Get financially fitter with forestry
Michael Somers looks at the big picture on forestry and profiles a Tipperary man who planted 40ha in the 1990s
Believe it or not, there are now more timber lorries than cattle lorries on our roads. Over 12,000 people are employed in the forestry sector, which covers more than 10pc of the country. Despite the sometimes negative connotations that forestry has in some farmer's minds, it is an enterprise that is helping many become financially fitter.
It's not just the value of the trees at harvest anymore either. The 18m visits to forests annually by walkers and locals is estimated at over €400m.
However, without the forestry subsidies and grants, much of the forestry in the country today simply wouldn't exist. In January 2015 a new forestry programme was launched. For farmers the main change was an increase in forest premium rates while the number of years of the premium reduced from 20 to 15 years. The current annual forestry premium is still attractive. The premium is still tax free and ranges from €510-615/ha on enclosed or improved ground. The rate is species dependant.
Another change is that this premium level is open to all land owners whether or not they are involved in active farming. Those actively farming that declared land for SFP in 2008 can plant part of their land and still claim SPS, subject to meeting certain criteria. Given that the average SFP is €9,800 a forest enterprise can aid in the financial fitness of total farm planning.
In all 47pc of the total forested area in Ireland is in private ownership. But the overall forest area is small. The average farm forest size is 9ha. This presents a massive challenge for harvesting. Thinning should be encouraged where possible. In some cases farmers are joining together to complete co-ordinated harvesting and timber sales. This increases the saleability of the timber and reduces harvesting costs. Farmers can also pool their forests together to optimise the roading grant. This year alone there have been applications for over 90km of road.
Sitka spruce is still the most commonly planted tree in Ireland. However, its premium rate is €510/ha. It accounts for 60pc of the forest area in Ireland. On productive sites it is fit for final harvest within 30 years. Recent timber prices are encouraging, with trees ranging from 0.6-0.9m3 making between €67-€84/m3. Timber sales are income tax free up to €80,000 in any one year. This maybe subject to change in this week's Budget. The average clearfell nets €20,000/ha. Therefore, it is important to seek advice on taxation before clear-felling forestry.