Brendan Callaghan, Head of Delivery with Forestry Commission Scotland sets out what’s changed in the past few years and why more farmers than ever are now considering an element of forestry on their farms.
"In my role with Forestry Commission Scotland, I have been very involved with developing the current Forestry Grant Scheme and introducing the new support arrangements that came in 2015.
One of the biggest changes has been that farmers can now continue to receive their BPS payments on land they plant with trees. The EU was keen to support woodland creation and made this possible around 2010, but it didn’t start in Scotland until 2015 when the new SRDP started. This allows farmers to establish woodlands on the least valuable/productive land on their farm and still receive the same level of BPS.
This also means that when the trees have grown and are safe from browsing damage, after say five or 10 years, the woodlands could be used for seasonal grazing or simply to provide shelter for stock during the winter.
The Scottish Government is keen to see an expansion of productive conifer planting, which as well as capturing carbon, is important for the future of Scotland’s timber processing industry. As a result of this, the woodland creation grant rates for conifers have recently been increased and now range from £3000/ha to over £6000/ha depending upon the type of woodland and where you are.
Creating new conifer woodlands is now an attractive investment, particularly for farmers who also get a range of other benefits on their farms. In most cases, the grants should cover most of the costs associated with establishing a new woodland, and if you want, you can do some or all of the work yourself.
On many farms across Scotland, conifer woodlands are also the most suitable as they can provide the shelter, are suited to poorer soils and exposure, and they also provide a growing capital asset with significant future income potential.
In recent years, there has been a very strong market for home grown conifer timber, particularly spruce. This is on the back of the world class timber processing sector that has developed in Scotland over the last 20 years, together with growing local demand for biomass and wood-fuel.
As a result by around 35-40 years of age, most spruce forests are now valuable assets, which often realise up to £20K per hectare or more from the 400 tonnes of timber/ha that can be valued at £50/tonne. Even though this income comes a long time after planting, the prospect of future income gets factored into the value of recently establish forests plantations and as a result even relatively young forests, with good growing spruce can be worth £10,000/ha or more, depending upon location and access.
Surprisingly, small mixed woodlands can be worth even more where they are sold to so-called ‘lifestyle’ owners – people who just want own some woodland, who in many cases seem to be willing to pay over £20,000/hectare in Scotland, depending on the location and type of woodland.
We also recognise that to get woodlands established, they need to be protected from damage by both domestic stock and wild deer. So the Forestry Grant Scheme includes support for tree protection costs.
Done well, new farm woodlands can integrate and deliver benefits to the farm, for example by breaking up large open hills and creating new enclosures that help with stock management. In most cases the new forestry fencing makes a useful contribution to the farm and sometimes entirely replaces old fences that needed to be renewed. Whilst grants won’t cover all the costs, they provide a really useful contribution.
I’ve discussed woodland creation with a few farmers recently and noticed that more and more are starting to consider forestry and are exploring how it could be integrated with the farm business in order to improve the viability and profitability of the whole enterprise.
Last year I came across a really good example of how this has been done when I attended an NSA Sheep and Trees event at Andrew Barbour’s farm, Mains of Fincastle, near Blair Atholl.
What was most striking was how Andrew looked at the two different activities – the 480 hectares of upland grazing and 60ha’s of woodland that made up his 540ha farm. He saw them as highly complementary, working well together and giving him increased flexibility and resilience over the long term.
Whilst he saw each as having very different characteristics in terms of the expertise needed, timing of inputs and timing of returns, overall they actually delivered very similar returns to the farm in terms of average profit per hectare per year.
But what I found most interesting was how they worked well together, in terms of the seasonality of work, being able to time forestry income to tie in with farming investment needs and the general benefits to stock management, shelter and productivity that Andrew was clearly gaining from his particular combination of farming and forestry.
Clearly no one knows exactly what the post Brexit arrangements will bring for agricultural support, but, as the basic economics of productive conifer forestry in Scotland are now stronger than ever, I can see why many farmers are concluding that having a significant element of forestry on their land is worth considering, particularly if it can improve the farm.
If this is a subject you‘d like to hear more about then please contact Forestry Commission Scotland and discuss with your local woodland officer, who would be happy to help. Alternatively there are a wide range of professional forestry agents who would be pleased to help you explore the potential for integrating an element of forestry with you farm business."
For more details on the Forestry Grants Scheme and the benefits of combining forestry with farming check http://scotland.forestry.gov.uk/supporting/grants-and-regulations/farm-woodlands or email FCScotlandenquiries@forestry.gsi.gov.uk or call 0300 067 6156.