Woodchip Driven Logging in the Otways: An Economic Analysis
Departmental logging revenue
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Benchmark Two: Departmental Logging Revenue
Economic significance of sawlog and Residual log revenue to DNRE (Forestry Victoria).
The Department of Natural Resources and Environment through its business arm, Forestry Victoria, allocates, sells and organises the extraction of hardwood timber from Victorian State Forests. The two primary customers of Forestry Victoria are:
The clearfell logging extraction method has operating costs that must be paid for. These operating costs include:
Forestry Victoria is required to charge the sawmill and woodchip (Residual log) customers to recover operational costs and provide a 4% pa return to the Government for sale of sawlogs
Source: Timber Industry Strategy
Charges are made to both the sawmill and residual log/woodchip industries to cover Departmental operating costs. They include:
Note: A proportion of the sawlog royalty fee is a payment to the Timber Promotion Council
Forestry Victoria’s (DNRE) four sources of revenue can be allocated between the sawmill and Residual log (woodchip) industries to determine which industry is economically more significant
The 1986 Timber Industry Strategy clearly states logging must be sawlog driven and woodchips must be a by-product of sawlog driven operations. Under such a policy it is reasonable for the public to expect that most of the revenue to conduct logging operations will be provided by the sawmilling industry to ensure that logging is in fact sawlog driven.