Many farmers see a tension when it comes to trees versus sheep – but land agents Galbraith insist that small forestry plantations can be a boost to an upland livestock business, even in the short term.

Jennifer Jeffrey, a rural agent with Galbraith, has seen the benefits of smaller commercial woodland plantations on upland farms in the Scottish Borders. She said:

“The benefits that agro-forestry can bring to sheep health and productivity are well known and include providing shelter; assisting with water management; increasing bio-security and increasing grass growth.

"What may not be as well known is that smaller forestry plantations can be profitable too and bring a wider benefit to the whole farming business. It really isn’t a question of trees or sheep – you can diversify your business to generate an income from small areas of forestry and keep sheep on the majority of the land.

“Previously, access problems and lack of economies of scale meant that shelter belts had little or no value for harvesting. However, in today’s market – with rising timber prices – harvesting may be more worthwhile. There is growing demand for timber around the world and this demand is expected to continue.

"Smaller areas of woodland created now will provide an income for the next generation. Although you may think that you don’t have enough land to sacrifice to tree planting – it is important to consider shelter belts, hedgerows and those wet corners that you never seem to get dry. It’ll probably turn out that you have more available land than you think.

“Timber prices are performing well and therefore income can be generated throughout a forest’s lifetime. Creating areas of woodland will lead to your farm becoming a more valuable and saleable asset, whether you intend to own the land just in the short-term or pass it on to future generations.”

Head of forestry at Galbraith, Philippa Cliff, added that small areas of forestry can offer a number of book-keeping benefits: “Generally, no income tax is payable on profit made from the sale of commercial timber and the gain in value of commercially managed standing timber is free from Capital Gains Tax. Commercially managed woodland should also qualify for Business Property Relief therefore no Inheritance Tax should be payable on commercial woodlands, in most cases, if they have been owned for at least two years.

“The Forestry Commission offers a grant for Sheep and Trees, which is particularly important for upland farmers," said Ms Cliff. "This is available to farmers planting between 10 and 50 hectares of productive conifers. It means you can apply for a planting grant as well as an infrastructure grant to create a road in order to access blocks of woodland – such grants were previously mutually exclusive.

“In addition, Carbon Credits are saleable assets which are allocated through the Woodland Carbon Code, a government initiative to quantify the amount of carbon that will be captured by new woodland planting. Galbraith has submitted numerous Carbon Credit applications on behalf of clients," she said.

“As an extra incentive, farmers continue to receive Basic Payment over the land if it had been used previously for agriculture. However, many of the current agricultural grants and funding schemes may be subject to change as the post-Brexit subsidy landscape unfolds.”