A national shortage of wooden pallets could threaten the supermarket supply chain in the lead up to Christmas.

The country's largest timber pallet manufacturer, Dormit, owned by Pentarch at Dandenong South in Melbourne produces 70,000 pallets each month, which are used to move stock for the major supermarkets.

But the Construction Forestry Mining and Energy Union said the mill was running out of logs and was winding down production. 

CFMEU national secretary, Michael O'Connor said the Australian Food and Grocery Council has warned unions and the Victorian Government that supermarkets could face a critical shortage of household goods, toilet paper, alcohol and other supplies in the lead up to Christmas if more timber was not released.

Mr O'Connor said there was a dire shortage of timber available due to the Victorian Government's decision to end native logging by 2030. 

"The Victorian Premier needs to act urgently to get pallet production back up and running in Victoria, so the problems impacting pallet supply nationally aren’t being made worse by a log supply crisis here," Mr O'Connor said.

Native timber crunch

In South Australia, Mount Gambier-based sawmill NF McDonnell & Sons supplies timber to pallet manufacturers.

CEO Craig Nisbet said while the Christmas period was traditionally a busy time, this year he was expecting demand for pallet timber to outstrip production. 

"These problems are likely to be only worse in the future," Mr Nisbet said.

Mr Nisbet said it was imperative the industry worked out the supply-demand imbalance. 

"If you take the Victorian example the government policies around native forestry probably aren't consistent with what industry would say is sustainable forestry," he said. 

"Without [native forestry] we really need more trees in the ground and more investment in processing on a domestic front." 

Agriculture affected

Victorian Nationals Leader Peter Walsh told the Victorian Country Hour the pallet shortage was already having an impact on agriculture. 

"I have had a number of fruit growers in my electorate raising severe concerns that they can't get enough pallets to ship their products now," Mr Walsh said.

"If there is not enough pallets going to CUB [Carlton United Breweries] that impacts on the distribution of beer and if there is not enough pallets going to Mars Confectionary that impacts the distribution of chocolates — probably two things that are consumed in large quantities over the Christmas New Year break."

In a statement, a spokeswoman for the Victorian Government said the worldwide shortage of pallets and other timber products was due to a number of factors including trade issues, bushfires and the coronavirus pandemic.

The government spokeswoman said current litigation against the state logging company Vicforests was also placing additional strain on the availability of timber in Victoria.

Dormit has been contacted for comment.