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The
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Report
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No. 65: What’s happening in the farm forestry market?
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The report can purchased online from the RIRDC's catalogue at www.rirdc.gov.au/pub/cat/contents.html (under Agroforestry Program) The Market Report is published
quarterly and distributed by various means, including as inserts to publications
such as Australian Forest Grower, Agroforestry News and the Australian
Farm Journal. It is also available on the internet at: http://www.anu.edu.au/Forestry/info/marketreport
For more information contact: U.N. Bhati, Department of Forestry, Australian
National University, Canberra ACT 0200; Ph (02) 6249 2579; Fax (02) 6249
0746;
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A lack of market information from independent sources has long been recognised as a major impediment to farm forestry in Australia. For example, farm foresters complain that the lack of reliable information on log prices diminishes the chance of obtaining a fair price for their products. Prospective growers ask ‘How can I invest in farm forestry when I don’t know what the prices are now, let alone in 20 years time?’
To address this lack of information, the Department of Forestry at the Australian National University set out in 1997 to establish a regular national market report for farm forestry. The objective was simple: to contribute towards creating more informed and transparent forest products and input markets in Australia, particularly for small-scale growers. Eight editions of the report have now been published (up to and including June 1999), the previous four with funding from the RIRDC/LWRRDC/FWPRDC Joint Venture Agroforestry Program. This Short Report collates all eight editions.
Methodology
The project obtains information from a wide range of sources, including the Australian Bureau of Statistics, the Australian Bureau of Agricultural and Resource Economics, state and territory forest agencies, industry organisations, consultants, a network of informed farm forestry practitioners and advisers, and international organisations. A concise analysis of the information is then prepared; this in turn is reviewed by a range of specialists before publication in the report.Topics covered to date include:
• structural timber prices (September 1997);
• pulplog prices (December 1997);
• log and agricultural product prices beyond 2000 (March 1998);
• the cost of tree seedlings and cuttings (June 1998);
• stumpage (September 1998);
• log exports (December 1998);
• the cost of log transport (March 1999); and
• woodchip markets and prices (June 1999).
Recent editions of the report have also included stumpage information obtained directly from small-scale growers via a distributed questionnaire. Such information is presented in the form of case-studies giving:
• the month and year of the log sale;
• the region where the logs were harvested;
• log type, grade and species; and
• where possible, other details that might influence stumpage prices such as distance to mill or wharf and the volume of logs harvested.
Feedback to the project suggests that this information is highly valued: some growers say it has enabled them to negotiate better prices for their own logs.
Abbreviations ABARE Australian Bureau of Agricultural and Resource Economics
ABS Australian Bureau of Statistics
AFFA Agriculture, Fisheries and Forestry – Australia (Commonwealth Department of)
AFG Australian Forest Growers
ANU Forestry Department of Forestry, The Australian National Universitycu. m cubic metre
FWPRDC Forest and Wood Products Research and Development Corporation
ha hectare
JVAP Joint Venture Agroforestry Program of RIRDC/ LWRRDC/FWPRDC
km kilometre
LWRRDC Land and Water Resources Research and Development Corporation
m3 cubic metre
N-C north-central
N-E north-east
NAFI National Association of Forest Industries
NSW New South Wales
PFCV Private Forestry Council of Victoria
RIRDC Rural Industries Research and Development Corporation
S-W south-west
t tonne
Tas. Tasmania
WA Western Australia
Woodchip markets and prices - Market Report 8 June 1999
A considerable proportion of Australia’s total commercial log output is first converted into woodchips. Hence it is useful for growers to stay informed on woodchip issues. This report outlines woodchip markets and trends in woodchip export prices. It also gives stumpage recently received by small scale growers for a variety of logs.Woodchip markets
Pulplogs and sawmill residue (offcuts of saw and veneer logs) constitute raw material for woodchips. The predominant use of woodchips is for making paper and wood based panels such as medium density fibreboard.At present, there is market for only a part of the total volume of pulplogs and sawmill residue available in Australia. The available volume is expected to increase with expansion of plantations and softwood sawmilling.
According to ABARE, Australia harvests 10 million cubic metres of pulplogs and processes 3 million tonnes of sawmill residue a year. Forty per cent of the pulpwood is sold domestically for making pulp for paper and wood panels and 60 per cent is exported mainly as woodchips.
The production capacity of pulp and wood panel mills in Australia puts an upper limit on the domestic market for pulpwood. Events such as the closure of the pulp mill in Burnie reduce the domestic market for pulpwood. But nationally, the reduction will be more than offset by developments such as the proposed pulp and paper mill in Tumut.
Despite such expansions, the latest ABARE projections by Graham Love and colleagues suggest that Australia will continue to have a growing surplus of pulpwood for export, chiefly as woodchips.
Ninety-nine per cent of Australia’s total woodchip exports go to Japan—the world’s largest importer of woodchips.
During 1996 to 1998, average annual imports of woodchips by Japan, from all countries, totalled approximately 7.3 million tonnes (green) for softwood chips and 20.7 million tonnes (green) for hardwood chips.
Australia’s share of the Japanese softwood chip import market increased from 25 per cent in 1996 to 35 per cent in 1998. Australia also gained market share in the hardwood chip segment, increasing from 25 per cent in 1996 to 29 per cent in 1998. Scope exists for further increases in Australia’s share of the market.
Woodchip export prices
Based on ABS data, figures A and B present monthly ‘free on board’ (f.o.b.) prices of Australian woodchip exports.They show hardwood chip prices were above the softwood chip prices. Average price in 1998 was $69/t (green) for softwood chips and $78/t (green) for hardwood chips.
The export prices have trended downwards recently. Between the last quarter of 1998 and the first quarter of 1999, the quarterly average prices fell by 6.5 per cent for softwood chips and 1.3 per cent for hardwood chips. The fall in prices would, however, vary regionally.
The export volumes and prices in 1999 may remain below the 1998 levels. This is because, first, there has been a build up of stocks of paper in Japan; and second, the Japanese consumption of paper in 1999 may stay low due to the country’s continued depressed economy. Assuming woodchip export prices partly determine stumpage, then the growers who sell pulplogs to export chip mills in 1999 may also receive low stumpage. (Stumpage means the price of wood in a standing tree.)
Stumpage case studies
Based on the data collected by ANU Forestry, Table 1 presents actual stumpage received by small scale growers for various types of logs. As the information is insufficient for deriving averages and trends, it is presented in a case study format. Growers should exercise due care in using it for assessing stumpage for their particular situations.A: Softwood chips: f.o.b. export prices, Australia
B:hardwood chips: f.o.b. export prices, Australia
Table 1: Stumpage case studies
Cost of log transport - Market Report 7 March 1999
The cost of transporting logs to mill or wharf can have a big influence on stumpage prices received by growers.To illustrate the magnitude of this influence, suppose the price of pine pulplogs at mill door is $33/t. Suppose further that the cost of log harvesting and loading on trucks is $15/t and it costs $6.50/t to haul logs to a mill 50 km away. In this situation, stumpage will be $11.50/t as ($33 – $15 – $6.50 = $11.50). But if distance to the mill was 150 km, with freight cost of $15.80/t, then stumpage would be only $2.20/t. For a distance of 175 km, freight cost would be even higher. The result? Stumpage could well be zero. It is a hypothetical example. However, the message is clear: transport cost affects stumpage. And because stumpage affects profit, transport cost warrants the attention of growers who are about to harvest trees or establish trees for commercial log production.
Averages of truck freight rates for different regions of Australia were not available for this report. But four quotations of general rates for farm forestry situations were available: two from New South Wales and one each from Western Australia and Tasmania (see table 1).
Figure 1:
The table shows that freight rate rises with distance but the rise is proportionately smaller. This is because overhead or fixed cost component of freight rate (eg the cost of loading and unloading time) is shared by a larger number of kilometres as distance increases. Longer hauls may also allow the use of more economical larger trucks and better quality roads. Hence, on per km per tonne basis, freight rate is lower for longer hauls. Figure A illustrates this based on extended Western Australian data.
Freight rates per km per tonne
For instance, the characteristics of the roads to be
travelled determine their collective quality which, in turn, influences
travel time and wear and tear of trucks and thus the freight rate. Examples
of road characteristics are: gradient, surface, number and sharpness of
bends, weight restrictions over bridges, single or dual carriage way and
speed limits. Freight rates quoted below from the Farm Forestry Extension
Kit of the Department of Natural Resources and Environment, Victoria, give
an idea of the difference in freight rates for roads of different surfaces:
Normally, freight rate refers to weight of logs. But
if it refers to volume, as in the data above, a general rule is to assume
a cubic metre of logs weighs a tonne.
Due to economies of size, freight rates tend to be lower for larger quantities of logs. Small scale growers can capture the size economies by organising harvesting and transporting operations jointly with neighbours or by joining a growers’ cooperative.
It is uncommon for trucks to carry goods on return trip from mill or wharf. However, to the extent back loading is feasible, it may help reduce freight rates.
Other factors affecting freight rates include the hours during which mill accepts log deliveries, market conditions and government rules and regulations.
As in recent past, freight rates are likely to remain
fairly stable in the short term. This is due mainly to the expected continuation
of Australia’s low interest rate and low inflationary environment. Beyond
the short term, one factor that could affect freight rates is federal government’s
proposed tax reform package, including goods and services tax at a rate
of 10 per cent. Documents released by the government suggest that the tax
package will reduce freight rates. But the package may change when the
parliament passes it. Hence it is not possible to comment further on its
impact at present.
To conclude, several factors jointly determine actual
cost of log transport. It is a major cost and deserves due attention of
growers.
Stumpage prices
Table 2 summarises latest stumpage information collected
by ANU Forestry. It shows actual stumpage received by small scale growers.
However, the information is insufficient for deriving averages and trends.
Hence it is presented in a case study format and should be used with care
for assessing stumpage for a particular situation.
Table 2: Stumpage case studies
In the following discussion on log exports, words ‘log’ and ‘logs’ refer to ‘roundwood’. Roundwood is a category in the international commodity trade classification. It represents sawlogs, veneer logs, fence posts, piling, pitprops and pulpwood; in round or quarter split; treated or untreated with paint and preservatives; with or without bark; and in the rough or roughly squared.
A: Quantity and value of log exports
Data from the Australian Bureau of Agricultural and Resource Economics show that log exports from Australia were tiny until recently. But now they are shaping as a major export item (figure A), having grown faster than the exports of forest products as a whole. Log exports peaked in 1996-97, when they were worth $53 million on a free on board (f.o.b.) basis. The quantity was 615,500 cu. m or 3 per cent of the total log removal.
Softwood sawlogs, veneer logs and pulplogs are major export categories. In 1996-97, softwood sawlogs and veneer logs together contributed 65 per cent and pulplogs 17 per cent to the total value of log exports. Their respective contributions to the total quantity were 78 per cent and 19 per cent.
In the same year, ports in Tasmania shipped 36 per cent of the total value of log exports. Shipments from the Victorian and Queensland ports accounted for 33 per cent and 21 per cent, respectively.
Korea is the largest market. Other main markets are Japan, Chinese Taipei (Taiwan) and Indonesia (figure B).
Prices of Australian log exports have fallen in the last two years but more so in the latter half of 1997-98. But Australia is not alone in feeling the pinch. Data from the New Zealand Ministry of Agriculture and Forestry show a fall in NZ export log prices as well (Table 1). Prices are also down sharply for log exports from South-East Asia. For example, according to the International Tropical Timber Organisation, Sarawak’s f.o.b. prices of Meranti ‘sawmill quality and up’ logs fell to US$110–120 per cu. m in October 1998 from US$180–195 per cu. m a year ago.
B: Value of Australian log exports, by markets: 1994-95 to 1997-98
Log export volumes and prices can be expected to remain
depressed in 1999. It is mainly because of the likely continuation of a
general weakness in demand for wood and paper products. The weak demand
is a result of economic recession or low growth and the financial crisis
dogging Japan, Korea and South-East Asia. The Russian and some Latin American
economies are also in strife. The latest projections by the International
Monetary Fund paint a picture of a weaker output growth in 1999 for the
United States, the European Union, Australia and other industrial economies.
Hence the problem of low export volumes and prices can be expected to keep
confronting Australian exporters and growers for a while yet.
Table1: Indicative radiata pine epxort log prices, f.o.b. New Zealand
These rather trying times may not be a bad time to start addressing basic export issues. Some commentators have asuggested that Australia could learn from New Zealand on this subject. They point out that New Zealand industry invests heavily to gain a better understanding of overseas markets, and that various sections of the industry and government tend to act in unison and in a sustained manner, to address industry-wide export market issues. The suggestion has merit. It is consistent with some of the key goals of Plantations for Australia: The 2020 Vision and deserves serious consideration.
Market Report 5, issued in September 1998, described the
background and method of data collection for the real-world stumpage case
studies. Hence those aspects are not repeated here. But it is worth repeating
that while the stumpage information in the table is helpful, it is advisable
to treat it with care when using it to assess stumpage for a particular
situation. Note that for Victoria’s Latrobe Valley, the stumpage column
in Table 2 gives mill door prices instead of stumpage prices.
Table 2: Stumpage case studies
Late last year, governments and industry jointly released Plantations for Australia: The 2020 Vision policy document.
The policy recognises, among other things, the need for providing growers with price information. A committee has been charged with the task of implementing the actions specified in the document. In relation to log price information, the committee is developing a project which will involve third party collecting and collating log price information from log processors. This information, subject to the processors’ agreement, will be published and distributed.
Given the need to include price information in this market report, advice on the matter was sought from some members of the 2020 Vision implementation committee. They felt it would take a while to obtain agreement of all processors to supply mill door price information and to then release it for growers. They and growers’ representatives, who were consulted on the matter, proposed an interim measure. The interim measure was that the ANU Forestry Market Report collect data on stumpage, ie the log price a grower receives for the wood in a standing tree, and make the data available to growers. As data collection from all growers is prohibitively costly, further advice was that the data be collected only as resources allow. Also, if the data available were relatively few, then they may be reported in a ‘case study’ style.
Following these consultations in July 1998, the market report gathered recent actual stumpage received by individual small scale growers in various regions of Australia. Data were also gathered on factors that influence stumpage such as: time and place of log sale; species of trees; log type; quality and quantity of logs; logs from thinning or clear felling; logging conditions; contract, if any, between log seller and buyer; membership of growers’ cooperative; log haulage distance to the mill or wharf; end product manufactured by buyer; seasonal factors; and structure of the local market.
Some of the data came directly from growers, and the remainder through a group of highly knowledgeable and experienced regional cooperators who obtained it from growers.
The growers and cooperators contributed the data voluntarily but on the condition that the identities of sellers, buyers and cooperators will be kept confidential.
As the data received were relatively few, the accompanying table on page 13 presents them in case study style. Besides stumpage, the table also gives other useful information eg State and region; period; log species, type and volume; distance to the mill; and other information. However, to abide by the confidentiality condition, it has been necessary to withhold some detail in one form or another. Still, even the limited data are informative because such wide ranging stumpage data are not available publicly at present.
It is worth emphasising that the table contains real-world stumpage case studies. Hence, a reader must treat the information with care when using it to assess stumpage for a particular situation. This is because, as mentioned earlier, a large number of factors influence actual stumpage received by a grower.
It may be noted that in the accompanying table, pine is Pinus radiata and myrtle in Tasmania is Nothofagus cunninghamii.
Stumpage case studies
It also reports stumpage for public forest logs in Western Australia.
In recent years, both radiata and eucalypt planting stock have been improved. It is expected to provide even higher net profit for growers. So, whether planting radiata or eucalypts, it may be preferable not to skimp on the cost of superior planting stock.
It may, however, be difficult to accurately figure out planting stock’s overall quality, especially its genetic quality. One way of overcoming the difficulty is to choose the supplying nursery with care. Nurseries accredited by professional bodies, such as the Nursery Industry Association of Australia, can be expected to meet standards. But at present not all nurseries are accredited. Hence, to find a reliable nursery, it may also be helpful to talk with neighbours, members of local farm forestry network and advisers. Visit the nurseries recommended by them; talk with nursery production managers who should be professionally qualified and experienced persons. The choice of nursery must be made well in advance of planting time, for, all good nurseries require orders at least four to six months ahead of delivery date.
Bare-root seedlings and cuttings are usually used for planting radiata. If their seeds are from New Zealand seed orchards, they may have growth (G) and form (F) improvement rating number, for example GF14, that indicates the degree of genetic improvement. The higher the number the greater the improvement. Both seedlings and cuttings may be assigned a GF number.
Depending on the species, climate and time of planting, growers may choose either bare-root or container eucalypt seedlings. Container seedlings cost more but the extra expense may be justified to ensure better survival, faster growth and longer planting period.
Tables 1 and 2 give indicative prices of seedlings and cuttings compiled in April–May 1998 from reputable nurseries in New South Wales. Table 1 shows prices of two species of eucalypt seedlings in 10 cm long tubes, raised from medium priced first generation seed orchard seeds. And Table 2 has prices of radiata seedlings raised from orchard seeds and cuttings from selected pedigreed superior trees. The prices are on a per 1000 seedlings or cuttings basis at nursery gate. Delivery costs an extra one to five cents a seedling or cutting, depending mainly on distance and volume.
Stumpage: Western Australia
Royalties and stumpage currently received by the Western
Australian Department of Conservation and Land Management have come to
hand. As there is widespread interest in stumpage, the WA data are reported
now rather than hold them back for a later issue of the market report.
Table 3 shows the royalties and stumpage for selected types of logs. Hardwood log royalties are for the southern forest region. The range in royalties for the premium and third grade sawlogs arises from differences in species. For the first and second grade sawlogs, the range is due to differences in species and small end diameter of logs. Differences in species and their green or dry status explain the range for residue logs.
For softwood logs, the stumpage is for pinaster and radiata species in all forest regions. Regional differences account for the stumpage range for industrial wood.
Hardwood royalties have been operative since July 1997. However, stumpage for all softwood logs became operative since January 1998, except for industrial wood that has May 1995 as the operative date.
The royalties and stumpage are gross. That is, they consist of base royalties or stumpage and roading, inforest and administrative charges.
Table 3: Gross royaltiesor stumpage, public forest logs, Western Australia
Before planting trees for commercial log production, farmers need a lot of information for assessing its profitability. So one of the questions they ask is ‘What log prices can they expect to receive when trees will be harvested in ten or more years’ time?’ As farm land has agricultural uses, farmers also ask ‘How will the log prices compare with agricultural product prices during that time?’ Log price relative to agricultural prices is therefore an important piece of information for them.
Relative price is not quoted in dollars because it is
a ratio or an index.
If the relative price goes up over time, it means that
log price has in effect increased compared with agricultural product prices.
Data on stumpage, that is, price of wood in a standing
tree, are currently only available for Tasmania. Hence, past trends are
examined here for Tasmania. The period is 1980-81 to 1996-97. Stumpages
are from annual reports of Forestry Tasmania and refer to logs from public
forests and plantations in the State. Stumpages represent weighted average
prices for various log types, locations and markets. Table 1 shows recent
average stumpages.
The stumpage data used here for calculating relative prices refer to only native forest pulpwood and eucalypt sawlogs (excluding veneer and special species) and plantation softwood pulpwood and sawlogs.
Forestry Tasmania is a dominant supplier of logs in the State. Due to economies of size, Forestry Tasmania generally receives higher stumpage than small scale growers there. However, stumpages for both are expected to follow similar trend over time.
Australian Bureau of Agricultural and Resource Economics (ABARE) is the source of data on agricultural prices. The data are weighted index of current prices received by farmers in Tasmania for total crops and livestock — barley, oats, apples, potatoes, wool, milk and slaughter cattle, sheep, lambs, pigs, etc. Base for the index: 1987-88=100.
The relative price of logs is calculated in two steps. First, Forestry Tasmania stumpage is converted to separate indexes for each log type, with the base year as for the ABARE index. Next, stumpage index for each log type is divided by the ABARE index of total agri-cultural prices received by Tasmanian farmers, and expressed as a percentage. Figure A shows relative stumpages for four types of logs.
An examination of figure A reveals that:
• Relative stumpage of eucalypt sawlogs has tended to rise faster than that of softwood sawlogs.
• Relative stumpage of eucalypt pulpwood rose sharply in 1988-89. It was due to a three fold rise in stumpage during the year.
A: Relative stumpages, Tasmania
Future trends
Many have made medium to long term projections of world
agricultural prices. But only the World Bank has made projections of both
timber and agricultural prices. Hence the World Bank data are used for
looking at future trends in relative prices in the world market, of which
Australia is an integral part.
The relative price is calculated by dividing projected timber price by agricultural commodity price and expressed as percentages. The World Bank specifies prices as follows.
‘Timber’ price is a weighted index of prices in current
US dollars for Malaysian and West African logs, Southeast Asian plywood,
Malaysian and Ghanain sawnwood and Swedish woodpulp.
Agricultural prices are weighted indexes of prices in current US dollars. ‘Grains’ price index is for the US grain sorghum and maize, Thai rice, and Canadian and US wheat. ‘Other foods’ price index is for Australian/ New Zealand beef, New Zealand lamb, the US and world sugar, Central and South American bananas, Mediterranean oranges and fishmeal of any origin. ‘Total food’ price index represents fats and oils, grains and other foods groups.
Base for these indexes: 1990=100. Using the indexes, figure B presents world market price of timber relative to prices of grains, other foods and total food. It has actual values till 1996 and projections from 1997 to 2010.
The projections in figure B reveal that relative price of timber in world markets is likely to have a rising trend during 2000–2010. The trend works out to an average rise of 1.5 per cent a year, assuming the World Bank projections are correct.
Australia pursues freer trade in world markets. Also,
State forest agencies are committed to setting stumpage for public forest
logs based on market conditions. Hence, prices of logs and food commodities
received by Australian growers are assumed to reflect more closely world
market prices than has probably been the case in the past. On this basis,
Australian farmers thinking of growing trees for commercial log production
may expect relative prices of most types of
logs to also rise during 2000–2010.
Main points
Pulplog prices received by private growers are shown in
the table below, but it is more informative to see them against a background
of medium to long term price trends. There are however major gaps in the
data. Under the circumstances, trends in prices of export woodchips can
provide a good alternative background. This is because, first, competitively
determined export woodchip prices are likely to also reflect trends in
pulplog prices as woodchips are mainly a slightly processed product of
pulplogs. Second, data on prices of export woodchips are readily available.
Currently, Australia has 25 per cent share of the Japanese import market. Ten years ago the share was 63 per cent and Australia the leading supplier. Now the USA is the leading supplier. Australia also faces competitors such as Chile, South Africa and China in this market and receives competitively determined prices for export woodchips.
The graph shows annual prices of Australian export woodchips for eight years to 1996-97. The prices are f.o.b. (free on board), that is, after woodchips have been loaded on ships in Australia and on per tonne bone dry unit (BDU) basis. (One tonne of pulplogs roughly equals half a tonne of bone dry woodchips.) To make prices comparable across the years, they have been converted to 1996-97 dollar values using the consumer price index. All data are from the Australian Bureau of Statistics.
Main features of the price trends in the graph and their implications for growers are as follows.
• Hardwood chip prices have a declining trend. The trend has, however, levelled off in the last three years. Consequently, prices received by hardwood pulplog growers may have also fallen initially but are likely to have stabilised recently.
• Softwood chip prices fluctuated widely and fell sharply in 1996-97. It implies that prices for softwood pulplog growers would also have been highly volatile and were very low during the last year.
Recent changes in pulplog prices in Australia are
consistent with these inferences.
Export woodchip prices (in 1967-97 dollars)
Japan’s economy is beginning to recover. It had a growth
of 3.6 per cent in 1996 and a reversal in exchange rate. These trends are
projected to continue in 1997 and 1998. Further, its paper industry is
reported to be resuming substantial investment and structural adjustment
domestically to improve industry efficiency and competitiveness. If these
trends continue, they will have a positive impact on Japan’s demand for
and prices of woodchip imports, including on pulplog growers in Australia.
However, the global increase in pulpwood stocks continues and there is
some uncertainty about the projected strength of Japan’s economic growth
to 1998. Hence, short term outlook for export woodchip prices is unclear.
The stumpage data were provided by a group of highly knowledgeable and experienced regional cooperators who collected them from private growers. They are the best available data at present. Scope nevertheless exists for an improvement in them and efforts will continue to achieve that outcome.
In the meantime, growers should treat the stumpages in
the table as no more than indicative when assessing stumpages for their
particular situation. It is worth remembering also that stumpage can vary
for several reasons such as the species, quality and quantity of logs,
harvesting conditions, distance to mill, contractual arrangements and contestability
of market.
All these factors can differ between growers, regions
and over time.
Main points
• In 1996-97, prices remained flat for hardwood pulplogs and fell sharply for softwood pulplogs.
• Which way the prices will turn in 1997-98 is uncertain.
Stumpages
This issue of the market report focuses on structural timber prices. Timber prices to some extent reflect log prices. In addition, they could be of direct interest to growers who are sawing or intend to saw their logs into timber for sale.
It is recognised that many small scale growers need log price information. However, at present, very little information is publicly available on log prices. Attempts are being made to collect reliable price information and to provide it in due course.
ABS collects price data at the mid-point of every month in each State capital city of Australia. It publishes prices as indexes for each capital city and their weighted average. The weighted average index could be regarded as the price index for Australia as a whole. Current base year for the index is 1989-90, with a value of 100 index points.
At present, ABS publishes separate price indexes for hardwood and softwood structural timbers for Australia as a whole. For the capital cities, it publishes a single combined index of hardwood and softwood timbers.
The price indexes do not allow discovery of the timber
prices in dollars. Hence, it is not possible to measure differences in
prices between the cities and between hardwood-softwood timber types. However,
a rise or fall in the index represents an increase or decrease in the underlying
prices. It is therefore possible to compare relative changes in prices
between cities and types of timber over time.
Figure A
Main points arising from figure A are as follows.
• Prices rose steadily until 1990-91 but they fell slightly in 1991-92. Immediately afterwards they rose sharply until around 1994-95. (There are several reasons for the sharp rise in prices. Two main reasons among them are: a major upturn in timber prices in North America at the time; and a growing demand for timber in Australia due to a recovery in house construction that peaked in 1994-95.)
• After 1994-95 the prices began to return to the general trend level. (Timber prices in the world markets and the housing activity in Australia eased after 1994-95.)
• Over the ten year period, softwood timber prices have
tended to rise relatively faster than hardwood prices.
Having investigated the medium to long term price changes,
we now look at the short term picture. Figure B presents monthly timber
price indexes for 1996-97. It shows a slight recovery in prices during
the year, with prices in the last few months being higher than those in
earlier months of the year.
Figure
B
Sydney –14.1
Melbourne –12.9
Brisbane –10.7
Adelaide –21.9
Perth –5.6
Hobart –11.8
These percentage changes confirm the decline in prices nationally. They also show that the price decline occurred in all capital cities. However, there was considerable variation among the cities; Adelaide had the largest price decline and Perth the smallest.
• Softwood timber prices have increased relatively more.
• Price levels have moderated in the last two years.
Other RIRDC agroforestry and farm tree reports:
