The Joint Venture Agroforestry Program (JVAP) commissioned research to investigate what policies it will take to create a viable, self-supporting, plantation based, farm forestry industry in Australia. The project reviewed the Policy Reforms for Agroforestry following the work by the National Plantations Advisory Committee and the announcement of the Wood and Paper Industry Strategy in December 1995.

The major outcomes of the study, which identifies impediments and suggests policy actions to overcome the identified concerns, are listed below.
The research was commissioned at a time of rapid change, and some of the policy reforms identified by the research were adopted by governments during implementation of the research.
 

Summary of findings

• explicit policies which define their involvement in forestry generally, and specifically clarify their roles in relation to farm forestry;
• adherence to competition principles in the forest sector – ensuring that publicly owned forestry enterprises do not compete unfairly with private forestry;
• transparency and accountability through independent scrutiny of their practices and policies;
• confidence amongst growers and investors in regulatory and planning arrangements;
• ongoing investments in the innovation processes needed to accelerate farm forestry development, including sponsoring strategic and applied R&D;
• assistance for industry initiation with scheduled withdrawal when private enterprise is ready to take on the commercial and further development roles; and
• the formulation and implementation of cost-sharing arrangements based on a fair split between public and private costs and benefits.

What are the general impediments?

Residual culture of blame
Continuing to shunt blame between various parties about the farm forestry sector and state of the industry will fail to achieve useful outcomes. While the role of governments is crucial, industry, landholders and investors must also show a willingness to advance the opportunities.

Governments need to adopt a coherent reform agenda
Numerous factors such as log-pricing and the fragmentation of responsibilities across the spheres of government and between agencies continue to hinder farm forestry development. While communication and cooperation are crucial, fundamental clarification of the role of government is necessary as the basis for institutional and structural reforms. Governments have made unambiguous commitments to competition policy. The resultant reforms to State government forestry operations should benefit farm forestry. However, the wood processing industries must be weaned off any residual expectation that it is government’s responsibility to guarantee a supply of cheap and abundant raw materials.

Recognise regional diversity and transfer best-practice solutions
Different regions have vastly different historical, cultural, policy and physical circumstances affecting farm forestry. Generic or national approaches to farm forestry investment are unlikely to succeed. Therefore, regionally developed solutions will be required in some cases, but many best practices and simple solutions could be applied nationally. Solutions developed in one region can be transferred into other regions with similar problems.

The JVAP research suggests that the Ministerial Council for Forestry, Fisheries and Aquaculture, or its Standing Committee on Forestry, should examine the potential for transferring best practice in farm forestry policy so that proven solutions can be applied nationally. High priority should be given to implementing a standardised approach to land-use planning and tree-tenure legislation. The Tasmanian Private Timber Reserves system should be examined to see if it can act as a model.

On-going need for simple networking tools
National programs such as the Commonwealth Farm Forestry Program and the Joint Venture Agroforestry Program should invest in simple communication and networking tools to fulfil the widely dispersed need for easy access to information on farm forestry. There is a clear need for a farm forestry directory available in both hard copy and electronically, e.g. on the World Wide Web. A directory would give rapid access to information and would support regional plantations committees so they don’t each have to reinvent the mechanical tree planter or wood-flow planning methodologies.
 

What are the forest grower and industry impediments?

Develop a critical mass to improve representation of farm forestry interests
Forest debates are dominated by major players corporate processors, industry associations, other lobby groups, and government agencies. Non-industrial, private growers feel disenfranchised because they believe that major policy decisions continue to be made in ignorance or neglect of their concerns and of the opportunities that private and farm forestry offers. It is important that growers and enthusiasts develop a critical mass through joining or supporting the existing organisations which have proven capable of formal advocacy, such as the Australian Forest Growers (AFG) and the Tasmanian Farmers and Graziers Association.

Cultivate independence and galvanise interest into self reliance
To create persistent structures, project managers such as Regional Plantation Committees, and funding agencies must focus beyond the “grant horizon”. The creation of State organisations such as Forest Grower Associations, which are administratively distinct from the large forest or resource management agencies, is generally supported by those involved in farm forestry because of their capacity to put farm forestry at arm’s length from the politicised nature of many forest management decisions.

Marketing efficiencies for small forest growers
An undue reliance on government will impede the development of farm forestry and maintain the expectation that timber growing is mainly a government responsibility. A willingness by growers and industry to organise in ways which recognise each other’s needs is crucial. Appropriate ways of apportioning and sharing the risks intrinsic to forestry production need to be transferred into commercial practice. Methods of organising numbers of small forest growers in ways which achieve economies of scale and bargaining power require further development, but cooperatives, market brokers and other joint venture arrangements are already being trialed successfully in Australia.
 

What are the policy and legislative impediments?

A clear set of principles is needed to inform government involvement. These must allow for the differentiation of the public and private goods to be gained from farm forestry.
Achieving the supporting or enabling policy environment in which farm forestry flourishes could be considered a test case of the usefulness of the various national policies on sustainable land use and rural industry development.

The forestry profession, and the State government agencies responsible for forestry may be a source of the inertia slowing farm forestry in Australia, where there is a conflict of interest between large-scale, public sector forestry and farm forestry. The culture of change - both institutionally and silviculturally - in State government agencies is starting to reduce the conflict of interest. The State agencies not only provide most of the advice to governments on forest policy and management but also carry out forest policy and manage sizeable forest-growing enterprises. The potential for conflict of interest still remains.

The relationship between the forest industries and the State forest and plantation agencies is established to such an extent that it could be described as mutually co-dependent. Professional cultures or guild connections are likely to remain a powerful influence despite recent attempts to separate responsibility for forest policy and forest management. This is an natural result of a specialised profession which sources its members from a small number of training institutions and has a strong culture of self reliance. Increasing use of multi-disciplinary teams to solve complex problems including socio-economic and marketing issues as well as wider ecosystem needs is helping reduce this problem.

The political dynamics of the sector could change as a result of vocal, independent growers who regard the States as one of their competitors. The emergence of organised growers combined with increased public sector scrutiny in the era of competition policy could threaten the interests currently served by the existing institutional and professional paradigms.

Key findings of the JVAP research relating to policy and legislative impediments included:

Need for an holistic approach to trees in the landscape
Policies are required which specifically recognise private forest management issues. In regions with sizeable areas of native forest in private ownership (Tasmania, NSW, WA and Queensland) the lack of a coherent approach to commercial private forestry – whether native or planted – tends to confound farm forestry. The importance of privately managed native forests must be recognised and governments must be willing to broaden the focus of their programs even if this results in some controversy. A strict focus on planted trees on farms or plantation forestry obscures other possibilities for wood production including improved management of private regrowth forests, or strategies to sponsor natural regeneration.

The lack of uniform tree-tenure legislation
A uniform national approach to the introduction of simple and effective tree-tenure legislation and systems which guarantee rights to harvest will do much to overcome concerns about security and tenure held by growers and investors.

Need to broaden the focus of plantation policy
Suitable locations for industrial-style plantations are or will be determined by biophysical conditions (soils, climate) and distance to export or processing facilities. In addition to these physical factors, the attractiveness of a country to international investors is determined by a wider range of considerations including sovereign risk and taxation regimes.

Recognition of the limits to industrial plantations
Integrated farm forestry is substantially different from industrial plantations and therefore requires a different policy approach if the nation is to realise the opportunities available. Industrial plantation monocultures have traditionally been established for the singular, legitimate goal of maximising wood fibre production for industrial use. In the diversity of potential farm forestry situations there are limits to the appropriateness of industrial plantations and this should be recognised.

Need for consistent approaches to land-use planning and regulation
The use of local government land-use planning powers to control farm forestry is a major problem in all States except Tasmania, where the Tasmanian Private Timber Reserve System provides a degree of security for growers. There is also a need for consistent codes of practice for private and public forest growers. There is a widespread view that farm forestry should be treated consistently with other agricultural land uses. Imagine requiring a local government planning permit to plant potatoes or peach trees!
 

What are the investment and competition impediments?

Regulation of forestry investment schemes
The reputation of private forestry has been tarnished by the history of poorly conceived and poorly regulated investment schemes. Some investors continue to be lured into forestry projects which have outrageous cost structures or unrealistic promises of growth and wealth. The Australian Securities Commission should work intensively on the regulation of forestry investment schemes in order to overcome Australia’s poor reputation for the regulation of investment forestry.

Linking land, skills and capital
Improvements in the range of investment pathways suitable for farm forestry are needed. Simple and effective investment vehicles would facilitate the linking of land, skills and capital. The current range of commercial arrangements between growers, industry and investors offer possibilities including land leases, annuities, and joint ventures. Even with this diversity the three most frequently stated commercial needs of small growers were:

• ways to ensure that fair market prices are being paid;
• ways to overcome the current lack of liquidity associated with plantation investments such as greater flexibility in trading immature plantations; and
• the creation of off-the-shelf investment vehicles designed for linking investors directly with growers.

Standard accounting for forest agencies
Accurately assessing the capital values, and hence rates of returns achieved from State forests and plantations used for wood production remains a significant issue. It has major ramifications for the competitiveness of private forestry and should be resolved as soon as possible. Attempts to determine the competitive neutrality of government forestry activities will be meaningless unless meaningful accounting principles are established and adhered to.

Need for competitive markets
The structure of the processing and exporting industries, dominated by a few major players who are often both major wood producers and buyers of government-grown wood, does little for the confidence of the small grower. Creative mechanisms may be needed to introduce market-based pricing and competitive allocation systems. The effects of major reforms on these issues must be fully considered. For example, it is important that the privatisation of State plantations does not entrench problems of regional monopolies.

Competitive neutrality and independent auditing
Application of National Competition Policy (National Competition Council, 1997) has the potential to resolve growers’ concerns about the dominance of the State agencies or public corporations as log suppliers. Attempts to introduce competitive neutrality into State-owned forest and plantation services are still so new that it is not possible to know whether they will overcome private growers’ fears. Reforms begun to meet competitive neutrality goals should be communicated widely.
 

How do farm forestry impediments vary between regions?

• transparent pricing;
• distorted log markets (not applicable for WA Esperance);
• lack of market for environmental services (medium priority for NSW);
• facilitating external investments (medium priority for WA Albany);
• legislated tree-tenure (low priority for Tasmania); and
• scams and poor investment record (low priority for WA Esperance).

Who is primarily responsible for overcoming impediments?