Australian forestry is set to come under heavy pressure as residential construction takes a hit around the world during the coronavirus recession.
Ongoing fallout from the summer bushfire crisis will also hurt the sector for decades after infernos burnt 8.3 million hectares of native forest and 130,000 hectares of plantation.
The Australian Bureau of Agricultural and Resource Economics and Sciences on Tuesday released a report into the impact of fires and coronavirus on forestry.
A predicted fall in new homes being built has fuelled fears that demand for sawnwood could decline by almost 50 per cent over the next six months.
Reductions in domestic demand for wood are likely to be compounded by an increased supply of logs over the next 12 months, as forest growers salvage fire-affected trees.
ABARES acting executive director Peter Gooday said many of the bushfire impacts could take months to flow through.
"While the duration of the economic impacts of COVID-19 are uncertain, the bushfires could have lasting effects on domestic log supply for decades to come," Mr Gooday said.
He said there remained uncertainty around bushfire damage and what could be salvaged.
"The extent to which fire-affected trees can be harvested depends on the severity of the fires and the types of logs," Mr Gooday said.
"For example, if they are not severely burnt, sawlogs may still be processed by domestic sawmills and pulplogs may still be chipped to produce packaging and industrial paper and paperboard products."
Growers may look to export markets with limited opportunities to sell domestically, he said.
Trade has remained strong despite coronavirus restrictions.
Values of forest and wood product exports were low across January and February compared to the previous five years, but exports recovered in March, putting them back within the historic average.
"However, we may still see impacts on trade in the coming months as global demand for wood products falls and the effects of the bushfires on log supply are realised," Mr Gooday said.
Australian Associated Press
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