Invest in Forestry
Forestry is one of the most secure commodities in today's markets - tangible, secure and growing even in the worst financial climates. It's part of the perfect investment portfolio blend.
Green Belt is Ireland's largest private forestry company and currently manages in excess of 400,000 acres of private forestry in Ireland for private clients, investors and pension funds. Over the last 4 years, Green Belt has managed investment placement of €23 million into planting lands and semi mature forestry across Ireland. Green Belt enjoys working in partnership with forest owners to enhance the plantation and maximise the real returns from their forestry.
Why Invest in Forestry?
- Low risk to return ratio;
- Biological growth is not impacted by economic factors;
- Generally a negative correlation to stock market indices;
- Traditional risks can be avoided through professional forest management;
- A forest is a tangible asset which is a source of value creation;
- It is becoming more valuable as Carbon Capture becomes more important.
Consistent Growth in Value
- Biological growth Seasonal growth adds to greater timber stocks each year and are unaffected by external factors. Biological growth will account for about 60% of value adding, if an appropriate acquisition discipline and management regime is followed.
- Ingrowth As trees mature they add greater girth and product upgrade adds value. Small trees produce low value pulp, larger trees produce more valuable sawlog. Typically sawlog trades at 3-5 times the price of pulpwood per unit volume.
- Timber price inflation Over the last 60 years general timber prices have risen at 1.5% above inflation.
Tax Free Capital Growth
Forests appreciate in value annually, tax free.
By the time the forest reaches 15 - 18 years maturity, forest thinnings will be ready for use as fencing stakes, pulp or woodchip. From Year 15 onwards the thinnings become more valuable and the uses for the timber become more variable as the trees mature. Thinning is a value adding silvicultural process.
A well-managed crop of Sitka Spruce can be ready for clearfell after 30-35 years depending on the site, and at today's prices should yield a return of over €8,000 per acre (excluding the land) at clearfell.
Annual Tax Free Income
Farm forestry will generate a tax free income which is paid annually. The premium rates will depend on the species planted and classification of land. This annual tax free premium is payable for a period of 15 years and is based on the species planted.
The majority of commercial forestry in Ireland receives €510 per hectare for 15 years. The occupation of woodlands qualifies for very generous tax reliefs.
Generous Grants Mean No Capital Investment
There is a grant to cover the planting costs of a forest. In nearly all cases, this grant is sufficient to cover everything from planting to establishment to fencing. Forestry investors are acquiring a substantial asset without the need for a personal capital investment beyond the acquisition of the land.
As the forestry earns continually throughout its life, there is no opportunity cost with establishing a plantation and ends with a generous pay-out at clearfell.
Grants & Schemes
The Afforestation Grant and Premium Scheme aims to increase the area under forest in Ireland from its current low base of 11% (EU average is 38%). In doing so, this afforestation scheme will aim:
- to contribute towards climate change mitigation;
- to produce commercial timber;
- to provide a sustainable source of roundwood for wood product manufacture;
- to provide biomass for energy production;
- to provide sustainable, long term employment in the rural economy;
- to increase the area of native woodland and purpose-designed recreational and amenity forests;
- to improve water quality through the planting of protection woodland;
- and to increase woodland biodiversity.
This will be achieved through the provision of financial support for the establishment and maintenance of new forests and woodlands - which can be native woodlands or coniferous forests. Planting will be done in sustainable manner contributing towards the EU’s priority for “restoring, preserving and enhancing ecosystems related to agriculture and forestry”.
Forestry Establishment Grant
Forestry establishment is covered by a full, exchequer backed grant. This is to encourage further planting nationally to increase the national cover from below 11% to 18%.
For those who plant their lands, there are a range of premiums payable. This is based on the lands planted and the species established. The attached table outlines these premiums. Your local forester can discuss these with you.
Woodland Improvement Scheme
Hardwoods are an integral part of the national estate. Developing a hardwood plantation can be challenging, but the woodland improvement scheme is designed to enhance your broadleaf plantations. There are two occasions this can be applied for.
Native Woodland Scheme
Native Woodland Establishment (as represented by Grant & Premium Categories (GPCs) 9 and 10 under the Afforestation Grant & Premium Scheme)funds the establishment of new native woodland on open ‘greenfield’ sites.
Forest roads are essential to develop sustainable access to your forest as it matures. A grant which covers approximately 80% of construction costs, is offered to allow a high standard of road to be built and developed into the plantation.
As part of the forestry experience, harvesting events occur through the lifetime of the platation to develop a plantation to its maximum potential. To facilitate this, a felling licence is required. This licence needs to be completed ideally with the assistance of a professional forester.
This measure will be targeted at silvopastoral agro-forestry systems which combine forestry and pasture. A stocking rate of 400 - 1000 trees per hectare (equal spacing) is acceptable and the minimum eligible plot size will be 0.50ha and tree-to-tree width of 20 metres.
Forestry for Fibre
This scheme is introduced to provide further supply to the biomass market. Species such as Poplar is promoted and is required to be grown for at least 10 years.
Reconstitution Scheme for Ash Dieback
Chalara fraxinea, known as ash dieback disease, is a relatively newly described fungal disease of ash which was first named in 2006 and has spread rapidly across much of Europe, with the majority of European countries where ash is present now reporting the disease.
Get in touch with Maurice Ryan, Green Belt's Investment Manager on Tel: +353 (0)87 675 3097
Green Belt have invested more than €28 million for farmers and investors into the above options since our incorporation in 1982. Our network of professional foresters located nationally are perfectly placed to source opportunities suitable for you and to manage your investment through to clearfell and beyond.