GIPPSLAND timber processors during the next six months will have to put in bids to VicForests, the state’s commercial forestry arm, to buy their future wood supplies.
VicForests will run a “commercial process” later in the year to sell the Victorian Ash timber available from 2017. It will take into account the cutbacks in supply announced last week.
From 2017, only 215,000 cubic metres of high quality ash sawlogs will be sold a reduction of 25 per cent on the previous quota of about 300,000 cubic metres because of the impact of the three big bushfires of the past decade.
The cutbacks mean about 335,000 cubic metres of quality sawlogs from Victorian forests will be potentially sold annually by VicForests.
This figure includes about 50,000 cubic metres of quality mixed species sawlog timber from East Gippsland and potentially up to 70,000 cubic metres of mixed species sawlogs from the Central Highlands.
VicForests will sell its next tranche of mixed species timber from January 1 next year.
The new total is well below the more than 500,000 cubic metres sawlog supply promised by the Bracks Government in its 2003 policy Our Forests Our Future.
Now, about six per cent of Victoria’s 7.8 million hectares of forest are classed as suitable for industry.
The 25 per cent reduction is expected to cut about 200 jobs from the forestry sector, most of them in Gippsland.
Where the cuts fall is likely to be determined by VicForests’ sale of timber over the next six months.
Virtually all Victorian timber is now sold on the open market as there are few licenses from the old administrative price system still running.
VicForests’ planning director, Lachlan Spencer, said the commercial process would not be an auction.
The auction process had been very effective, achieving price rises of about 20 per cent.
“But auctions only work in certain markets,” he told the Gippsland Times.
In the current constrained market sluggish sales, a slow housing market, the high Australian dollar and cheap imports industry had to be sustainable and profitable.
“The proposal process will allow mills to propose a variety of ways they would use the timber,” Mr Spencer said.
“It is still a competitive process.
“It will be an evaluation of how the pieces fit together for industry value and VicForests’ value.
“We will look at a process that has more flexibility and taps into the innovation of industry,” he said.
The chief executive, Robert Green, said the reductions reflected VicForests’ commitment to balance social, economic and environmental factors.
“The change ensures future harvesting will continue at a sustainable level and future timber sales will be based on the reduced volume,” he said.