Market
Investigations into the potential uses and markets for agroforestry products should begin before the trees are planted. This will coincide with site and species selection. Given agroforestry is a relatively new concept only limited information about marketing processes is available and most information has been adapted from conventional large scale public owned forestry (Capill, 2001).
This discussion focuses on several topics relevant to marketing timber products, including products, type of sale, point of sale, market trends and location.
Products
Saw logs, veneer logs and chipwood are high value forest products (Kellas, 1996). Selling the wood for a satisfactory price is difficult if there are few potential buyers within an economic haulage distance. This highlights the need for effective market research prior to plantation establishment to identify buyers and their location.
Saw Logs & Veneer Logs
Pruning to produce knot free clearwood may add considerable value to the wood for appearance grade products. Mills purchasing saw logs set minimum size and quality standards. These standards vary between mills and products. As a generalization for softwoods a common minimum length is 2.4 metres with a minimum small end diameter of 15cm under the bark (Kellas, 1996). For hardwood a minimum length of 3 metres and diameter of 25cm is common (Kellas, 1996).
Chipwood
Chipwood refers to timber used for paper pulp and chipboard production. It is usually a softwood species and currently in over supply in most regions due to the extensive State Government plantations e.g. radiata pine (Capill, 2001).
Although chipwood from certain fast growing eucalyptus (E. globulus, E. nitens, E. regnans) is currently in high demand (Capill, 2001) .
Smaller logs are suitable for pulpwood e.g. 10cm small end and there are less demanding standards for straightness and knotting (Borough,1992).
Others
Other possible products include poles, posts and sleepers. These often require preservation treatment.
Point Of Sale
There are three options for point of sale (Cremer, 1990).
- Wood on stump (stumpage).
- Logs at mill door.
- Sawn timber.
Stumpage
The trees are sold on the property and it is the responsibility of the buyer to harvest and remove the timber. Factors affecting the price include haulage distance, harvesting difficulty, access road, log size and quality, volume of supply and bargaining power.
Logs At Mill Door
The grower performs the above task or employs contractors to perform it. The price is then negotiated for a product delivered to the processor.
Sawn Timber
The grower mills the timber on the property and sells sawn timber to wholesalers. This effectively removes processors and increases the return to the grower.
It is anticipated that sawn timber is the preferred option of smaller agroforestry operations as it value adds and increases profit. The development of portable saw mills has assisted in making this option available to agroforestry operators (Capill, 2001).
Products such as railway sleepers are sawn into their final form in the forest.
Type Of Sale
Two approaches are possible:
- entering into advanced contracts
- negotiating private marketing arrangement when the timber is approaching maturity.
Advance Contracts
In some areas there may be an option to sign a preplanting contract with a processor. The timber when ready is then sold to the processor at the current market prices. This guarantees a market, however the price at harvest remains uncertain. These contracts are generally limited to a few species that are of interest to large scale industry e.g. radiata pine and eucalyptus for pulp on short rotations. Plantation sizes are usually no smaller than 20 hectares which can make the venture more like conventional forestry than agroforestry. However processors are becoming more willing to enter into contracts of smaller areas (Capill, 2001).
Private Marketing
As an alternative trees can be grown and marketing take place closer to the time of harvest. For this approach it is desirable to have a knowledge of existing markets and to study trends in demand and supply of related products. However it is difficult to predict markets and prices decades into the future and an element of speculation must remain in tree growing.
Market Trends
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| Products such as railway sleepers are sawn into their final form in the forest. |
The price of timber has approximately followed the inflation rate in recent decades (Kellas, 1996). In future, the price of timber may increase faster as a result of such factors as world economic growth, especially in Asia and reduction in sustainable supplies from native forests (Kellas, 1996). Other factors such as large expansions in plantations in a number of countries may have an opposing effect.
The prices of possible substitutes such as steel, concrete and oil will set competitive limits to the price of wood for some uses, but are unlikely to affect the price of specialty timber (Kellas,1996).
Location
Unless the tree growers are close to the market, they will have difficulty selling their wood or suffer a discount on its value as cartage costs are approximately 10cents/km/cubic metre on highways and 20cents/km on country roads (Kellas,1996). Unless the logs are high value the supplier needs to be within about 100km of the market.
The present location of mills gives and idea of cartage zones for harvesting in the next few years. It must be remembered that these mills may not exist in 30 years time. This situation combined with the increased profits associated with the sale of sawn timber indicates that on site milling may be essential for smaller agroforestry operations.