AND it is ironic that mother Russia with international managers of Yanks and Canadians are able to club Gunns to a pulp on the open market
Forestry MIS teat milks 77 per cent; Farmers 7 per cent
Asa Wahlquist, The Australian 12.02.10 3:13 am
Dr Ajani said that, as a result, wood was now competing unfairly with food for agricultural land, water and other resources. She said government assistance to forestry and logging was equivalent to 42 per cent of the industry�s unassisted value added, with tax-based subsidies through managed investment schemes making up 77 per cent of that assistance. �Government assistance to grain, beef and sheep, which includes drought-related payments, are around 7 per cent of their unassisted value added,� she said.
HARDWOOD forestry managed investment schemes received tax-based subsidies of between $900 million and $1.2 billion in the five years to 2008, according to Australian National University economist Judith Ajani.
Dr Ajani said that, as a result, wood was now competing unfairly with food for agricultural land, water and other resources. She said government assistance to forestry and logging was equivalent to 42 per cent of the industry�s unassisted value added, with tax-based subsidies through managed investment schemes making up 77 per cent of that assistance.
�Government assistance to grain, beef and sheep, which includes drought-related payments, are around 7 per cent of their unassisted value added,� she said.
She warned that if managed investment schemes combined with forestry for carbon credits under an emissions trading scheme, vast areas of land would move from agriculture to forestry.
�At such significant differentials, government assistance works to redirect agricultural land, water and other resources away from food growing to wood growing, relative to an unfettered market outcome,� she said.
She said many investors in managed investment schemes would recoup just 25 per cent of their money, �so they haven�t turned out, for many investors, to be a very wise investment at all. The immediacy of the upfront tax deduction seems to blind the more considered judgment about wise investment.� Dr Ajani said the return from Great Southern�s hardwood plantation MIS was an estimated 1.9 per cent per annum.
She was critical of the Australian Tax Office for �providing a dispensation� to plantation managed investment schemes. �To receive that dispensation, the ATO must consider these investments are commercially viable. Without that deduction capability, most of these (schemes) would collapse.�
Dr Ajani said there was mounting evidence the schemes were not commercially viable.
�Many of them are not covering costs,� she said.
In the past year two major plantation forestry managed investment schemes, Timbercorp and Great Southern, have collapsed. But Dr Ajani said many others were still active in the market.
In 2009, ASIC reported 198 registered plantation schemes.
Speaking at the National Conference of the Australian Agricultural and Resource Economics Society in Adelaide yesterday, Dr Ajani called for tax-based assistance to forestry schemes to end, and for a Treasury review of the tax office treatment of forestry schemes.
Dr Ajani noted that the sale of Timbercorp�s 90,000ha of plantations, at an average of $2200 per hectare, was �significantly less than the establishment costs of any plantation MIS project currently on offer�. She said the assumed average investment in MIS hardwood plantations was $10,000/ha. But she estimated the actual cost of planting a hectare of trees and managing them over a 10-year rotation was $2000/ha.
She said many foresters claimed the assumptions about wood yields in MIS forestry prospectuses were optimistic, but her view was that price was �less of an overstatement than the wood yield�.
The Full Article, HERE
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1.I can hear the call now�.TIIIIIMMMMBEEEEERRRR!!!!
Posted by Dave Groves on 12/02/10 at 07:56 AM 2.Some naked emperor seems to be running this industry, without receiving due recognition. The grotesque forestry subsidies are provided by our own federal governments both Lib and Lab. They have never explained them.
The challenge seems to be to find more suitable employment for our politicians, such as in prison laundries.
john Hayward
Posted by john Hayward on 12/02/10 at 02:12 PM 3.Forest Enterprises couldn�t find it in their budget to slash the firebreaks beside my friend�s place this year .... they managed to get a few of the early thistles with a wand�. but missed all the broom infestation and the weeds that came up late in Spring/Summer.
Amazing how civic duty - even regulation - is totally ignored when funds are scarce. Even if it means risking the lives of their neighbours. It was not a risk FE�s neighbours accepted when they moved in next door.
Why should ordinary folk bear such a risk for an entity that is a poor investment? Not only do they get a taxpayer funded car and licence, they are free to drive as they like.
And they are supposed to be making money with Eco Ash, instead of woodchips. A scant few years ago sapwood was frowned upon as scantling. I guess the advertising budget may also have to go.
They should have their licence taken away and their plantations ripped out of the ground. NC
Posted by Neo Conned on 12/02/10 at 02:39 PM 4.At last, a view of plantation forestry taken in the context of other land uses.
This is good news for those trying to get some common sense into the non-existent but necessary debate about land use.
Well done to Dr Ajani and thanks for the useful data.
Posted by Mike Bolan on 12/02/10 at 02:58 PM 5.The greatest burden falls on the farmers who remain after their neighbours have sold there property to taxpayer funded pulpwood farming companies and gone laughing all the way to the bank. All farmers have to fence against their own stock. This property is now planted with the hemp and straw substitute, Nitens and becomes a harbour for wild stock, owned by no one and controlled by no one which find sanctuary there but feed on the surrounding crops. If it was made compulsory for these plantations to be fenced against pest animals there would not be the need for using vast amounts of 1080 poison. In 15 years time when it will be impossible to sell this trash being planted, one can not call it timber. The world will then be awash with pulpwood material but the land will have deteriorated.
Posted by J A Stevenson on 13/02/10 at 07:04 AM
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