Forests NSW spends $3.5 million a year more running its woodchipping operations than it receives in sales of trees to the Eden woodchip mill. Real prices for pulp logs – the trees used for woodchipping – are only half of what they were 15 years ago.
In other words, Forests NSW makes a loss. And at the moment it is the public that picks up the bill. The NSW government subsidises the roads, machinery and even the fuel used by the woodchipping industry. The logging industry is exempt from paying local rates.
Turning to the numbers:
- The areas logged to feed the Eden woodchip mill (that is Eden, South Coast/Southern and Tumut) have increased by 78% in the four years from 2002-03 to 2006-07.
- Productivity in tonnes per hectare has fallen substantially. In the Eden region, yields at the end of the 1990s were over 100 tonnes per hectare. In 2005-06 and 2006-07 they were down to 73.5 and 74.8 tonnes per hectare. Yields in South Coast/Southern were steadier, but 2006-07 had the lowest yield in six years. These drops in productivity reflects degradation due to continuing logging. Forests NSW is having trouble sourcing enough sawlogs and sawlogs now often travel from East Gippsland and Tumut to feed the Eden woodchip mill.
- Rotation times have shortened. Current rotation times – the time it takes to return to a previously logged site – are 15-20 years in Eden, less than 20 years in South Coast/Southern and Tumut.
- Average prices for pulp logs supplied to the Eden woodchip mill are falling. Current prices for pulp logs are $11.91 a tonne, and range from $6.42 to $16 a tonne. Weighted for volumes, the average price is around $14 a tonne. If 1992-93 average rates had been maintained in real terms, the price should be around $28.
Uneconomic pricing means that the NSW government has subsidised the Eden woodchip mill by approximately $8 million dollars in 2006-07. This is over 70% of the Eden woodchip mills before-tax profit
