Report Synopsis

Adding Value and Attracting Investment to Northern Territory Timberlands

Frank Miller

The African mahogany (AM) plantation estate in the Douglas Daly region of the Northern Territory (NT) is an example of where fundamental timberland investment drivers have been fulfilled to initiate sustained investment. Investing in, and growing a tree species, producing high value timber in a region with desired climate and within proximity of expansive markets has satisfied many hurdles of timberland investment projects. While these key elements have assisted in sustained interest in the investment, diversification through secondary income streams and exploring highest value markets for AM timber is imperative to realising optimal value of the existing resource. It was established that a preferred secondary income stream to timberland investments is carbon trading. Currently, Federal carbon trading policy does not allow plantations in the NT to be eligible for carbon credits. This is stifling new investment in timberlands for the NT.

The introduction of cattle into the plantation provides many benefits to the project: reduction of weeds, reduced fire risk and herbicide application, lower operational expenses, cashflow from agistment into otherwise long-term investment, increased nutrient cycling and the integration of two competing land uses. This integration can be refined to attract new investment to a system known as a Silvopastoral System (SPS).

As investigated throughout the author’s travels, a SPS fulfills many drivers of tropical timberland investment. Demand from institutional investors for positive environmental and social impacts are also satisfied. Cashflow from initial hay operations, followed by beef production and a commercial thinning when the plantation is ten years old all contribute to generate cashflow for the high value timber investment. A SPS driven investment in the NT will provide a range of benefits to local communities, the environment, the cattle industry, and growth of high value timber.

Market identification and implementing careful segregation of the resource is also critical to optimising the resource value. Additionally, logistics and strong commercial relationships are imperative to the success of the investment. It was found that further intensified market and domestic value adding investigations will assist in adding value to the mahogany resource in the NT.

These studies have resulted in the development of a financial model and a designed SPS for the NT. It is hoped this will attract investment and growth for NT timberlands and agribusiness.

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