David Cunningham, ABARES - 'Australia's role in Asia Pacific forestry'

Uploaded by Abaresoutlook2011 on 27.04.2011


So, Australia already has, y'know, a long
history of trade and strong links internationally, um ...
and opportunities to develop these further but at the same time
the forest sector has a number of challenges - both domestic and international - and these are some
of them. In the interests of time I won't read them out, I'll go through them
in detail but let's pick up a couple in the next slides. The
resource base has changed a lot in Australia in recent times - and this shows the trends
over about the last 15 years, with, er
hardwood plantations increasing the most but from a very low base - while access
to native forests has really declined in terms of wood production purposes.
... So, looking forward to
2050 what we expect to see is softwood supply to remain flat
- and this is mainly used for structural timber - but there's likely to be a significant
increase in hardwood supply from plantations and mainly for pulpwood.
... So, who's going to use the wood?
One of the challenges for the sector, I think, a big user is
the housing industry and building houses - but this middle line here, shown
in orange, shows a general decline or a slow decline in use
in new houses being built. At the same time
imports have increased, with a strong $A making it cheaper to
buy imported products from overseas.
If you look at paper and paper board, um ...
consumption has been relatively flat or declining in some markets
but we can China increasing - again, from a very low base - but a potential
to increase a lot - if you look at the red line at the base of this chart.
So, in this context, Abares and
the people in my branch decided to look at this idea of revealed
comparative advantage. In fact it's revealed symmetric comparative advantage.
And this comes to us from economic theory and what it lets us look at
is the specialisation of different economies and countries
and different types of products. So what we did was to examine the
current specialisation of APEC economies based on their exports of wood products.
We expressed this as an index - the RSCA index -
It's on a scale of -1 to +1 ...
+1 implies that a country or economy has a very strong advantage
in production and export of a particular product. If it's -1
you have a very dependence on imports. So,
the index is based only on trade flows - it doesn't take into account domestic productions
used domestically within an economy.
So we applied this method to all the APEC economies and
we've written up the details in a report and outlook paper that's available
at the conference. But some of the key results here are - looking in the bold font -
where Australia has a very strong advantage in chips and particles.
+0.91. Another country - like USA for example -
has plus in wood pulp.
So, the results of the analysis shows that Australia specialised
generally in low value products, such as wood chips, while other APEC economies
have put more emphasis on manufactured products.
And remember, the index shows a point in time. It was based in 2009 data
- it doesn't provide a future forecast. So, the questions remain open
about what the Australian industry should focus on and what might be the future
opportunities and challenges for the sector.
I'm conscious that I want to leave time for questions and I'm sure
people have some saved up, especially for Bjorn and Michael.
What we also looked through in the paper is a more
forward looking forecast based on some of the FAO work that's come out
and we look at what that means for wood fibre, for pulp
and for wood based panels. Now, I don't want to talk through all the resutls now
as I say - but generally they show
Australia, China, Japan and the USA are likely to remain net
importers of sawn wood, for example. I will go back to
one slide because it's quite interesting to show here the green line, with
China having a very dependence on importing high quality pulp
- and this sort of data presents an opportunity for Australia
if it wants to get into market - but it still has to compete with other APEC economies,
such as Indonesia. And if we look at the top line, they have a
- in general - on average across APEC - there's a strong advantage in that sector.
So it's not a simple solution.
So finally, I said I was going to leave some questions - and these are them. Y'know, what is
the long term direction of the industry and what direction does the industry want to go in?
How can they maximise the value of the resources that we have? And finally,
since we're a research organisation - what's the role of research and what are the needs
from providers such as Abares and others to inform this decision or these plans?
And I'll stop there.