Sunday, 30 November 2014

FT: Will it make a profit?

“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.


  1. The unfortunate residents of Lapoinya will lose there patch of bush at the expense of Tasmanian taxpayers, whilst Tasmanian teachers and nurses are losing their jobs. With logic like that in our Parliament no wonder Tasmania is in such serious trouble. Obviously the ABC reporter never bothered to check the figures. Mr Hodgman clearly didn't check them either.

  2. At the moment John Forestry Tas are ordering contractors to bury 16000 tonnes of high quality sawlog because they can't sell it. I am guessing that if they manage to find a market they will dig the logs up and sell them then, Of course the logs will need to be washed thoroughly to get the dirt off before they can be processed in a sawmill.
    What a stupid waste of resources just to keep a loss making enterprise like Ta Ann going.

  3. John have always valued your comments and will continue to do so but NOT all think of incoming in fact most understand what a balance sheet is and cashflow

  4. Many media articles and press releases that are toward events, activities, proposals and practices of Forestry Tasmania are often found to be an exaggeration (if it is to do with the directors and management style of this GBE) if there are negatives being featured or are becoming prominent in the daily news then they are down-played as if these matters are a mere trifle by those who would otherwise be the exaggerating perpetrators of this logging organization.
    Thus we read in the press how Forestry Tasmania has somehow juggled up a set of their figures to suggest that there is a fine profit awaiting them upon some distant hill in Lapoinya.
    With so much of the published history of this GBE having been found inaccurate and or even falsified it is arguable if such an 'organization,' (for it cannot be described by any business-like institutional descriptive, as these others are tasked with and obliged to be generating a profit by way of their primary activity) can still be entitled to remain an operative in Tasmania's Business Sector.
    Were this GBE to be offered up for sale, well then it would effectively have to contravene a regulation of some kind that will not permit a 'pie in the sky organization' as to be a legal business operation.
    Over the past 10 years of reading and listening to the deceptions and misleading statements that so frequently issue from within its headquarters one has to wonder why no criminal charges have been lodged against this furtive logging institution.
    In my time here in Tasmania (12 years) I have noted how companies and or business institutions have been de-registered and cancelled right across Australia for lesser offences in comparison to Forestry Tasmania, yet it seems that this logging organization in this State has been given a special exemption from being held responsible to the laws of the land that lay across the whole of Australia.
    Ironically the main tangible item and or visible product of this logging organization is its scandalously high level of debt with absolutely no plan in place to ever address such a serious flaw in its ongoing life, which can be no less than an unregulated fiercely destructive and extraordinarily expensive State of Tasmania extreme financial liability.