Competitive Neutrality in Forestry

Competitive Neutrality in Forestry outlines the States and Territories' application of competitive neutrality (CN) principles to their forestry operations and considers the implications of CN for log pricing.

The research paper by the Commonwealth Competitive Neutrality Complaints Office, within the Productivity Commission, finds that CN implementation varies between jurisdictions and encompasses some differences in approach.

Commissioner Mike Woods said that 'the implementation of competitive neutrality is requiring State forestry agencies to adopt a more commercial focus in their business activities. This should help reduce the likelihood of logs harvested from native forests being priced below cost'.

In practice, it can be difficult to assess the appropriate cost base for the commercial operations of forest agencies and, hence, to identify the underlying cost of logs. The paper finds that, in these circumstances, the use of residual values - derived by subtracting harvesting, transport and processing costs from prevailing international prices of processed wood products - can be a useful alternative way of getting a 'fix' on the full market value of logs.

Background information

02 6240 3330

• Preliminaries (PDF - 46 Kb)
  Cover, Copyright, Preface, Contents, Key messages and Summary
• Chapter 1 Introduction (PDF - 13 Kb)
  1.1 Background
  1.2 What is CN policy about?
  1.3 Structure of the paper
• Chapter 2 Forestry background and institutional framework (PDF - 66 Kb)
  2.1 Nature of forestry and the forest products industries
  2.2 Current institutional framework in forestry
• Chapter 3 Application of CN to forestry (PDF - 49 Kb)
  3.1 Implementation by jurisdictions
  3.2 Performance of forest agencies
• Chapter 4 Log pricing issues (PDF - 48 Kb)
  4.1 Log pricing
  4.2 Market structure and log prices
  4.3 How will underpricing affect private growers?
  4.4 Non-price impediments to private growers
  4.5 CN implications
• Chapter 5 CN and the broader policy context (PDF - 19 Kb)
  5.1 The role of CN
  5.2 Competitive markets for logs
  5.3 Legislation reviews
  5.4 Transparency of pricing outcomes
  5.5 Extension of market-based approaches to the provision of non-wood outputs
• References (PDF - 20 Kb)