Simon Hart, general manager of Bellshill-based EGGER Forest Management, believes farmers worried about the likely impact of Brexit on their livelihoods should heed the advice of one of Scotland’s favourite literary figures, Sir Walter Scott...
"THROUGHOUT my career, wise sages have frequently been saying we live in uncertain times. But, surely, the events of the last 12 months are destined to precipitate more change than any other period during the last 30 years.
However, I would argue that forestry brings about some calmness in this sea of worry. It is, without doubt, a lower-risk option than some other land uses – such as agriculture – that are more vulnerable to becoming a political football.
It was Scottish novelist, playwright and poet Sir Walter Scott who said: “Jock, when ye hae naething else to do, ye may be ay sticking in a tree; it will be growing, Jock, when ye're sleeping.”
Scott was also a judge, had a keen interest in politics and was a prominent member of the Royal Highland & Agriculture Society of Scotland – and his words two centuries ago are as relevant today as they were during his lifetime.
In these uncertain times, landowners and investors need to be sure of the fundamentals and it is here that forestry scores highly. Commercial trees grow very well in Scotland, and global demand for timber is rising – with the WWF predicting a threefold increase by 2050.
Additionally, Scotland’s forest industry – worth £1 billion a year and employing 25,000 people – is strongly supported by the Scottish Government as part of the climate change agenda.
So how well do trees grow and how does this compare with alternatives? Much of upland Scotland is highly suited to fast-growing conifer trees. As long as the peat is no deeper than 50cm, trees should be growing at an average of approximately 15 tonnes of timber per hectare per year.
This is on land that in the same time period might produce only one or two lambs per hectare. Timber sale prices typically range from £20-40 per tonne profit to the grower after all harvesting costs. Typically, each hectare is therefore producing £300-600 of income per year on a long-term, sustainable basis.
Costs such as management, maintenance and replanting need to be taken into account, but a healthy profit is still left in most situations.
The fundamental driver for the investment is biological growth. As long as the sun shines, at least periodically, and it is reasonably wet (times may be uncertain, but Scotland seems likely to deliver on these requirements!), the trees keep growing no matter who is the US president or how hard a Brexit we end up with.
In addition, crucially, there is a wide window of when to fell – usually five years and often ten or more. So if uncertainty has led to a weak market, owners can delay felling until conditions improve.
Another key fundamental is demand. Global timber demand is on the rise as societies become more affluent and use a lot more wood – for things such as bigger houses for example. This contrasts with food, where individuals actually eat less calories as they become more affluent due to them doing less manual work.
Across the UK as a whole, we are hugely dependent on importing to meet our timber needs as we are only about 20% self-sufficient. So, readers of The Scottish Farmer who look to grow the right trees will always have a market on their doorstep – and with no need for expensive transport or international trade deals.
The global trade in basic timber products, such as square sawn timber, is largely unfettered by tariffs – which means that timber operates in the real world, and politics is less likely to interfere with trade.
Contrast this with the way the EU puts tariffs on meat imports, for example, artificially boosting the price for EU farmers. If Brexit Britain strikes a free trade deal with somewhere like New Zealand, this will have a massive negative impact on the profitability of upland farming in Scotland.
Therefore, farming is exposed to much more risk from the politics of international trade deals than is forestry.
Established forests also receive little in the way of subsidy. Again, this means that forestry profitability is largely immune from the politics associated with the demise of CAP as we leave the EU.
With subsidy a fundamental driver affecting most farm business decisions, many upland farmers are saying it would be impossible to carry on without substantial subsidy – a strong case for at least considering the benefits of diversification.
Add in the strong political backing from the Scottish Government for forestry, and the major impact new planting can make on meeting its climate charge targets, and the pro-afforestation argument becomes even stronger.
A government official once said to me: “We either need to plant more trees or lower the speed limits”. Unsurprisingly, trees win – and the aim is to take Scotland’s wood cover from the current 17% to 25% by the end of the century.
Generous grants and incentives will help to make this happen. Although at present about half this funding is from the EU, there is evidence that the Scottish Government is committed to this expansion whether we are in the EU or not.
Sir Walter Scott’s view of tree-planting is persuasive and, I believe, based on fact not the fiction with which he is most associated. In summary, I think forestry is well positioned to not only ride out the many uncertainties we all face, but also actually flourish."