Why Invest in Forestry

Why Forestry?

Forestry as a profitable farming enterprise for you.

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 20 years.

Generous Grants mean no capital Investment
In addition to the annual income scheme forestry is substantially grant aided. Inmost cases the planting grant covers all the establishment costs thus reducing the overall capital requirements to run your farm. Grants are payable in two installments. Three quarters of the grant is payable on planting and the balance is payable after four years following inspection and approval.

Tax Free Capital Growth
Your forest will appreciate in value annually tax free. By the time the forest reaches 15 years maturity your 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 your timber become more variable as your trees mature. A well managed crop of Sitka Spruce should be ready for clearfell after 30-35 years, depending on the site, and at today’s prices should yield a return of over h8,000 per acre (excluding the land). Longer term broadleaves should yield considerably more.

Exemption from income tax, capital gains tax and stamp duty
With our current rate of taxation forestry represents a massive tax saving opportunity for farmers both full time and part time.

FEPS
FEPS is a scheme where a landowner can combine their REPS payment with their forestry premium payment on the same area of ground for the first time. This can lead to payments of up to h313/Acre, tax free. To attain the FEPS payment you must be in or prepared to join REPS.

Investment in forestry is not a new trend.

However, in the last 10-15 years the role of timberland in enhancing an investment portfolio has been increasingly recognised. Forest investment has a number of general character

• Strong returns Low risk to return ratio
• Generally a negative correlation to stock market indices Biological growth is not impacted by economic factors
• Traditional risks can be avoided through professional forest management Source of value creation

There are a number of sources of returns from timberland investment:

• Biological growth – the seasonal growth increments add greater timber inventories 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.
• Land price appreciation – the principal method of forest valuation is discounted cash flow (DCF). Therefore, as timber prices rise ahead of input costs, the net DCF, and the land value, increases.
• Professional Management and Marketing – professional forest management can increase the value adding potential of each of the above factors. Initial site selection, species/provenence/seed selection, selection of silvicultural regime, thinning intensity and timing, genetic enhancement, fertilisation, timing of clearfell, certification under Forest Stewardship Council procedures are all part of a comprehensive forest management package that is essential to maximise returns.

“With over 25 years forest management experience and with over 200,000 acres under active management, Green Belt Ltd. is Ireland’s largest private Forest management company”

For more information on Green Belt’s attractive Timberland Investment opportunities, contact Green Belt here - or by telephone at 049 - 854 8000