Forestry as a secure asset

THERE has been much discussion and questions from farmers and forest owners regarding the nationwide purchase of land and existing forests. Western Forestry Co-op welcome’s this endorsement of the Irish forest sector as a viable investment and the confidence that investors have in Irish forestry however the Co-op would always advise land and forest owners to hold on to your own land and reap the rewards of your hard work. Forestry is widely recognised as a viable alternative land use for marginal land, coupled with our mild Irish climate favours excellent growing conditions for forestry. Land and forest owners should consider their options before selling their valuable forest asset or land and make a planned and informed decision. Many forest owners who planted 20+ years ago have either exited or are exiting the 20 year forest premium payment and may be considering selling their forestry as they were used to the annual income stream of the premium. If you are considering this then make sure that you have assessed all your options before doing so. Many farmers are aware that forestry is a commercial asset and this asset can be used as a security against other loans.

For example you should assess the value you are being offered today versus the full value at maturity, the length of time till maturity, could the forest be felled earlier than full rotation and what would that value be? Western Forestry Co-op can assess these options for you using long term average timber prices and volume estimates. Many farmers are also recognising the value of leaving a replanted forest for the next generation, keeping the benefits associated with the forest enterprise in the family and the local community. For example a farmer client who clearfelled 25 acres of forestry that was planted in 1988 (27 years) replanted this land and then signed it over to their children while still pocketing €180k income tax free after all costs - Western Forestry Co-op managed the whole process from felling license to forest road, harvesting, replanting. The farmer was delighted that all he had to do was lodge the cheque, secure in the knowledge that the land is replanted at no cost to his children and this will be their asset or pension fund in another 30 years.

It would be prudent to remember the old saying that “if it seems too good to be true, then it probably is”. Western Forestry Co-op was set up by the main Co-ops (Aurivo, Lakeland, Lakpatrick) in Western counties to provide a back up service to farmers entering forestry, to increase farm income and help increase employment in rural areas. Forestry currently employs some 12,000 people nationally. Western Forestry Co-op would advise all local famers, landowners and forest owners to seek advice or talk to the co-op before you sell. Please ring 071-9161458 for more information or contact Operations Manager and forester Victor Barber directly on 086-8289926.