The benefits of farm forestry spruiked at Perth conference

This idea was sprouted at the Carbon and Farming Conference last week, with Federal Agriculture Minister Murray Watt highlighting the forestry and farming sectors as having a crucial role in the government achieving its net zero emission targets.

Providing his opening address via video link, Mr Watt said he was keen to ensure the agriculture and forestry sectors could fully participate in generating and benefiting from carbon credits.

"I think there is a really exciting future in this space and the Albanese government is making the changes needed to deliver the integrity these markets need," Mr Watt said.

With an estimated one million homes required to be built across the country over the next five years, Mr Watt said a strong forestry sector was needed to help build these houses sustainably and move Australia to a lower carbon economy.

With carbon stored in plantation and forest products, the forestry industry helps to offset Australia's carbon emissions while also delivering renewable forest materials.

Due to the recent introduction of carbon credits for the agricultural industry, the housing boom and supply and demand issues leading to increased prices for construction timber, the economics of farm forestry seem to have changed for the better.

Forest Products Commission (FPC) new business and innovation director John Tredinnick said the establishment and ownership of forests on farms now provided the triple benefits of wood production, carbon mitigation and onfarm productivity for landowners.

"Where we've had trees on farms previously, it's generally been under arrangements where corporates will rent the land and the farmers receive a lease," Mr Tredinnick said.

"This (farm forestry) is a shift to farmers actually making the decision to invest in trees themselves...and from the supply and demand dynamics I think this is shaping up as a pretty good investment for them."

Mr Tredinnick said carbon offsets were an important component in terms of the balance sheet for farmers who were considering these projects, as it enabled the landowners to receive an annual income from their forested land.

"Carbon offsets are a really important component because one of the impediments to the establishment of long rotation trees on farms in the past has been cashflow, where you put up a lot of money upfront and you don't get a return for 20 or 30 years from that," he said.

"What carbon allows landowners to do is to actually get an annual income associated with the carbon sequestered from the trees and that annual income is from about the ages of zero and 18 years of age and that takes you up to that point where you've got wood production.

"That's a real game changer in terms of the attractiveness of the investment from the cashflow perspective."

Potential income opportunities

The Federal government is currently consulting on draft legislation for the Nature Repair Market in which approved methods applied by landholders to restore or manage local habitat could generate tradeable biodiversity certificates.

Mr Tredinnick said the legislation could result in farmers who participated in the forestry industry being funded for that activity, due to its environmental benefits.

"There are obviously questions about the integrity of the certificates - how do you compare two similar environmental benefits?

"Are offsets credible in this sense?

"I'm not sure."

Despite these issues all still needing to be worked through, Mr Tredinnick said there was potential for the development of the Nature Repair Market to work in conjunction with the carbon market.

Supply and demand issues

The Centre for Population has forecast WA's population will increase by about 1.5 per cent per annum equating to 42,000 people for at least the next five years.

As a result of this, in order to meet the State's housing requirements, the Masters Building Association has suggested about 21,600 homes will also need to be constructed each year.

While traditionally wood has been mainly used to build roofs by WA's construction industry, Mr Tredinnick said an increase in timber also being utilised for house frames had led to an increase in demand for the fibre.

As a result of the strong demand for housing, as well as emerging new building technologies which include construction timber, a restriction of supply in regards to State-owned plantations as well as a 70 per cent increase in the prices of imported timber into Australia, Mr Tredinnick said this left a great opportunity for the local timber industry.

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"When the squeeze really came on as a result of the housing stimulus packages and the need for wood, imports actually went down because there were the same sort of demands across the world, indicating this isn't just a local issue in terms of supply and demand - it's actually a global one," Mr Tredinnick said.

"Increased emphasis on construction over the past couple of years has exposed the shortage of timber, and the prices have reacted accordingly.

"So while we talk about decarbonisation as a reason to plant trees or other benefits associated with offsetting your on farm carbon impacts, I really encourage landowners to have a look at investment in trees just in its own right.

"I think you might find that things have changed and it might just stack up."

Mr Watt said the Federal government had invested in a suite of initiatives totalling more than $300 million to secure a sustainable domestic timber supply for Australia for the future.

This includes the establishment of the National Institute for Forest Products Innovation and the extension of regional forestry hubs, including the local WA-based South West timber hub.