Farm Ireland
Independent.ie

Saturday 26 May 2018

Farmers should consider options on forestry after State's aid vow

"Keep a tree green in your heart and perhaps a singing bird will come," is an old Chinese proverb.

Clare Minnock

THE recent announcement by Minister Tom Hayes that State aid will continue under the forestry programme 2014-2020 has been widely welcomed, particularly by farmers unsure of where they stood.

But what significance does it really hold?

Some people had been holding off making the decision to plant forestry because of concerns about their future single farm payment (SFP) entitlements on planted land.

Paddy Bruton, an agricultural adviser and director at Forestry Services Ltd and Cillin Hill Farm Advisory, outlined what exactly Government support means to farmers.

"Farmers can now receive the single farm payment and the forestry premium on the same land. This announcement took all the doubt out and shows the importance of forestry," Mr Bruton said.

This is also good news for people that have planted land since 2009, as they are now assured that they can continue to receive SFP on the land planted until 2020.

What should farmers do?

Most farms have some marginal land which is more suited to forestry than any other farming activity, so given the announcement by the minister, farmers should look at their farms objectively and see if forestry is a good option on sections of their farm.

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"Farmers get the benefit out of forestry the same as any other crop. That is clear now," explained Mr Bruton.

"A lot of farmers were not willing to plant because of the doubt.

"The minister made the announcement to entice people. This is significant at this time of year."

Farmers considering planting forestry now need to ensure that their SFP applications are correctly filled out to secure both payments.

Applicants who plant the land parcels in 2014 before submitting their SFP application should declare the land as 'other' in column 9 and 'forestry 2014' in column 10.

The small print

There are two components to the Afforestation Scheme – the afforestation grant and the annual forestry premium. The grants cover the cost of establishing a plantation and are payable in two instalments.

The grant rate is dependent on the species planted and ranges from €2,400 to €5,500 per hectare.

The annual forestry premium is an income tax-free premium payable for 20 years to farmers and 15 years for non-farmers. Recipients must pay PRSI and the USC on the premium, but the applicant remains the full owner of the land and timber.

The rate of premium paid is also dependent on species planted and ranges from €155 to €515 per hectare for farmers and €126 to €195 for non- farmers.

Future earnings

If farmers plant now, they are guaranteed payments for 20 years. Current rates of grants will continue to apply to applications approved up to and including June 30, 2014.

However, with CAP negotiations ongoing, there is a possibility that there will be a reduction in payment years from 20 to 12 in the future.

However, it is believed an increased rate per annum will be considered in that scenario. A new forestry programme will be in place from autumn of this year until 2020.

"If farmers plant in autumn 2014, they could well be facing reduced payment years, depending on CAP, but it may be at a higher rate. It's a risk farmers have to weigh up.

A lot of farmers are deciding to plant now to be sure of the 20 years," Mr Bruton said.

Another potential change facing foresters is the grant cap on the forest road scheme. Currently, farmers can avail of up to 80pc grants at a maximum of €35 per linear metre.

However, in the new rural development programme, the suggested max grant to be paid will be 40pc.

Therefore, owners with crops ready to be thinned should prioritise securing forest road grant approval immediately, as the current rates will only apply to applications approved up to and including June 30, 2014.

Indo Farming