Availability of plantation trees

IBISWorld anticipates the availability of plantation trees to stagnate at 0.0% in 2025-26 and stay at 1.703 million hectares. The total plantation area has declined over the past five years due to the loss of commercial viability in certain plantations and the non-renewal of lease agreements, particularly affecting hardwood areas. This has resulted in a significant decrease in hardwood plantation land, while softwood plantations remained relatively stable . This trend is expected to plateau in 2025-26, supported by a recovery in softwood sales volumes, which grew 16% between the first and second halves of 2025, driven by strengthening residential construction activity. However, sawn softwood apparent consumption rose only 0.4% in 2025, reflecting ongoing caution in domestic demand, which continues to limit the incentive to establish new plantations.

The plantation sector has remained largely stagnant over the past decade, with minimal expansion despite the urgent need to establish 200,000 to 250,000 hectares of new softwood plantations to meet future log supply demands. Several key challenges continue to hinder growth, including high upfront costs, lengthy investment return periods of approximately 25-30 years and modest average returns of 3-4%, which fail to attract sufficient private investment. The transition from government to private ownership has reduced incentives for plantation development, compounded by declining research and development funding and persistent obstacles including limited land access, water allocation constraints and transportation inefficiencies. While the federal government's Timber Fibre Strategy, released in July 2025, commits over $73 million to the Support Plantation Establishment program and outlines 128 actions to revitalise the sector, new planting activity of approximately 3,700 hectares per annum remains well below the scale required to meaningfully reverse the structural decline.

Escalating climate risks continue to threaten the existing plantation estate. According to a March 2026 study published in npj Natural Hazards (Nature Portfolio), extreme fire weather events across southeast Australia's eucalypt forests are projected to become approximately 2.1 times more likely under 3 C of global warming. The 2025-26 bushfire season again produced damaging conditions across key plantation regions, adding pressure to plantation stocks. These risks reduce the confidence of long-horizon investors and compound existing challenges around securing insurance and financing for new establishments. Overall, IBISWorld forecasts the availability of plantation trees to weaken at a compound annual rate of 0.5% over the five years through 2025-26.