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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2012-07-12 Daily Xml
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MORGAN SAWMILL

Mr VAN HOLST PELLEKAAN (Stuart) (15:14): I rise today to talk about the Morgan Sawmill at Jamestown. This is a family business based at Jamestown, but previously based at Wirrabara. It is a multigenerational family business and they employ 30 full-time people in three locations. They have their sawmill at Jamestown, which is their main business. They have a treated pine business based in Loxton and they also have a sawmill direct business at Wingfield. However, as I said, the sawmill at Jamestown is their primary place and that is where they employ most of their people.

The Morgans have based that business at Jamestown based on the wood that is supplied from the Bundaleer and Wirrabara forests. As you might know, Madam Speaker, they are the only two forests in that part of the state. They serve many purposes. Their charter actually includes community and heritage responsibilities, but they do certainly still produce commercial grade.

The Morgans have customers throughout South Australia; in fact, interstate as well. I congratulate them on the growth of their business, which has been based on hard work and planning. The planning to develop their business includes the fact that they have set themselves up at Jamestown so that they can process what is produced locally. They are the only local sawmill, and both the Bundaleer and Wirrabara forests combined have the capacity to produce about 25,000 cubic metres of wood per year. That is exactly what the Morgan Sawmill can process as well, and they have a contract in place with ForestrySA for that much wood. So, everything is very well-balanced in that part of the world, and that is certainly not by accident.

As one would understand and expect, forests produce high-quality wood, medium-quality wood and low-quality wood, and it all comes out together. You manage a forest so that ideally it produces as much high-quality wood as possible, but you get the lot. That is how the Morgans have established their business. They can actually process the high, the medium and the low-quality wood.

Any sawmiller would prefer to have more high-quality wood because it goes into higher quality output and produces more profit; lower quality wood, of course, makes less money. However, the Morgans have set themselves up so that they can process the lot, everything that comes their way. They can do the complete mix. That is an important part of their business. Of course, their contract includes the fact that they can have access to all of that wood, not just the good stuff and not just the poor stuff. However, at the moment they are encountering a problem, and that is that a large part of the good wood coming out of those two forests is actually being sent to Adelaide and all of the poor-quality wood is being sent to them to be processed. Not only is that unfair on them and on their profitability, but it is also causing some production problems, potentially some downtime and also some impact on their future capacity for the employment of locals.

The Morgans were told by ForestrySA that that is due to price, that it is getting better prices in Adelaide for the higher quality wood than the Morgans are offering. Without going into the details, for obvious reasons, the Morgans have spoken to various people throughout the industry and they have established that that is actually not the case when you include freight.

It certainly seems that the price being paid for the wood alone in Adelaide is slightly higher, but when you add the cost of the freight on to the price that ForestrySA incurs, the net return to ForestrySA is actually not higher when the wood is sent down to Adelaide. So, the Morgans are a bit perplexed about this. I will look into this matter with the shadow minister for forests, the member for Hammond, Adrian Pederick, and we will discuss it with the minister.

This is a really concerning development because these people have put a great deal of effort into making sure their business is set up to process, both with regard to volume and also with regard to the various qualities of wood that come out of the forests. They are doing everything that they can to set up a sustainable business and to support a sustainable forest, and they have a contract with ForestrySA that supports that.

Given that they have that contract, if ForestrySA sends wood to Adelaide, it is going to have to send wood from other forests up to Morgans. That would not be efficient because you would have freight going backwards and forwards. So, I appreciate the opportunity to put this issue on the record in the house, and I will certainly pursue it further.

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