Kilkenny farmer Michael Owens runs a mainly dairy enterprise in Castlecomer, Co Kilkenny, milking 125 cows on a holding of almost 80 hectares, with more than half on very good land.
Having trained in forestry, Michael’s late father planted 2.5 hectares of mainly spruce 29 years ago. He actually wanted to plant more but this went contrary to general advice at the time.
Michael is now reaping the rewards of his late father's inspired decision, having just overseen the final harvest and sale of his timber, which has matured rapidly following two thinnings.
According to Michael, "We are very happy with the way the harvesting worked out, the whole job was done in three days. It has produced over 750t and the price we will receive is about €55/t, perhaps even a bit more. We are lucky that timber prices are strong at the moment. It will cost 8-10pc of the money we receive to replant and put it back; the remainder as you all know is income tax-free anyway."
With the strong demand for timber at present, forest owners can have a very valuable crop on their land. Michael was impressed with the timber and financial return from his forest, explaining that, "It yielded pretty good, it was fairly straight and the product breakdown is 45pc sawlog, 37pc palletwood and the remainder is going to pulp. So that’s pretty decent for forestry."
Returns from harvest
750 tonnes @ €55/t = €41,250
Minus replanting costs (10%): €4,125
Total return * €37,125
Return per hectare: €14,850
* Note: Subject to relevant USC and PRSI
Michael, in conjunction with his forester Jonathan Neville, is also conscious of the need for protection and enhancement of the farm environment.
Michael describes how, "Number one, the weather was super, the ground was bone-dry and there wasn’t a mark on the ground. But the brash was piled up in rows along the site and the forwarder (collecting the timber) travelled along these. Basically, it doesn’t touch the ground and didn’t impact with the soil in any way."
The existing broadleaf trees in the forest were also retained and Michael will replant a further 10pc broadleaves through the site for environmental and aesthetic reasons.
Michael can now make plans for his forestry returns. He is aware that when you are farming you have a lot of options for what you are going to do with money. Michael’s family is top of his priority list and he is keen to invest in their future.
"I have four small children and hopefully they will be smarter than me and they might go to college."
Many farmers like Michael have the potential to diversify their on-farm resource and future potential income streams. Through whole-farm planning, forests can be integrated into existing farms and provide options on appropriate land parcels, particularly marginal areas.
In this way, forestry premiums, combined with retained basic payments and tax-free returns generated from timber production can diversify income streams and enhance family farm income. For a younger farmer, forestry is an ideal way to help pay off that mortgage on a new family home. And for older farmers a forest makes for an ideal pension pot.
Michael is now looking forward to getting his forest planted again and seeing the next forest establish and rapidly grow, adding, "hopefully when I am about 70, I will get some retirement money out of it. It’s not like anything else, you get what you get and it’s yours."