The bi-annual report, Australian forest and wood products statistics, reveals a significant downturn in forest product production and exports, as the industry is affected by the international downturn in forest products trade and a drop in domestic housing sector demand.

“2009 is finally revealing the effect of the global financial crisis on Australia’s forest sector, with domestic housing activity decreasing by 17 per cent in the year to June 2009, affecting domestic consumption of structural wood products,” said Mr Phillip Glyde, Executive Director, ABARE.

“To compound this downturn, there has also been a significant drop in export demand for our major forest product exports this year. Together, these factors suggest it will be a tough year for the forest industry.”

The effect of the drop in housing activity can be seen in the fall in demand for wood based panels (excluding veneer) with consumption and production down by 11 per cent and 7.7 per cent respectively, in 2008-09, with a similar effect expected in the sawnwood sector.

Forest product exports, which remained strong in the first half of 2008-09, suffered large declines in the March and June quarters of 2009, leading to an annual fall of more than 5.2 per cent to $2.3 billion in the 2008-09 financial year. This was mostly a result of a 7 per cent fall in the value of woodchip exports, which fell below $1 billion. The volume of woodchip exports also fell, with a decrease of 15 per cent. However, prices of exports to Japan remained firm.

“On the positive side, the two veneer export mills operated by Ta Ann in Tasmania are approaching full production. Total veneer production exceeded 100 000 cubic metres in 2008-09, resulting in the value of veneer exports almost doubling to $36 million. China has also increased its demand for our woodchips, going some way to offset lower demand from our principal market, Japan,” said Mr Glyde.

“We noted in the previous issue that Australia’s forest sector had remained remarkably resilient in the face of the economic slowdown; however, the new data emphasises that the industry remains dependent on key trade markets and domestic housing. Future developments in these sectors will be critical to the forest sector’s outlook,” said Mr Glyde.