Money grows on trees– it really does!
Well farm forestry ticks all the right boxes. The world demand for timber keeps on growing despite the collapse of the construction sector in Ireland and in other countries. According to the NCREIF index, based on the North American forest holdings the 20-year data shows an average annual return of 15%.
Indeed the global trade for woody biomass, primarily for energy was over 11 million m3 in 2007, up from 5.6 million in 2003. Higher oil prices guarantee an ongoing demand for timber as a renewable fuel for electricity and heating. A recent trend in the Nordic regions is the growing number of facilities producing ethanol and bio diesel from local forests.
Our forests produce yields three times greater than northern and central European forests and the timber processing sector has increased exports despite the recession.
Private plantations now account for 45% of the total forest area of 730,000 ha. Forestry on farm has been a success story as the area under trees has gone from 5% forest cover in 1970 to over 10% today.
Over 14,000 farmers and private landowners have established a forestry enterprise and the main reason for planting was the tax-free forest premiums. However for the optimum return on this long term investment top quality timber is a key requirement so the plantation needs appropriate management and attention over the years.
Prudent owners who have now completed their first thinning either in conifer crops or even fast growing ash or sycamore crops are beginning to substantially appreciate the asset they have created on their family farms.
Many growers never thought about their forest as a productive crop which could be harvested like any other farm crop. Some owners were able to supply all their firewood needs for two/three years and sell the surplus for additional income.
Their positive experience will encourage new entrants into the market who unlike their pioneering neighbours now have access to the latest market information, timber prices, non-timber revenues via leisure pursuits etc.
According to the Association of Irish Forestry Consultants we need to review our species portfolio to cater for more profitable markets. Otherwise we are ignoring opportunities to produce high value crops which other countries cannot do.
For example there is a strong market for Douglas fir (DF) which is not grown in Scandinavia or to any extent in mainland Europe but we are not growing it. DF also commands a premium price for construction/ indoor panelling/exposed beams and for transmission poles.
Even when the timber trade is going through a difficult period Douglas fir always attracts premium prices. One of the main reasons why there has been a serious decline in DF afforestation is deer damage. Deer fencing however can prevent this damage and there are fencing grants available so there is no reason why there should not be a significant increase in DF plantings.
Another species which has a potential higher end value than Sitka Spruce is Western Red Cedar- an attractive timber which can be used for outdoor cladding and decorative features. Two species of broadleaves which have a high end value and a massive international demand are cherry and walnut.
