Tasmanian forestry industry handed small lifeline

The move comes after The Examiner revealed on Tuesday that a slowdown in economic activity in China had resulted in lower demand for plantation woodchips.

Forico chief executive officer Bryan Hayes said eight ships, or about 400,000 tonnes, of woodchip sales had been delayed.

Harvest contractors who employ about 450 people are expected to cut jobs because of reduced quota as Forico seeks to reduce woodchip stockpiles at Long Reach and Burnie.

Resources Minister Guy Barnett said the Forestry Contractor Resilience Program would be extended from July 31 to January 29, 2021, to support forestry contractors through the challenges.

"Tasmania's forestry contractors can apply for funding to improve their business practices under the program, which is being delivered through Rural Business Tasmania," Mr Barnett said.

Mr Barnett said: "Both the Australian and Tasmanian governments have announced stimulus packages, many of which can be accessed by forestry companies."

"The Tasmanian Liberal government remains committed to protecting and rebuilding the forestry sector as our economy recovers."

Australian Forest Contractors Association general manager Stacey Gardiner said the organisation was still gathering information from members about the impact of the downturn.

"We are still working through the implications but with a significantly reduced quota it is going to have serious implications for contractors in terms of employee numbers and the retention of skills," she said.

"Contractors have a lot of skin in the game with assets that they have to make repayments on whatever the quota they have.

"They also have ongoing insurance payments as well."

She said the Association was hoping that the federal government's JobKeeper scheme could help employees.

Mr Hayes said the company would support any of its contractors who needed to go to their financier.

"We are happy to provide letters of support if they need relief on repayments for three months if that is what is required," he said.

"We are pulling every lever we can to get through this but at the moment out main priority is to protect our supply chain so that when things do improve whether it be three months or six months.

Mr Hayes said commodity markets were typically cyclical and there would be deep troughs in demand every five or seven years.

He said that contractors were at the "pointy end" because they were paid for producing tonnes.

"If they are not producing tonnes they do not get paid," he said.

The last three years had been strong.