UK Forestry Market

UK Forestry Market
 
A step change in new planting ambition

22 March 2017, by Scottish Woodlands

We are potentially witnessing the best period for forestry expansion since the 1970s and 1980s

 

In what was considered one of his finest novels, The Heart of Midlothian (1818), Sir Walter Scott’s character Dumbiedykes, a Highland Laird, extended the following advice to his son and heir “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”.

It feels that this sound advice from nearly 200 years ago is coming round again as Government policy is increasingly focused on the benefit of woodland. The Scottish Government is currently reviewing the grant application process to streamline and create efficiencies and has just announced increases in its tree planting target from 10,000 hectares per year to 15,000 hectares per year by 2025. This is a rise from 22 million to 33 million trees per year.

Funding has been bolstered to help achieve these targets with an increase in Scotland from £36 million to £40 million in 2017/18. In addition, over the same period, the funding for co-financed infrastructure improvements through the Strategic Timber Transport Scheme will rise by £5 million to £7.15 million per annum.

With the ambitious plans for forestry expansion being announced in a “post-EU referendum” environment, there is confidence the funding streams to support these developments will continue.

Scotland is not alone in providing additional funding for tree planting and England has recently seen the announcement of the £19 million Carbon Woodland Fund. This fund aims to stimulate increased planting of woodlands over 30 hectares in size and to contribute to the Westminster Government’s target of 11 million trees planted in the lifetime of the 2015–20 UK parliament.

So where does this lead us? Arguably to the best potential period for forestry expansion since the 1970s and 1980s, which of course gave us the crops which are now the mainstay of our highly competitive modern sawmilling industry.

With modern forestry plantations being designed and highly regulated to take account of local sensitivities, we have the recipe for creation of a world class forestry resource.

Importantly, due to the long-term nature of forestry, the stimulus of tax free capital grants remains, along with beneficial Inheritance and Capital Gains Tax treatment, allowing forests to be established often in a cash neutral or perhaps even a cash surplus position.

This gives landowners and forestry investors an opportunity to help meet the targets in a way that often provides a more economically productive use of their land resource.

The simplified cashflow (Figure 9) for a 100 hectares productive forest gives an indication of the potential through the Forestry Grant Scheme.

FIGURE 9

New planting example cashflow: 100ha productive conifer in target area, deer and rabbit fenced

 
Figure 9

Source: Scottish Woodlands

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Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

Nicola Buckingham

Nicola Buckingham

Associate
Rural Research

Savills Margaret Street

 

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