Farm Forestry Situation and Outlook 2008/2009

Forestry Development Unit Situation and Outlook Conference, 9th December 2008

Farm ForestrySituation and Outlook2008/2009

James Breen1 and Mary Ryan2

1Rural Economy Research Centre, 2Forestry Development Unit

Teagasc


Outline

New planting rates Current trends Profile of farmers with forests Review of timber markets Profile of farmers intending to plant Summary


Irish Afforestation Rates 1982 - 2007

0

5

10

15

20

25

'000 h

a

Total Plantings Private Plantings Public Plantings

Source: Forest Service 2007


Farm Afforestation rates by region 1990 to 2007

02468

10121416

'000 H

ecta

res

South-West

Midland

Border

West

Mid-West

South-East

Mid-East

Source: Forest Service 2007


Divergence between Premium Payments and Private Planting

0

0.5

1

1.5

2

2.5

Ind

ex

19

92

=1

PremiumPayments


Divergence between Premium Payments and Private Planting

0

0.5

1

1.5

2

2.5

Ind

ex

19

92

=1

PremiumPayments

PrivatePlanting


Barriers to Afforestation

Potential value of unplanted land No REPS payment on forestry Forestry is a permanent decision Need all my land for agriculture Dislike forestry Other

Source: National Farm Survey 2006


Main Reason For Not Planting

OtherDislike forestry

Need all my land for

agriculture

Forestry is a

permanent decision

No REPS payment

on forestry

Potential value of

unplanted land

500

400

300

200

100

0

Fre

qu

en

cy

What are the Biggest Barriers to Engaging in Farm Forestry?



Farms with Forests 2007

Survey represents 7,200 farms with forests 6.5% of all farms Average farm size:

Farms with forests = 62.7 ha Farms without forests = 33.7 ha

Average forest premium payment: €4,428/yr


Farms with Forests 2007

% of Farms Average Forest Area (ha)

Specialist Dairy 16 8.6

Dairy and Other 8 15.5

Cattle Rearing 33 11.8

Cattle Other 19 8.6

Sheep 18.5 15.5

Tillage 5.5 4.8



Review and Outlook for Markets

New opportunities: >60 industrial wood chip boilers

2,000 ha of thinnings Carbon sequestration potential

Increase in thinning activity General Felling Licences:

102 in 2005 to 692 in 2008 2007 – Record year –Coillte supplied 87% Decline in forecast for 2009 house starts according to

Home Bond.


Coillte Roadside Large Sawlog Price Index – 1992 to Present

Source: Coillte 2008


Returns to Farm Forest Owners

NPV

(€/ha)

Annualised Discounted Gross Margin

(€/ha)

Planted 1998 5,252 342

Planted 2008

No FEPS

8,795 513

Planted 2008

With FEPS

10,203 595


Farmer Planting Intentions

Survey population represents 5,100 farms (4.5% of pop) stated intention to plant in the next three years

Area to be planted 36,700 ha Approx 1% of U.A.A.

But represents 13% of U.A.A. on those farms




Larger Farms 56 ha of U.A.A. vs 36 ha 2,500 (50%) were in REPS 1,700 (33%) were in REPS and had >40 ha

therefore could benefit from FEPS 38% of farmers who intend to plant already

have a forest



% of farms Average Intended Planting Area

Specialist Dairy 9.4 7.2

Dairy and Other 6.7 19.3

Cattle rearing 18.7 6.9

Cattle Other 15 6.1

Sheep 31 5.4

Tillage 19.2 7.1



Summary

Significant levelling off in new planting area Policy moving towards more environmental focus Shift in species and type of land being planted Decline in construction industry Cyclical timber prices New opportunities Forests eligible for SFP Variety of reasons for decline in planting both

economic and social.

Farm Forestry Situation and Outlook 2008/2009

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