Production in Australia’s forests is forecast to flatline over the next five years, with increased competition from structural steel — especially in detached housing — a major cause of concern for Australia’s softwood industry, already grappling with a push by developers and builders away from detached housing toward steel-friendly mid-rise and high-density systems.
That is according to the latest ABARES Agricultural Commodities Report, published yesterday, which revealed that the gross value of forestry (GVP) production is expected to reach $2.23 billion in 2026-27 — a 3 per cent nominal increase or a 1 per cent real increase. And over the medium term, the GVP is projected to drop back $2.1 billion, with no material growth expected until at least 2030-31.
“If builders shift further toward steel framing systems — driven by price competitiveness, supply certainty, prefabrication efficiencies or changes in building standards — demand for structural softwood products could weaken,” according to the report, which warns that the percentage of four-storey or greater apartment blocks could rise from 18 per cent to more than 30 per cent. “This directly affects sawlog markets, particularly plantation softwood used in framing and engineered timber products.”
By the numbers, total gross value production in forests has dropped by 36 per cent over the past eight years — from about $3.4 billion in 2017-18 — with softwood relatively steady at about $1.5 billion, hardwood plantations flatlining at $0.5 billion and native forest continuing what is now a 20-year decline.
According to Diana Hallam, CEO of the Australian Forest Products Association, whilst the topline figures point to the vital role of sustainable forestry in producing essential products, the report also identified serious challenges and headwinds for the sector.
“Some of these challenges and risks include high manufacturing and energy costs, greater use of structural steel in residential and mid-rise construction, as well as a growing amount of imported timber products of varying quality flooding the Australian marketplace, including from China,” she said.
Hallam said the new estimates also reaffirmed the importance of aligning the government’s policy with Australia’s Timber Fibre Strategy, which outlines opportunities for the industry to make a greater contribution to national goals in carbon, innovation, and housing construction.
Softwood up, hardwood down, native at historic lows
The value of softwood plantation production is forecast to increase slightly in 2026-27, driven by short-term movements in detached housing demand. But ABARES warns that a gradual shift toward higher-density dwellings is expected to temper timber demand over the medium term, whilst projected increases in softwood log availability will ease unit prices.
Hardwood plantation production, however, is heading the other way.
And that’s because ongoing shifts in global paper markets are placing downward pressure on woodchip demand, whilst Vietnam’s growing share of global trade — combined with projected exchange rate changes — is continuing to erode Australia’s competitiveness overseas. ABARES expects Australian hardwood woodchip exports to settle at similar volumes but lower unit prices, with Australia holding a smaller, more specialised role in the market.
And then there is native forestry, where production has now fallen to historically low levels following 20 years of contraction driven by the transfer of multiple-use public native forests to nature conservation reserves and increased harvest restrictions.
A $570 million downward revision
ABARES has slashed its forestry forecast by more than $570 million — a 21 per cent revision from its December report — with exports the major driver of the writedown, down more than $619 million amid weaker production and prices.
It comes days after this masthead reported on a new white paper from the Rozetta Institute arguing that Australia needs a national roadmap to boost forest productivity and encourage new capital into the market.
On Friday, Wood Central spoke to the white paper’s lead author, Steve Walker, Principal of Terrafolia Advisory, and co-author Dr Lyndall Bull, who revealed that Australian plantations produce just 15 to 18 cubic metres per hectare per year against international benchmarks of 30 to 50.
And on Monday, Walker went further, telling Wood Central the sector’s decades-long focus on cost discipline had come at the expense of genuine value creation. “Lifting productivity on the land already planted is the fastest and most scalable opportunity,” Walker said. “International benchmarks in Brazil, India, Vietnam and China demonstrate that 30 to 50 cubic metres per hectare per year is achievable using proven technologies already available.”
“If we can do this, we can ultimately strengthen our capacity to produce more competitive engineered wood products like LVL and other EWPs,” he said, adding that the downstream benefits could add tens of millions of dollars to regional communities.
- For more information, including the ABARES full March 2026 Agricultural Commodities Report, visit the Australian Bureau of Agricultural and Resource Economics and Sciences.
