Dr WOODRUFF - Is the company involved in chain-of-custody management processes for its customers, for its customers' products in Victoria or elsewhere?
Mr WHITELEY - We provide an assurance that wood that is sold from our land is certified. When they purchase that, they are then responsible for maintaining records. We maintain records up to the point of sale to a customer. Clearly, chain of custody then roles through to the supply chain, so if those processes then wish to sell their certified wood to other parties, they need to maintain that chain of custody. We do our bit as the grower to make sure we have started the chain of custody which then, at the option of our customers, can clearly continue on to a finished product and that is for any scheme. So, that is both responsible wood or FSC. There is a similar principle when it comes to chain of custody.
Dr WOODRUFF - Are you aware of on selling of Tasmanian product?
Mr WHITELEY - I would hope so. That's what a supply chain is.
Dr WOODRUFF - Of course it is. But the situation in Victoria, with their subsidies that have alleged to be heading towards the Victorian forestry industry, which is being wound up at the moment -
Mr ELLIS - I think you mean buy-outs.
Dr WOODRUFF - On selling in the chain. Do you think -
Mr WHITELEY - In terms of us selling our logs to Tasmanian processors, we don't monitor what they do with that. In fact, many of the businesses clearly have customers in Melbourne and Sydney and other places. They've got distribution. That's been decades-long established business practice so I'd expect that they would value a chain of custody and that would flow through their processes, whether they are re manufacturing within a vertically integrated business or selling to somebody else who maybe then sells furniture or timber in some other form.
Dr WOODRUFF - In terms of the announced shutdown of Ta Ann's mill at Southwood, what changes have there been in terms of contracts and the supply volumes?
Mr WHITELEY - The wood that had previously been contracted to Ta Ann, Ta Ann relinquished that contract. They were simply unable to operate any more. So, we went through a tender offer process. Some of that wood has been picked up by the other processing business at Southwood, which is Neville Smith Forest Products. Any of the wood not suitable for their process goes to mainly log export and, if not suitable for that, into the woodchip export market.
Dr WOODRUFF - What are the amounts that the companies are obliged to deliver to Ta Ann and Shin Yang, Patriarch and Sons, now?
Mr WHITELEY - In terms of the various non sawlog processing bidders, we maintain contracts with Ta Ann at Smithton. They are long established contracts and they remain in force. In terms of the log export markets, it is effectively spot sale. If we have surplus wood that is not requested by Tasmanian businesses, we will potentially offer that to log exporters of various types if they're interested in the logs at the time.
Dr WOODRUFF - Can you provide on notice the volumes that are going to Ta Ann?
Mr WHITELEY -We've reported it, it's in the audit report. We don’t name Ta Ann but by the nature of the product, domestic peeler logs, our only customer is Ta Ann.
Dr WOODRUFF - If I understood it, Shin Yang, Patriarch and Sons, are you saying you're not delivering volume to them now?
Mr WHITELEY -We do and that’s reported in the annual report as well. There's a category that's reported, what we sell to exporters.
Dr WOODRUFF - Chair, in 2016 the previous Chair wrote to the shareholder adminstor at the time and highlighted the unconventional nature of Forestry Tasmania's contracts. Specifically the stumpage price that was being charged was about 50 per cent less than in other jurisdictions. Something that was embedded in contracts during price negotiations. Has the stumpage price being charged by the company changed since 2016 and if so how much has it increased by?
Mr de FEGELY - Thank you, yes it has changed. I'll ask the CEO to actually give a number on it. We've gone through a number of pricing negotiations since then or since I have been the Chair anyway.
Mr BROOKWELL - Your question again, please?
Dr WOODRUFF - Has the stumpage price being charged by the company changed since 2016? It was embedded at about 50 per cent less than other jurisdictions in 2016. Has it changed?
Unknown - It was under a Labor-Greens government from memory when that was initially done.
Dr WOODRUFF - The stumpage price and how much has it increased by?
Mr BROOKWELL - The stumpage is essentially the return we make, which is the difference between the revenue and the cost that we incur, so we essentially manage the price that we charge to customers and the cost that we incur with the contractors and both of those have moved since 2016.
Dr WOODRUFF - Then what are they? Can I take that on notice please?
Mr WHITELEY - We don't provide specifics around our commercial arrangements with individual customers.
Dr WOODRUFF - It's a general question.
Mr WHITELEY - In answer to your relative question, part of the default arrangement is a CPI increase, which runs over a number of years. We've had two -
CHAIR - I am sorry to say, but the time has expired. I thank you all very much for coming along this afternoon.
