‘Public goods’ can be good news for forestry sector
While forestry is often seen as a major competitor for land use by the farming industry, a report released in Edinburgh yesterday claimed that moves towards basing support payments on the delivery of “public goods” could lead to a more integrated approach to land use.
Stating that the public goods delivered by the forestry sector were widely recognised, the UK Forest Market Report 2018, claimed that while it was not clear yet clear what these payments would be for, who would pay them or how much they would be, the policy direction had been set.
“The government continues to consult widely on the new policy and wants to involve farmers, foresters and other stakeholders in its design,” said Jason Beedell, a director with Strutt & Parker.
Writing in the 20th annual market report to be produced by John Clegg & Co and Tillhill Forestry, he said there was now far greater recognition of the importance of tree planting and forestry for a range of purposes – timber production, flood risk management, carbon storage and recreation.
The report also claimed that patience and shrewd investment in timber had paid dividends over the last 12 months for those already in the sector.
With many UK forest owners who purchased their property 30 or 40 years ago seeing a 30 per cent increase in the price of standing timber over the past year, long-term investors had seen a 13.9 per cent annual return on investment according to the report.
Fenning Welstead, director of John Clegg & Co, said that the level of competition for forestry assets had been “remarkable”.
“The upward movement in the price of timber in the last 12 months has been staggering,” said Welstead.
“It has been driven partly by the weak pound and more expensive imports but also, I believe, by the dawning realisation that the supply of fibre is finite.”
Peter Whitfield, business development director with Tilhill Forestry, added: “Motivations for investors vary but the main reasons are long-term financial returns, the potential for tax planning, long-term capital growth particularly within a pension, or the amenity value.
The report also revealed that more conifers were planted in Scotland last year than in any year since 2000 and stated that Forestry Commission Scotland had reported strong demand for woodland creation schemes over the next two years exceeding the 10,000 ha per year target.