Analysis of the ACT plantation forests value chain

Abstract

Radiata pine is the only softwood plantation species in the ACT, and these plantations and processing industries were once a more important part of the local economy. However, the 2003 bushfires destroyed a large number of plantations, leading to a shortage of raw materials and the closure of most processing facilities - only one sawmill producing tile battens remains. While there are other markets for ACT plantation wood outside the ACT, it is likely that the current value chain is suboptimal in terms of its contribution to the ACT bioeconomy. The current ACT radiata pine processing value chain faces many challenges, including limited plantation management options, outdated processing facilities, and changing market demand. This study aims to enhance the resilience and value-adding of the local wood processing industry and promote sustainable development by optimizing the ACT radiata pine value chain against the background of the global transition to a forest bioeconomy. The study used Net Present Value (NPV) analysis to explore multiple improvement options for the plantation growing and wood processing components of the value chain, by comparing the NPV values of existing baseline cases and new scenarios. Sensitivity analyses were used to explore how changes in important parameters such as wood prices affect the selection of growing and processing options, and to provide guidance for value chain actors to respond to future changes and enhance the resilience of the value chain. This study found that the current plantation management regime and sawmill operations are each the most financially rational for plantation and sawmill managers, respectively, under current operating conditions. However, if markets were available, a more attractive option for plantation managers, operating under a standard discount rate of 5%, is to extend the rotation period and produce more higher quality sawlogs. For sawmill managers, if the price of timber increases by more than 26.5%, it will be better to invest in new equipment to increase the recovery rate of primary wood products to the level typical of contemporary sawmills (50%). Both sawn timber and plywood production are feasible options for the ACT plantation value chain, under certain assumptions. The establishment of new sawn timber and plywood processing facilities can increase the added value of timber from ACT plantations while also providing motivation for the plantation managers to produce more sawlogs and mill owners to upgrade their equipment. This study provides a systematic framework improving the ACT radiata pine plantation value chain, as a foundation for both the ACT Government and wood processing enterprises drawing greater value from the ACT's plantation forests. Show more