€10,000/ac for investors in 'sleeping giant' sector

Caitriona Murphy

July 30 2013 04:03 AM

Ireland's earliest forestry investors are set to reap rewards of up to €10,000/ac this year, according to forestry company SWS Forestry.

Farmers and investors who put money in the early 1980s have seen their crops mature to clearfell stage and will now pocket the profit from their investment.

The crops were eligible for a premium payment of €176/ac for 20 years and all planting costs were covered by a grant to a farmer planting his own land.

Speaking at SWS Forestry's annual strategy meeting in Carrick-on-Shannon, Co Leitrim on Thursday, general manager Pádraig Egan said early plantations were now in the timber production phase and returning attractive dividends to these pioneers.

"Those who took the longer term view will now see their investments returning dividends.

"Not alone has the land value increased but they are now set to reap up to €10,000 per acre from the timber crop once timber production commences," he said.

Mr Egan described the forestry sector as a "sleeping giant", with a lot more to deliver.

Coford's timber production forecasts show that the total annual thinning area will more than double from 22,800ha in 2011 to 49,400ha by 2028, with the most significant increase being in the Republic of Ireland's private sector.

Timber prices have increased by more than 30pc in four years for mature standing timber crops.

The average standing price in the third quarter of 2012 was €54 per cubic metre, compared to €41 per cubic metre at the same time in 2008.

INCREASED

Mr Egan maintained that while prices were unlikely to increase in the short-to-medium term, they were expected to be maintained.

"More restrictions on clearfelling worldwide will tighten supplies and new uses for timber should increase demand," he explained.

At the moment, timber thinnings go to the fencing, pallet or pulp sectors but Mr Egan predicted that the biomass sector would be a key player in the future forestry market. The Government has set a target for 40pc of electrical consumption from renewable sources by 2020, with 12pc of heat to be sourced from renewables by 2020.

"While the concept of using forest residue to produce heat and power is relatively new in Ireland it is well tried and tested in Europe."

Ireland has some of the best tree growing conditions in Europe, with an annual growth rate almost three times that of Finland where the energy use from biomass is 18pc compared to Ireland's 1.3pc.