The security of forestry investment
MONEY REALLY DOES GROW ON TREES: Afforestation schemes are looking more attractive as a financial safety net in a recession
Most people are looking for a reliable home for their earnings along with a safe, sound source of income. Forestry has to be one of the safest investments any of us can make.
The estimated returns from woodland are an annual five to six percent and while other assets and investments collapse around the world, trees just keep on growing. Stock markets can implode and banks can go to the wall but woodland remains, growing annually and increasing in value. Timber prices may rise and fall, but with the huge demand for wood fuel, the rapid decline in demand for construction materials has not affected timber growers as badly as other businesses that have been hit by a fall in the demand for their products.
Benefits
Well-planned woodland mixed through farmland also improves conditions for grazing stock and crops, and given all the obvious benefits, farmers are once again starting to do some serious tree planting.
No doubt much of the current farmer interest is due to the falling returns from other enterprises but having made a substantial investment in forestry myself 15 years ago, I can honestly say it was one of the best decisions of my career to date.
Like so many others, I too have bank shares that are now virtually worthless and as for pensions, I can only thank the God who inspired me at the time that my pension was in woodland and not in one of the many funds that have since lost most of their value.
The old advice of not having all your eggs in one basket was never truer than today and forestry provides the perfect additional farm enterprise for anyone looking for a safe annual income and the security of a growing asset.
Few investment options nowadays can equal the returns from forestry, nor do most of them come with the same level of security. In times of financial crisis, security is everything and with the present recession looking like running for at least another 10 years, the afforestation schemes currently available are looking increasingly attractive.
It's important to note the words "currently available". Along with virtually the entire world, our national finances are in a truly desperate state and by dithering and sitting on the fence, landowners may miss a golden opportunity to have their land planted for free.
There is no guarantee that many of the existing schemes will not be suspended some time in the future and it would appear sensible to avail of them while they are in place.
The annual tax-free premiums also provide financial security to many farm family businesses around the country and the scheme is state guaranteed.
With all the current cutbacks, the reason we still have our forestry schemes is quite simply because they provide a net gain to the national economy. It occasionally takes time to get this to sink in to the minds of some of our civil servants but the facts are indisputable.
Carbon sequestration alone is worth hundreds of millions to the national coffers and the thousands of jobs in the forest-contracting and nursery industries bring employment and prosperity to areas that have few other job options. Many rural farms in disadvantaged areas would not be viable without the added income that forestry provides and the thousands of livelihoods it supports bring real exchequer benefits.
Drop
I read recently that the world's second richest man, Warren Buffet, has seen the value of his investments drop by a massive $9bn. Having started with virtually nothing, he progressed to running the world's most successful investment group and is of course still worth more than $20bn. He made his money solely by making smart investments in companies with good growth prospects and I must admit it made me feel a whole lot better to see that he too can make mistakes. It makes my own losses seem a bit less stupid.
I mention this to illustrate how in good times we loved to talk about the increased value of the money we might have put in so-called "smart" investments like overseas property and the stock markets. But in tough times the slightly "boring" investments in safer havens such as forestry or livestock come in to their own. If you are suddenly in need of cash, you can always load up a few bullocks and get paid for them the same day. Try doing that with houses or shares and see what happens.
In times like these we also tend to blame others when things go wrong but I was always told to be very careful about employing consultants and advisors. We are all perfectly capable of making our own mistakes. Why pay someone else to make them for us.
- Joe Barry
