INDONESIA TRADE DEAL COULD HELP FILL
AUSTRALIA’S GAP IN HARDWOOD SUPPLY

Sealing trade deal… Prime Miniser Scott Morrison and IndonesiaN President Joko Widodo.

BUSHFIRES, and now rain, have delivered a cruel blow to the forest sector in Australia – scorched and flood-hit land across millions of hectares will slow wood supply and hamper salvage operations.

There is an urgent need for a full assessment of the impacts of the fires. But it is clear there will be major impacts on timber resources both from private forests and plantations.

Victorian and NSW logging operators face a race against time to salvage millions of tonnes of timber. Up to 40% of the native woodland set aside for harvesting in east Gippsland has been burned, but the industry now believes that most of those trees can be salvaged.

Despite the damage to the timber industry by the fires, timber mills are expected to have access to more wood than they can handle in the coming months as the salvage process ramps up.

But the respite will be temporary, according to AFPA, with the damage to plantation and native forests in both NSW and Victoria expected to seriously hit timber supplies in the medium and long term.

In Victoria, VAFI is calling for a priority program of salvaging felled trees and harvesting burnt trees that are still viable for use.

“Salvage harvesting and the recovery of burnt trees is a legitimate and well recognised aspect of the fire recovery process and is a crucial element in helping state forests recover from bushfire,” CEO Tim Johnston said.

Meanwhile, the wood industry has taken significant interest in this week’s trade talks between Prime Minister Scott Morrison and Indonesian President Joko Widodo and the southeast Asian country’s ability to help fill the supply gap, particularly in hardwoods.

Trade Minister Simon Birmingham admitted that in the past the economic relationship between Indonesia and Australia had been “underdone” and a new trade agreement was a step up in the ties between the two countries.

The Indonesian parliament has voted to approve the Indonesia-Australia Comprehensive Economic Partnership Agreement that was signed in 2019.

“We expect the benefits from this trade deal to start flowing in a matter of months,” Mr Birmingham said.

Indonesia is Australia’s 13th largest trading partner, but Mr Birmingham said he wanted to see the country higher up on the list, similar to trade deals with China, Japan and South Korea.

Australian farmers, particularly beef producers, will have greater access to a huge market and lower tariffs. Most Indonesian goods, including timbers, exported to Australia will also have tariffs stripped.

In 2018-19, total two-way trade in goods and services with Indonesia was worth $17.8 billion. By some estimates, Indonesia will be the world’s fifth-largest economy by 2030 and the trade agreement ensures Australia is well-placed to deepen economic cooperation and share in Indonesia’s growth

There is an established trade between Australia and Indonesia in the wood and paper product sectors, although one-sided with a significant trade deficit for Australia of around $458.7 million.

A relatively small amount of exports from Australia to Indonesia are concentrated in sawn wood, medium density fibreboard and recovered paper, by value. Conversely, major imports from Indonesia are concentrated in sawn timber, plywood, miscellaneous forest products, furniture, printing and writing paper and packaging and paper products.

According to latest available FAO figures, Indonesia has around 91 million ha of forested land, which constitutes 53% of the total land area. Around 86.1 million ha is primary or otherwise naturally regenerated forest and around 4.9 million ha is planted forest.

The plantation industry, which up until recently was dominated by teak plantations in Java, is mostly on Indonesia’s outer islands. Over the past two decades, plantation forestry for the pulp and paper industry has become a significant component of Indonesia’s forest industry. Pulpwood plantations are dominated by acacia and eucalyptus species, which grow quickly in Indonesia’s tropical climate.

According to available ITTO figures, Indonesian produces more than 75 million cub m of round wood, which is almost entirely used within the country.

The export of primary timber products accounts for a total export value of around $2600 million, with plywood the most important product.

While globally renowned for tropical hardwood timbers such as merbau and meranti, Indonesia is actually home to thousands of diverse timber species that can be used in many different areas.

– JIM BOWDEN