetting values.

• Changing lifestyles –

different population so we’re possibly looking at a population by 2026 of about 4.75 million, of which 0.9 million will be under 15, 1.5 million are in the 15-39 year age grouping, 1.45 million in the 40- 64 age group and 0.9 million will be 65+.

• Energy – interest in consumption and costs, use of biomass to reduce carbon footprint, transport.

• Markets are overseas – domestic market currently consumes about 6 million cub m (RWE) per annum, the current harvest is 20 million cub m pa and the national harvest is projected to rise to 35 million cub m over the 20 years of the discussion.

So MAF’s view is that regardless of development of new local products and markets most of New Zealand’s wood products are destined for overseas.

So the issues are market globalisation, tariffs, and barriers to trade etc., shipping costs (given where NZ is and where markets are), exchange rates, sustainability, international links and product

for company and industry growth and success. The three most important things for our industry to prosper are: profitability, stability and trade.

• Rather than call it ‘markets and overseas’, just call it ‘markets’. There is also a very large growth potential in the NZ domestic market; BRANZ has already suggested timber could, without too much trouble, take 25% of the non-residential market.

In addition with research consortias like the Structural Timber Innovation Company, this percentage could well increase. New Zealand’s non-residential market is a $6 billion dollar business..

• Energy / carbon are also important drivers – ranked third.

• The other three FSS drivers can be wrapped into one, and in priority feature in fourth place.

All in all, MAF are to be congratulated on their FSS effort, and especially their desire to constructively engage with industry to identify where perhaps they can lend support.

Large growth potential in the New Zealand domestic market.

knowledge.

• Resource – what’s already planted, its genetics, the silviculture that has been employed, the ownership patterns (growing importance of small scale forest owners and of Maori), the existing industry and its demands/ supply agreements The Pine Manufacturers Council considered these drivers far too forestrycentric; not surprising as MAF’s thinking rarely ventures outside the forest gate.

Council considered the key drivers to be: • Profitability: there is no discussion in the FSS report on this critical factor

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issue 92 | 07.09.09 | Page 11

IFA CONFERENCE SEPTEMBER 6-10

Capturing the value of R&D

Strategies for the forest and wood products sector

DOES the forest and wood products sector in Australia have an industry strategic plan to identify where it wants to be in 5-50 years and what R&D, promotion and marketing does it need to get there?

Such challenging questions and opinions will be presented to the IFA national conference on Queensland’s Sunshine Coast this week in a keynote address ‘Capturing the Value of Innovation – R&D for Forest and Wood Products Industries’ by Kathryn Adams, a director of Forest and Wood Products Australia and Australian Forestry Standard.

There have been some sector-based approaches to this question, including the Plantations 2020 Vision and Forest Research Strategic Directions 2008-2011, but Ms Adams says neither of these really provide an industry-driven, integrated approach to a strategic future which would provide a firmer base for decision making.

“If the Australian forest and wood products sector could develop this sort of strategic framework, it could be used for a range of purposes, but would be particularly useful for organisations such as FWPA when developing investment priorities,” Ms Adams says.

“To be successful, such a strategy needs the CEOs within the industry to engage and drive the strategic direction; it cannot be driven by researchers or industry association staff. They may have the ideas for innovation Page 12 | issue 92 | 07.09.09

IFA conference under way MORE than 200 delegates are in Caloundra on Queensland’s Sunshine Coast this week for the Institute of Foresters of Australia national conference.

The conference – Forestry: a Climate of Change – will be opened today (Monday) by the Queensland Governor Penelope Wensley, AO. The IFA is a professional body with 1350 members engaged in all branches of forest management and conservation.

Membership represents all segments of the forestry profession, including public and private practitioners engaged in many aspects of forestry, nature conservation, resource and land management, research, administration and education.

In one of a number of papers advanced

but the companies, at a senior level, must provide the strategic commercial direction and market drivers for R&D focus.

“This is easier said than done as market forces change rapidly and response time, particularly in the tree growing area, is long. CEOs often do not have the luxury of time to focus on industry wide strategies and where they do they need to be cognisant of Trade Practices Act restrictions.

“Once a strategic direction has been developed and the broad areas for research

Kathryn Adams to Timber & Forestry enews, Kathryn Adams presents her personal opinions of research and development. Ms Adams is a lawyer and agricultural microbiologist and a senior research fellow with the Australian Centre for Intellectual Property in Agriculture. She holds Masters degrees in Law, Environmental Studies and Business and is a Fellow of the Australian Institute of Company Directors.

investment have been outlined, researchers and investors can take a marketbased approach to project development by asking what research is needed to meet industry market expectations?

In her keynote address, Ms Adams also questions whether industry is making the best use of information already available.

“One aspect of industryfocused R&D that always troubles me is whether we are duplicating what has happened in the past and whether we are making the

best use of the information already available,” she says.

“Good practice for any research project dictates that there be a literature search before a new project is started to ensure that the wheel is not being reinvented or impinging on someone else’s intellectual property.

“I don’t know that this is done particularly well.

“The other aspect that bothers me is whether all the information in final reports for projects undertaken over the last 10 years is being used as well as it could be.

When you see the number of reports produced and the little time that is given to reviewing them, particularly by industry, then I think we should stop where we are for 6-12 months and review/ analyse these existing reports to see what we could use and what would be needed to make the outputs more usable – just in case we’ve missed something.”

Ms Adams says capturing the value from investment in R&D is not always easy.

“There is a general rule of thumb that says only about one in 100 projects will yield results that get to commercial pilot stage and that, maybe, one in 1000 will actually get to market and make money.

“These figures differ depending on the proximity to market, the complexity of the innovation and the level of change that is required in an operating business to implement the innovation.

“For example, if a whole new Cont Page 13

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IFA CONFERENCE SEPTEMBER 6-10

Review of reports, just in case we’ve missed something From Page 12

processing line is required and the existing one still has 20 years of life, then the value add of the new line will need to be considerable.

However, if the innovation can be readily integrated into the existing system, then the likelihood of more immediate change is much greater.”

In 2007, Agtrans completed a cost benefit study for FWPA which showed that for the 36 completed projects in the sample there were a range of quantitative and qualitative benefits.

The weighted average benefit at 5% discount rate, using 2005-6 dollars, was 11:1 – ie $11 benefit for every $1 invested in R&D. Similarly, the combined rural R&D corporations/companies (RDCs) have just completed a joint cost-benefit analysis across a range of their programs. They too found a return of about 11:1 from 32 randomly selected projects rated across their combined portfolio.

In addition, a cost benefit analysis was done on 36 projects rated as ‘highly successful’ across the 15 RDCs. For a total $465 million investment ($265 million from RDCs plus $200 million from partners including the Australian government), the value added was $10.5 billion (22:1) being $5.5 billion in direct industry benefits and $5 billion in other benefits (eg environmental and social

benefits).

The project was undertaken by seven independent consultant groups and the methodology was reviewed by a number of key economic development agencies including Treasury, Department of Finance and Deregulation, Department of Agriculture Fisheries and Forestry, Productivity Commission, and the Australian Bureau of Agricultural and Resource Economics.

In the project summary report, it was noted that: ‘The returns attributable to the RDCs’ $265 million investment – $5.9 billion – will more than pay for the entire $4.5 billion invested

by RDCs across 600 projects over the past 10 years’.

“These types of analyses are undertaken by most rural RDCs, CRCs and others who invest in R&D and innovation both in the private and public sector.

For both FWPA and the RDC model in general, this is an excellent result and these analyses are a valuable tool in assessing the potential return on R&D investment,” says Ms Adams.

“However, for the forest and wood products sector, where the R&D effort is fragmented, the question has to asked as to whether there may be ways of improving this return even further by placing more emphasis on simple principles that are included in the current Cont Page 14

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issue 92 | 07.09.09 | Page 13

IFA CONFERENCE SEPTEMBER 6-10

Identifying investment priorities Bringing focus back to end user-driven R&D From Page 13

investment processes but where companies, investors and researchers could place more emphasis.”

In her presentation, Ms Adams looks at whether there are some more basic steps that can be taken to improve the usability and value add of R&D outputs.

She focuses on research programs that are for the benefit of an industry and the Australian community and are not company specific; for example where a group of interested partners are investing jointly eg through FWPA, CRCs, Joint Ventures.

Ms Adams concentrates on the industry benefits in particular, while recognising that joint funding with government also requires community benefits. She highlights the need for more commercial engagement, on the basis that the government is managing its investment to ensure that the community benefits are achieved but industry investors and levy payers at senior levels need to pay more attention to the benefits their investment in R&D is providing. “Where a company is investing directly in R&D for its own benefit, it will take a close interest in the direction and progress of the project,” says Ms Adams.

“Where there is more than one investor, the specific benefit to each one is a little further removed and responsibility for the success of the investment can become diluted the greater Page 14 | issue 92 | 07.09.09

the number of investors. It is then left to the researcher, an industry association or the coordinating organisation to do their best to interpret what they think the end users want.”

To help bring the focus back to end user-driven R&D, Ms Adams has built a simple framework based on eight fundamental questions to be asked by those identifying investment priorities and preparing and assessing investment proposals: • What R&D should we be investing in, or from another perspective, why are we investing in this research?

• What outcomes/impact do we want to achieve as a result?

• Who will use the outputs to achieve these outcomes?

• How will the outputs be used?

• How is industry ‘usability’ monitored during the project?

• How is intellectual property identified and managed to maximise benefits to industry?

• Are we making the best use of the information already available in this area?

• How to we design a project to achieve the outcomes and address each of the above issues?

“The effectiveness of this approach depends on how seriously those assessing the proposed investment are in requiring complete and substantiated answers.

Focus on outcomes rather than inputs can result in much more directed investment and more usable, value-

The IFA conference is being held at Caloundra from September 6 to 10. Major sponsors include Forestry Plantations Queensland, Forest and Wood Products Australia, DERM Forest Products, Australian Plantation and Paper Industry Council, CSIRO, Forests NSW, Timber Queensland the Department of Agriculture, Fisheries and Forestry, Proptec and Jiffy.

Industry investors and levy payers at senior levels need to pay more attention to the benefits their investment in R&D is providing.

adding outputs for the end users,” says Ms Adams.

For further information contact the conference manager, Shanna Sheldrick, All Occasions Management.

Tel: +61 8 8125 2200. Fax: +61 8 8125 2233 Email: shanna@ aomevents.com or visit the website at www.forestry.org. au/conference

Consumers will help solve illegal logging FINDING a solution to stop the supply of illegally logged timber into Australia is a difficult task but not insurmountable says Timber Queensland.

Chief executive Rod McInnes said legal and sustainable forest management practices had significantly improved worldwide since the introduction of forest management certification schemes in the early 1990s.

“Clearly there is a long way to go and certification schemes alone can’t stop illegal logging – government intervention is required,” he said.

“Industry is looking at introducing a code of conduct to exclude illegal timber from the supply chain, but Forestry Minister Tony

Burke needs to implement an official solution.”

Mr McInnes said consumers would play a major role in combating the importation of illegal timber.

“The basic principles of demand and supply come into play here; the greater consumer demand for timber products that can be proven as coming from legal and sustainable forests, the less illegally logged timber will be sought out, imported and sold,” he said.

“Timber Queensland encourages all business involved in growing, processing and supplying timber to ensure they can prove their products are made from legally certified timber.”

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issue 92 | 07.09.09 | Page 15

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