The high costs of involved in establishing new plantations are a challenge.
Plantations across Australia are owned by:
Governments: The major owners of softwood plantations in Western Australia, South Australia, New South Wales and the Australian Capital Territory are governments. Tasmania's government retains 50% equity in the softwood plantations on public land in that state.
Managed Investment Schemes: Participation in managed investment schemes soared from the mid 1990s until the Global Financial Crisis in 2009. At one point MIS investors owned over 722,000 hectares (35%) of Australia's plantations, however the failure of some poorly managed MIS has seen the popularity of this investment type dwindle.
Timber Industry Companies: Several companies that manufacture sawn timber, woodchips, paper and other products in Australia own plantations that supply logs to their mills. Since the early 1990's, pulp and paper industry companies and industry organisations based in Japan, Korea and India have started over 20 plantation projects in Australia. These projects have established about 120,000 hectares of plantations. Most of the projects are planting eucalypts and aim to export woodchips.
Superannuation funds: Australian and international superannuation funds have purchased plantations in New South Wales, Victoria, Tasmania and recently in Queensland. This new form of ownership is consistent with a world-wide trend for large institutional investors (Timberland Investment Management Organisations) to allocate a small portion of large diversified funds to 'alternative' investments
Farm foresters and other private owners: Many individual farmers and other landowners own plantations ranging from a few hectares to a few thousand hectares. A recent (2008) survey indicated that farm forestry (including MIS leases on part of a farm) accounted for over 10% of Queensland’s plantation estate.
Source: Australia’s Plantations 2009 (pdf), Bureau of Rural Sciences.
Financing Queensland’s plantation industry
The financial case for new plantation establishment has always been a challenge, with the long period between outlays on establishment and returns from harvesting being outside the scope of most private investors
Managed investment schemes (MIS) were the major source of funding for plantations in the last 20 years until the Global Financial Crisis exposed some serious flaws in the model. Despite this MIS remains an important vehicle for investment in future timber plantations, although regulatory changes are required to enhance investment security.. Industry also has a critical role to play, as investment will only be attractive if schemes demonstrate long term sustainability.
Any significant expansion of the plantation estate will come from the private sector, but this will require facilitation by Government. In particular, governments will need to address remaining impediments to plantation expansion; however addressing the financial viability is the key issue.
A recent report sponsored by Forest and Wood Products Australia (de Fegely, Stephens & Hansard 2011) investigates a range of options to support plantation investment, and highlights the need for policies to fundamentally address the financial viability of plantation investments by augmenting the high up-front costs and limited cash flows in the short to medium term.
The report also noted that direct Government investment to secure the carbon associated with timber plantations is one of the more promising opportunities for Government to support expansion of the plantation estate.