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Growing the Northern Territory Timberlands

African mahogany is an internationally important, high-value forest tree species, native to the arid tropical zone of the Sahel region of Africa.

It has also proven itself to be compatible with the Northern Territory environment, as demonstrated by the existing African mahogany plantation estate in the Douglas Daly region.

There is potential for African mahogany plantation expansion, but for this to happen, there is a need to understand the drivers for high-value timber investment, including ways to add value to the existing resource.

Frank Miller, CEO of African Mahogany Australia, was awarded a Nuffield Scholarship, to undertake an investigation into African mahogany silviculture and valuing adding.

According to Miller the Northern Territory has the largest area of African mahogany plantations in the world.

“Despite this, there was a knowledge gap around the most effective ways to grow the resource in this specific environment. We currently have a first generation crop showing immense commercial promise. With further refinement of genetics and silviculture this crop will enjoy significant improvement.”

Current African mahogany plantation management in the Northern Territory has seen cattle introduced to plantations. This approach is known to help eliminate weeds, reduce fire risk, lessen the need for herbicide application, lower operational expenses, and increase nutrient cycling.

Miller sought to investigate a refined version of this system that has been successfully used internationally, known as a Silvopastoral System or SPS.

This integration of forestry and cattle farming, two traditionally competing land uses, can be refined to create an SPS. This approach has proven successful overseas as a tool for attracting new investment.

To discover whether creating an SPS has similar potential in northern Australia, Miller visited sites in the USA, Costa Rica, Colombia, Paraguay, New Zealand and China, where he was able to observe a number of existing SPS.

“I looked at SPS internationally, and considered how those models might be adapted to suit the Northern Territory environment,” Miller said.

Miller was able to identify the different elements that make an SPS work, before assessing its feasibility in the Northern Territory.

“I was pleased to note that SPS models successfully fulfil many of the drivers for tropical timberland investment,” said Miller.

“Cash flow from initial hay operations, followed by beef production and commercial thinning of the resource after ten years, all contribute to the kind of improved cash flow that is attractive to high value timber investors.

“And the list of benefits doesn’t end there. Demand from institutional investors for positive environmental and social impacts can also be satisfied through an SPS.

“We also believe SPS-driven investment in the Northern Territory will provide a range of benefits to local communities, the environment and the cattle industry,” said Miller.

Alongside SPS-related considerations, the study investigated how the value of the African mahogany resource in Australia can be optimised post-forest gate, through secondary income streams and by better understanding supply chains, high-value markets, and the barriers to adding value.

Miller considered options for value-adding through reduced labour costs and looking at the entire suite of products that can be produced using African mahogany. By visiting manufacturing plants in China, valuable information was gathered on the many applications this particular timber species is used for, as well as market trends, manufacturing specifications, substitute species, and quality standards.

“I also discovered that a preferred secondary income stream amongst high value timber investors is carbon trading,” Miller said.

The studies resulted in the development of a specially designed SPS for the Northern Territory, as well as a financial model that further displays the attractiveness of investing in the region following the establishment of an SPS, with an internal rate of return expected of 11.1 per cent.

It is hoped the SPS and financial model can now be used to attract investment and generate growth for the region’s timberlands and agribusinesses.

In addition, Miller has published a report including his recommendations to overcome some of the barriers to investment, which he believes are primarily associated with infrastructure and access to carbon payments.

These recommendations include a call from Miller for the Northern Territory Government to work collaboratively with industry on refining the SPS to ensure optimal results for local timber, hay and beef production. Miller also recommends that industry work with government to advise on a sustainable land development policy that will attract more investment into plantation forestry.

“The goal now is to use this investigation as a foundation to continue to add value to the existing Northern Territory African mahogany resource, and attract investment for a land-use system that is sensible, sustainable and profitable,” said Miller.

“Ideally there will be a continuation of existing estate monitoring over the next six years, with the results used to inform the continued evolution of the SPS.”

To find out more about Miller’s work you can download the full report by clicking here.

Posted Date: September 17, 2020

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