17 May 2012

LARA GIDDINGS, MP
Premier

BRYAN GREEN, MP
Minister for Resources

Forestry Tasmania not immune from market challenges

The challenges in the broader forest industry have been reflected in Forestry Tasmanias operations, with $35 million set aside to assist the business through market uncertainty The Premier, Lara Giddings, and Minister for Resources, Bryan Green, said the state-owned company was not immune from market pressures and change in the wider industry. We must ensure Tasmanias public forest manager can continue its core business functions while also providing noncommercial services like maintaining public access to State forests, Ms Giddings said. The first stage of the URS review, released in February, confirmed that changes in global demand for Tasmanian forest products have presented significant challenges for the entire forest industry. The trends that started many years ago show that the Intergovernmental Agreement on Forestry is not the cause of those problems.

To the contrary, the $276 million Tasmanian Forests Agreement gives us the best possible chance of managing the transition and retaining a long-term sustainable industry in Tasmania. This provision has been estimated from the URS Review and will assist Forestry Tasmania manage through this difficult period of transition. Mr Green said the first stage of the URS report found a number of factors had impacted on Forestry Tasmanias short-term profitability including: Significant contraction of traditional Japanese woodchip markets and stronger preference for plantation resource; Reduced prices in Chinese woodchip markets in comparison to Japan; The high Australian dollar weakening export competiveness; Price pressure from market competitors; The exit of Gunns Limited from native forests.

Mr Green said the State Government expected to receive the final report from URS in the coming weeks. This report will inform our decision making about the appropriate role and structure for Forestry Tasmania into the future, Mr Green said. Just as we cannot ignore the changes occurring in the wider forest industry, we need to ensure that FT, as the manager of public forests, is structured not only to survive the current challenges but to make the most of future opportunities.

Additional provision has been made over the forward estimates to provide the capacity to support Forestry Tasmania through difficult market conditions.

Contact: Michael Stedman: 6232 7065

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