and another 1 bites the dust

Third MIS giant collapses
Leslie White

April 22, 2010
A THIRD Managed Investment Scheme forestry giant has collapsed.

Forest Enterprises Australia, which controls 72,000 hectares of MIS plantations, has gone into voluntary administration.

Its operations were based in Tasmania, where it had a pulp mill, but much of its plantations were in NSW.

The company had cleared native forest to make way for plantation in the early 2000s.

The collapse could see the Australian market flooded with yet more plantation timber land.

Elders, which owned 13.5 per cent of the company, has written off its stake, which it valued at $32.4 million. Tasmanian forestry giant Gunns also had a share in the operation.

Sustainable Agricultural Communities Australia director Rob Belcher said the collapse was "inevitable".

"I've called it a pyramid selling arrangement ... it must fail by definition," Mr Belcher said.

"There is an inevitability about all of this. You can spin it but you can't escape the reality of what is a false economic arrangement. And guess who's left with the mess."

Australian National University forestry economist and forest industry analyst Judith Ajani said FEA would have had "more robust" opportunities for its plantation products if Tasmania, NSW and Victoria had stopped logging native forest, which competed in some of the same markets.

"The loss-making activities (of state government logging operations such as VicForests and NSW Forests) is ... to the detriment of the hardwood plantation chip sector," she said.