Thursday 29 September 2016

Swapping the cows for trees

Christy Tighe has gone from running an 800 cow dairy to managing a 140 hectare forestry portfolio

Steven Meyen

Published 21/06/2016 | 02:30

Noel Kennedy, Forestry Adviser with Teagasc assesses Christy Tighe's ash in preparation for a first thinning operation
Noel Kennedy, Forestry Adviser with Teagasc assesses Christy Tighe's ash in preparation for a first thinning operation

"Forestry has been a positive experience and a rewarding investment" says Christy Tighe, a dairy farmer from Tuam, Co Galway who went from milking cows to harvesting trees.

  • Go To

Born and bred in Tuam into dairy farming, Christy and his brothers Michael and Peter took over the farm owned by his father and uncle, and farmed in partnership culminating in the establishment of Tuam Dairies in 1985.

At its peak, Tuam Dairies was milking over 800 cows and employing 30 people. By the time the business diversified into the Galway Bay Cheese company in 1987, Christy had left the farming side and was managing the processing end of the business.

Towards the end of the 1980s, the big supermarkets began to squeeze milk prices and with strong downward pressures hitting margins and profitability the brothers took the decision to sell the business to the Kerry Group in 1992.

By this stage, Christy and his brothers had already seen the potential of forestry and bought three semi-mature Sitka spruce plantations.

Convinced of its potential, Christy took a major personal and business decision to begin seriously investing in forestry. Fast forward twenty years and by now his forestry portfolio extends to eight plantations totalling over 140 hectares.

Dominated by high yielding Sitka spruce, which provides the strong commercial drive to his investment, the average plantation size of 17.5 hectares generates considerable economies of scale.

Good husbandry is critical whether it is a good milker or timber producer like Sitka spruce.

From the outset, Christy was determined to follow best forest management practice and employed professional forestry companies to oversee the planting and early maintenance of all his plantations.

But he then went a step further and made an even more critical decision early on to take responsibility himself in the day to day maintenance of the plantations after they passed the maintenance grant stage at four years old.

With a substantial forest portfolio to manage involving a range of management skills and schemes, Christy keeps himself informed by regular attendance at Teagasc and other field days and staying in regular contact with foresters including his local Teagasc forestry adviser Noel Kennedy.

"There are a number of obstacles that are hindering the development of farm forestry," says Christy. "One of the main reasons why I believe there is a relatively low uptake of forestry by farmers is because of the replanting obligation after clearfell and no forestry premiums available at that time," he added.

The large road bonds that are requested regularly by some Local Authorities are another obstacle.

"Some County Councils I deal with now require large bonds in case roads are damaged before timber can be removed from the forest. Why do I have to pay this money to move timber every five years or so when milk lorries go up and down this road daily?" he asks. "For instance, I had to pay a bond of €5,000 to a Local Authority before I was allowed to remove the timber. It took months to get my money back."

He also finds it frustrating the inconsistency how Local Authorities apply planning regulations. "I had to go for full planning permission recently although there was a sufficient and existing entrance in place already," he said.

However, he feels that farm forestry is worth it. Christy conservatively estimates that the return on investment from his early plantations to date is 10pc per annum. Increases in land price have reduced the rate of return on his younger plantations which he estimates at a still healthy 5pc per annum.

The future for forestry in Ireland is bright according to Christy and he advocates that more farmers should be considering forestry on marginal land as an investment in their farming future.

Together with his children who are now joint owners of the forests, he is looking forward to growing more quality trees and leaving a solid and sustainable investment for the next generation.

Steven Meyehn is a Teagasc forestry advisor email: Steven.Meyen@teagasc.ie

THINNING DRIVES GROWTH OF COMMERCIAL TIMBER PRODUCTION

Thinning is a critically important operation as it drives the growth onto the remaining trees to accelerate more valuable commercial timber production. The end game is a high volume final crop that maximises the most valuable sawlog timber category as early as thirty years old.

Christy has organised and supervised several timber harvesting operations and sales already, gaining valuable experience in the process.

Most timber sales in Ireland are ‘standing sales’. This means that the forest owner sells timber as it stands in the forest at an agreed price before harvesting takes place. The buyer will organise and pay for the harvesting and haulage costs.

From his experience, Christy now favours ‘roadside sales’. This means that Christy pays a harvesting contractor directly to fell and forward the trees to roadside. Christy will then –in a separate operation- sell the harvested timber on to a timber buyer. The timber buyer buys the timber ‘roadside’ and pays for the transport from the forest to the sawmill.

Christy finds that there are several advantages to selling his timber roadside. “Most importantly, it gives me full control over the harvesting operation. I supervise the thinning operation making sure that the poorer quality trees are removed while the better quality trees are left to grow on undamaged,” he said. “Another very good reason is because I find that selling roadside tends to be a good bit more profitable,” he added.

However, keep in mind that organising and supervising a roadside sale is not for the fainthearted. It requires time, dedication and expertise.

It also has tax implications. Christy charges 5.2pc tax on the sale of the timber while he pays the harvesting contractor 13.5pc tax on the services provided.

Over the last few months, Christy has been carrying out thinning operations in Co Galway.

He thinned a 2.5ha Norway spruce plantation for the first time. This resulted in a harvest of about 93 tonnes of pulp and 25 tonnes of palletwood. Harvesting costs came to approx. €24 + VAT per tonne. Murray’s sawmill in Co Galway paid him €47.34/t for the palletwood roadside. He sold the pulpwood separately to a firewood merchant. The total net return on the first thinning of this Norway spruce plantation came to €16 per tonne. Not bad.

Christy also carried out a second thinning in a 5.7ha Sitka spruce plantation. This operation resulted in a harvest of 217 tonnes of pulpwood and over 29 tonnes of 2.5 metre length palletwood. The latter assortment was once again sold to Murray’s sawmill in Ballygar for €47.34/t roadside while the pulpwood was sold for firewood. Because this was a second thinning operation the harvesting cost was lower and came to €21 + VAT per tonne. This resulted in a net return of approx. €18/t. Not bad especially if you take into account that standing sales in this area tend to fetch €8-10/t standing.

The above figures correspond to timber prices being paid currently. Sawmills tend to pay right now €50-55/t standing for sawlog while 3.1 metre length palletwood fetches €30-35/t standing. Pulpwood prices are typically €4-6/t standing.

Keep in mind though that several factors will influence the price you’ll get for your timber. Issues such as distance to the mill, timber quality and straightness, current demand, volumes, etc. all play a major part.

Indo Farming

Read More

Promoted articles

Editors Choice

Also in Business