Private Forestry Fact Sheet Number 11

Woodchip export prices explained

The price paid for export woodchips depends on the world price which fluctuates with supply and demand. Woodchips are sold on the basis of bone dry units (BDUs) which take into account the variation in wood density and moisture content. BDU is a measure of the quantity of fibre in one kg of dry fibre. This fact sheet explains how the price the grower receives as part of the Green Triangle Treefarm Project is calculated, based on export prices in terms of BDUs.

Under the terms of the Green Triangle Treefarm Project’s Grower Agreement, the base price per tonne which the grower receives for the product is set at the time of signing the agreement. It depends on the distance of the plantation from the Port of Portland.

To determine the actual price which the grower receives at the time of harvest, this base price is indexed to the price of Tasmanian Hardwood Export Woodchip using the International Chip Price Factor. In other words, the base price is multiplied by a factor reflecting the price of Tasmanian woodchip. The Tasmanian Hardwood Export Woodchip prices for each quarter from 1984-2006 are shown below.

Tasmanian Hardwood Export Chip Price
($Aus/Bone Dry Tonne)

  Quarter Annual
Average		 5 year
Running
Average
Year 1 2 3 4
1984 80.84 80.84 83.13 83.13 81.99 na
1985 92.78 92.78 94.80 94.80 93.79 na
1986 102.70 102.70 110.23 110.23 106.47 na
1987 119.42 119.42 124.24 124.24 121.83 na
1988 129.98 129.98 135.03 135.03 132.51 107.32
1989 142.38 142.38 145.32 145.32 143.85 119.69
1990 142.84 142.84 141.00 141.00 141.92 129.31
1991 141.00 141.00 140.54 140.54 140.77 136.18
1992 140.09 140.09 140.09 140.09 140.09 139.83
1993 140.09 140.09 140.09 140.09 140.09 141.34
1994 141.92 141.92 141.92 141.92 141.92 140.96
1995 151.11 151.11 151.11 151.11 151.11 142.80
1996 155.50 155.50 155.50 155.50 155.50 145.74
1997 152.50 152.50 152.50 152.50 152.50 148.22
1998 155.50 155.50 155.50 155.50 155.50 151.31
1999 145.50 145.50 145.50 145.50 145.50 152.02
2000 143.00 143.00 143.00 143.00 143.00 150.40
2001 150.00 150.00 150.00 150.00 150.00 149.30
2002 149.00 149.00 149.00 149.00 149.00 148.60
2003 156.00 156.00 156.00 156.00 156.00 148.70
2004 159.00 159.00 159.00 159.00 159.00 151.40
2005 162.00 162.00 162.00 162.00 162.00 155.20
2006 162.00 162.00 162.00 162.00 162.00 157.60
2007 166.50 166.50 166.50 166.50 166.50 161.10

The International Chip Price Factor is calculated by dividing the average price of the Tasmanian Hardwood Export Woodchip Price for the five years (20 quarters) preceding the quarter in which the woodchips are delivered, by the average price of the Tasmanian Hardwood Export Woodchip Price for the five years (20 quarters) preceding the quarter in which the trees were planted.

As an example, assume that trees were planted in July 1994(3rd quarter) and harvested in October 2005(4th quarter), the International Chip Price Factor would be calculated (using the figures given above) as follows :

154.25 (average $ for the 20 quarters preceeding harvest) = 1.09
141.30 (average $ for the 20 quarters preceeding planting)

Assume that the base price per tonne (set at the signing of the contract) was $29, the price per tonne paid to the grower at harvest would be:

Base Price x International Chip Price Factor  
29 x 1.09 = $31.66 per tonne

For further information contact:
ForestrySA
E-mail: forestrysa@forestrysa.sa.gov.au

Mt Gambier
Phone: (08) 8724 2888
Fax: (08) 8724 2870

Disclaimer: While this publication may be of assistance to you, the government of South Australia and its officers do not guarantee that it is without flaw of any kind or is wholly appropriate for your particular purpose. The Government therefore disclaims all liability for any error, loss or other consequence that may arise from you relying on any information in this publication.

Last Revised March 2007