Forestry groups and co operatives anticipating renewed interest in the sector as a source of carbon credits in the lead up to a national emissions trading scheme have been left reeling by the decision.

They say the Government is taking a short term view and has overlooked the fact that with the cut back in logging in native forests and the growing deficit in terms of trade in timber products, agriculture is the only sector with the land available to help meet future growth in demand for long rotation timber.

Benalla dairy heifer rearer Angus Howell, who ran the Department of Primary Industries’ successful Farm Forestry North East (FFORNE) strategy which resulted in the planting of 1700ha of native hardwoods and establishment of a 90-member commercially focused co operative, said disbanding the unit was flying in the face of common sense.

“It is the complete opposite of what they should be doing,” he said. “Everyone is just aghast.”

Mr Howell said the majority of commercial plantings now going in were for short term woodchip production for export as pulp, driven by the favourable tax treatment available under managed investment schemes rather than commitment to the end product.

Nor were woodchip plantations suited to developing carbon credits because of the shorter rotations and large amounts of carbon used in harvesting.

“Clearly we are facing a crisis,” he said. “We have a deficit of $2billion a year in timber products. We are importing speciality timbers for furniture production, flooring, window frames and architraves. We are protecting native forests for the future but we are not doing anything about increasing the resource on the only land available, cleared agricultural land.”

Mr Howell said farm foresters depended on the Department of Primary Industries’ private forestry unit for advice and support.

“Without them nothing like the area planted would have gone in,” he said. “They have been an enormously useful resource in terms of advice and in terms of promoting the whole concept of tree planting as a commercial enterprise integrated with a whole range of farming operations.”

He conceded the long time frame for sawlog production of 25 years plus and ongoing management costs had acted as a deterrent to expansion of the industry, particularly among farmers cash strapped by the drought.

But he said with the closure of native forests and the likely introduction of a national emissions trading scheme there had been growing interest from superannuation funds and other investors in farm forestry.

“There is an opportunity for carbon,” he said. “There are people interested in planting on rural properties. They have said yes we are interested; the sums do appear to add up. But this sends a clear message to investors that it is not an industry that works. It doesn’t make sense as the only place you can plant for carbon sequestration is on cleared agricultural land.”

Studies have shown up to 10 per cent of farms can be planted to timber without an impact on profitability, in part due to the animal husbandry, biodiversity and environmental benefits they provide.

Mr Howell said forestry could be easily integrated into a range of farming operations and although managing trees for quality timber did require ongoing costs of thinning and management, European experience had been that trees could be a profitable enterprise.

He said growers were not looking for direct funding, only for support.

“Farmers in the main do not have the money to establish trees with a 25 year horizon,” he said. “We are not looking for plantation establishment money, but for help changing the culture to bring investment in.”

Agriculture Minister Joe Helper’s office declined to confirm or deny the unit was being completely disbanded, answer questions on the future of private forestry officers who have made up the unit or on the Government’s future commitment to farm forestry.

A spokesman would say only that the DPI was currently developing a timber industry strategy, which would cover all areas of the industry and would inform future decisions.

"Currently funding for the private forestry comes from the Plantations Incentive Strategy which is coming to the end of its life span,” he said.

"Each year the total number of DPI staff, the type of work they do and where they are located fluctuates depending on the project and industry requirement. When projects commence or conclude, staffing needs change accordingly."