“Will it make a profit?”
“Indeed it will....“was the unequivocal reply.
FT’s District Forester was in no doubt when answering an ABC reporter's question about the proposed clear felling of a 68 hectare coupe of 60 year old native forest regrowth at Lapoinya in North West Tasmania. The full ABC report can be found HERE.
After a few years of losing $20 for each tonne of timber chopped down and sold has FT found a way to make a profit?
FT expects income between $500k and $1 million.
Foresters always talk gross receipts and not cash surpluses/deficits after expenses.
A preliminary assessment confirms the harvestable timber in the coupe after allowing for streamside reserves and other retention areas has a mill door value of $623k.
But harvest costs of $285k and cartage of $205k means the net stumpage value to FT is only $133k.
The costs of roads and structures (bridges are needed) are estimated to cost $182k and windrowing, burning and native forest reestablishment a further $61k.
That makes the cash deficit $110k.
The costs of wages for FT employees and other direct costs are estimated to add a further $114k, making the cash deficit $224k.
This implies a cash deficit of $20 per tonne, a figure confirmed by FT’s financials of the last 2 years.
Yet a FT spokesman brazenly asserts that the coupe will indeed be profitable.
It is often claimed than sawmillers who take a small % of logs from native forests need an outlet for the residues generated by their activities else they are unprofitable.
The situation is worse for FT as most logs from native forest head straight to the chipper.
If all timber from the proposed Lapoinya coupe was fed into a chipper the cash loss would be $31 per tonne.
So we should be thankful for small mercies.
Logs diverted to sawmillers and peelers to Ta Ann reduce the overall cash loss to $20 per tonne.
If all logs go to Ta Ann, a theoretical possibility only, the cash loss would still be $9 per tonne.
Only if a very high % of timber was of sawlog quality could a coupe like Lapoinya generate a cash profit for FT.
I guess Mr Hodgman can be excused for not realising that growing the industry will add to FT’s losses under current settings when one of its senior foresters appears to suffer similar myopia.