Australian forestry has been held back by decades of productivity stagnation and capital misallocation — and the industry’s own training is partly to blame.
That is according to Steve Walker, Principal of Terrafolia Advisory and lead author of the Rozetta Institute’s new white paper, A National Pathway for High-Productivity Forestry and Renewable Carbon Supply, who told Wood Central that the value chain had built a culture of cost discipline that, whilst producing stable and resilient assets, had come at the expense of genuine value creation.
“For most of the past century, foresters have been trained exceptionally well to manage cost,” Walker said. “We are taught to protect the estate, control establishment and harvesting costs, deliver predictable yield, minimise risk, avoid catastrophic loss and maintain certification and compliance.”
Whilst this discipline has produced stable and resilient assets, stability is not the same as optimisation: “And in a capital-constrained world, that distinction matters.”
That’s why Dr Paul Dalby, CEO of the Rozetta Institute, is backing the development of a new roadmap to address the barriers to productivity across the country’s forest-based value chain.
“Timber is increasingly a strategic resource for Australia that underpins housing, renewable fuels, green materials and regional employment,” Dr Dalby said. “Rozetta Institute supports the recommendations of this report, which is to develop a national roadmap to address the systemic challenges that currently inhibit the productivity of the timber resources in Australia.”
On Friday, Wood Central spoke to Walker and co-author Dr Lyndall Bull, who revealed that Australia could dramatically improve the productivity of its forest assets by using modern genetics, clonal propagation and precision silviculture, all without planting new estates. Today, Walker went further, arguing the productivity gap is a symptom of a deeper structural problem rooted in how the industry thinks about returns.
Managing cost vs creating value
Walker said cost management focuses on reducing expenditure per hectare, improving harvesting efficiency, and avoiding volatility. Value optimisation asks different questions — how to lift yield per hectare, improve log mix and recovery, and monetise carbon and residue streams.
“One mindset protects margin,” Walker said. “The other expands it.”
Walker said Australia’s plantation estate had shed more than 300,000 hectares over the past decade, whilst demand for structural timber, engineered wood, renewable carbon and industrial biomass continued to grow, a divergence he said was too often framed as a land-use or policy issue.
“It is more accurately a portfolio performance issue,” he said. “If forestry consistently delivered compelling, risk-adjusted returns relative to other asset classes, capital would scale it.”
“Capital flows toward productivity. It does not flow toward hectares alone.”
Dr Bull, Director and Principal Consultant at Lynea Advisory, who has worked on forest product market development across Asia-Pacific and global supply chain policy, agreed, telling Wood Central the investment case for productivity-led forestry was well understood internationally, but that Australia had lacked a clear framework for acting on it until now.
Where forestry fits right now
Walker said the industry had evolved as a biological science, a land stewardship profession and a long-cycle asset management model — but not as a vertically integrated industrial platform, an energy transition asset or a capital markets optimisation product.
“The industry often debates expansion before optimisation,” he said. “But expansion without productivity gains simply scales mediocre returns.”
“Capital discipline requires a different sequence — optimise the existing estate, lift biological productivity materially, integrate downstream processing and carbon strategy, secure offtake, and only then expand.”
Walker said forestry was increasingly part of energy transition portfolios, industrial decarbonisation strategies, and sovereign manufacturing, and that this demanded integrated thinking across biology, logistics, processing, and capital.
“It requires foresters who understand finance and financiers who understand forestry,” he said. “The next phase of the industry will be defined not by cost containment, but by value creation. And value creation begins with productivity.”
Please note: Wood Central will have further coverage of the Rozetta Institute white paper in the coming weeks.
