Why Trees are the Best Financial Bet

By Brian Henderson.

Hill farmers have been urged to consider diversifying their operations by planting woodland after it was claimed that new figures show a significant increase in the relative benefits of forestry over farming in the Southern Uplands of Scotland.

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Confor – the promotional body for forestry and woodlands – this week said that updating the findings of a report produced using 2011 figures with 2014 prices showed that the income gap between farming and forestry had widened in favour of tree planting.

The study, which was carried out by SAC Consulting, looked at tree growing in the Eskdalemuir area of Dumfries and Galloway and covered an area of 20,000 hectares. It showed that once the woodlands were established, productive conifer forestry was capable of producing a substantial surplus, while sheep farming produced a deficit.

The SAC pointed out that the results related only to Eskdalemuir – and were not directly comparable with farming or forestry in other hill areas of Scotland due to wide variations in productivity, costs, returns, subsidy eligibility and subsidy rates.

However, Stuart Goodall, chief executive of Confor, said that forestry offered a real economic opportunity for Scotland’s sheep farmers.

He said an important factor in the change had been the 20 per cent rise in standing timber prices between the two reports – while over the same period sheep prices had fallen, costs had risen, and agricultural subsidy payments were expected to fall to 2019.

Goodall said that timber provided an opportunity for farmers to successfully diversify their businesses, deliver more for the environment, create shelter belts for livestock and reduce their reliance on public subsidy in the longer term.

He said the report showed that annual output per hectare was £549.61 before subsidy for forestry during the productive phase (up from £495.15 in the initial study) compared to £117.33 for upland sheep farming (£196.19 with subsidy), down from £154.27.

The report, stressed Goodall, was not a call to return to the blanket afforestation practices of 30 or 40 years ago:

“What it does demonstrate is that forestry is an even better economic opportunity in Scotland than we previously believed – and we would, therefore, encourage more hill farmers to consider the economic opportunity of diversifying their operations by planting trees on part of their land.”

He said the report was published only a week after a Forestry Commission survey showed that 83 per cent of people surveyed wanted to see more trees planted.

“Planting more trees can deliver for Scotland’s environment, society and economy – and that includes offering a great opportunity to diversify for hard-pressed hill farmers. Confor is always happy to talk to farmers and their representatives about the potential range of benefits on offer,” he said.

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Andrew Heald, technical adviser with Confor, added that while it could be 25 years until full commercial returns were achieved, farmers would still be able to claim basic payment scheme support on land put down to forestry. He said that overall profitability was dependent upon local infrastructure, especially access as well as planting grants and other woodland maintenance incentives.

First published in The Scotsman, July 4th, 2020.