Lawson Grains' new owner is a forester who wants to work with farmers

A Sydney-based global investment manager specialising in forestry, carbon, row-cropping and timber processing, New Forests has $7.7 billion in assets under management across 1.1 million hectares.

Speaking ahead of his Impact X Summit Sydney 2021 address this week, chief executive David Brand said agriculture was a good fit in its forestry-dominated portfolio and pointed to its deal to purchase Lawson Grains.

"One of our clients was very interested to expand into agriculture," he said of the investment.

"We've been cropping maybe 10,000-15,000ha in Western Australia that was formerly under trees in ex-Great Southern plantations and so, when Lawson Grains came up for sale, that gave us an opportunity to expand our cropping.

"Where you've got cropping and forestry and conservation and biodiversity areas you can be thinking about that in terms of whole-of-landscape outcomes and carbon production systems optimization between forestry and agriculture."

New Forest wanted access to more land, Mr Brand added, through partnerships with farmers.

"As we look to expand the forestry estate, there's hopefully going to be an opportunity ... where we can potentially be joint venturing with rural landowners or leasing land that's maybe less suitable for agriculture so we start to create a landscape that integrates forestry with farming," he said.

The form of the arrangements was negotiable, Mr Brand said, and could involve a straight land lease or a share in either the carbon credits or the timber that plantations produced.

"The idea is to explore the structure that is of most interest to the farming community so that it's a win-win approach," he said.

"From our perspective, this is more capital efficient, and it's also more aligned, I think, with rural community interests.

"I know, previously, there has been concern that an organisation like us would come and buy large amounts of land.

"We would rather a model that's based on partnerships. And maybe from time to time we buy some properties, but generally we're focused on trying to build a regime that's working with the local communities that are there today."

The scale of the on-farm plantings would need to be at least 20-40ha to make management viable, Mr Brand said.

New Forests would engage contractors to maintain the plantations over the term of the arrangements, which would be about 15 years for eucalypt plantations or 30 years for pines.

At farm level, Mr Brand said, forestry needn't crowd out farming either.

"When you sit down with a farmer, they'll say, 'Look mate, this 100ha over here, I don't make any money from it, if you could work that for forestry, I'd be happy to have a go'," he said.

"We're trying find ways we can optimize land allocation and not try and take the prime country that's there for growing wheat or canola or barley."

Mr Brand said forestry presented an opportunity for agricultural regions to diversify.

"You might have some years that agriculture is in the doldrums or you've maybe had a drought but the forestry maybe can keep going, so there's still economic activity in the community there that can help balance and diversify the agricultural core businesses," he said.

New Forests was looking for land with average rainfall of more than 600 millimetres, good soils, and proximity to sawmills or ports.

It's a very similar description to good farming land but Mr Brand said forestry would not compete with production of food and fibre.

"There's probably six or seven key what we call 'forestry hubs' and that's where we've got consolidated timber processing, and scale and capacity of existing plantations, so we'll focus forestry into those areas," he said.

They were the Green Triangle region around Mount Gambier and Hamilton, south-west Western Australia, northern Tasmania, and the Murray Valley region in New South Wales and Victoria.

"The whole forestry estate in Australia is less than 2 million hectares, so it's tiny compared to agriculture but we do want to expand because the country has a huge timber deficit," Mr Brand said.

"We're importing sawn timber from places like Scandinavia, and that can be quite volatile in terms of its pricing.

"Particularly now when we've got a strong housing market, I think there's a desire to have more of our timber produced domestically."

Those hubs tie in with federal government declared regional forestry hubs that encourage industry, state and local governments to plan forest industry growth.

Mr Brand said the failure of the MIS schemes was not being repeated.

"We're recognising the role that we play in rural communities, we relentlessly pay our bills on time and that means that all these small businesses are bankable," he said.

Over the last decade, he said, New Forests had "almost completely recapitalized the forestry sector in Australia" with new equipment.

"And today, I think the forestry sector in Australia's ready to grow, is completely modernized, is expanding, and is internationally competitive," Mr Brand said.

"So I think a lot of that has been leaving behind that legacy of the managed investment scheme era, and now moving into an era of institutional investment in the sector."

The expansion of the forestry industry provided Australia with two big opportunities, Mr Brand said.

"One is removing carbon dioxide from the atmosphere and storing that in forests. whether those be revegetation of natural vegetation or commercial forestry plantations," he said.

"The second is what we call the circular bioeconomy, where we're systematically trying to substitute wood products and biomass and biomaterials for concrete, steel, plastics, polyester fabrics.

"We think there's a great opportunity for Australia to be active in some of those new climate solution areas."

Mr Brand was a speaker at the Impact X Summit Sydney 2021 this week.

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