The timber prices achieved in Ireland have traditionally been higher than those achieved in our nearest neighbour in the UK.
Over the years, timber prices have kept pace with inflation and many analysts believe that timber prices especially within Europe will increase relative to inflation in the long term due to a combination of emerging energy markets, compliance with EU renewable energy targets and the forecast supply demand deficit for traditional wood products.
Between 2000-2013, the volume of sawn softwood which has been exported by the sawmill sector in Ireland has increased from 274,000M3 to 601,000M3, an increase of 219pc.
The two key markets are Northern Ireland and the UK. The market turmoil created by Brexit is obviously going to lead to some disruption in this market in the short-term, but the lack of supply of home grown timber in the UK ensures their continued reliance on imported sawn wood in the long-term.
In 2010 the UK was the third largest global net importer of timber after China and Japan, while in 2013, 82pc of around 9millionM3 of sawn timber used in the UK was imported.
The UK will continue to be one of the world's largest importers of sawn timber. Ireland is ideally positioned to access this major market.
Future Timber Supply
Supply of timber or roundwood from private sector forests in Ireland, mostly owned by farmers, are forecast to exceed the supply available from Coillte by 2025.
Currently Coillte supplies around 80pc of the volume of roundwood sold to the wood panels and sawmilling sectors in Ireland, while future roundwood supply forecasts show little if any increase from Coillte.
This changing dynamic in timber supply in Ireland has led to concerns by private owners that prices will fall just as the crops mature financially.
However a recent analysis undertaken by COFORD estimates that despite this increasing timber supply from the private sector, demand will continue to outstrip supply into the foreseeable future.
The potential shortfall in supply on the Island of Ireland by 2020 is 2millionM3. This has resulted in some sawmills resorting to importing round logs to ensure sufficient supply of raw material to meet orders.
Wood Processing Sector
Ireland has a well developed wood processing sector with a number of large modern high technology sawmills and three world class wood panel manufacturing plants.
The wood energy sector is relatively young, but recent developments have seen the commissioning of one large combined heat and power plant and two wood pellet manufacturing plants. Such new wood using facilities need timber to survive and prosper.
Farmers are particularly aware that there can never be enough outlets for their produce in order to ensure good prices.
In this regard, the forest industry is significantly different to what currently pertains in the beef and sheep meat industry.
Irish Conifer Timber Prices
Irish conifer timber prices fell between 2007 and 2009 as a result of a steep decline in demand from the domestic construction industry but timber prices have recovered as a result of the sawmills developing export markets. Prices are now above 2007 levels while the Irish construction demand has now begun to recover.
The Agricultural Consultants Association (ACA) Farmers Handbook for 2016, outlines the projected returns from forestry in the table.
The returns detailed are typical of a 14ha plantation established on low lying grass rush type land, growing Sitka Spruce with a yield class 24 with 10pc other species included and 10pc broadleaves planted.
Forest owners have the opportunity that beef, sheep, tillage and dairy farmers are denied.
They can let the crops continue to grow until market conditions are optimum to maximise the cash value of the timber. The maximum returns that can be attained from forestry are not reflected in the table.
The production forecasts show that private forest owners, particularly farmers, will hold the "balance of power" in future increases in timber supply.
As the future supply demand forecasts are anticipating that demand will surpass the supply of timber available, this places farmers with forestry in a position that beef and sheep farmers would like to occupy. Currently, sawmills are importing roundwood to meet export led demand for sawn timber.
Historically the timber price trends are positive, while another strong plus in Irelands favour is the world class timber processing sector that is in place.
Paddy Bruton is Managing Director of Forestry Services Ltd. www.forestryservices.
Manage your crop - don't depend or wait on another "entity" to do it
Never sell your timber on a "lump sum" or on the basis that it could make "up to" a certain price once harvested and delivered to the market place.
In thinning, the highest price bid may not be the best price in correct plantation management.
Get professional forester input into thinning and clearfelling.
Investigate forest rotation management services which are available where timber sales are only part of the services provided.
Get recommendations from previous clients of the harvesting contractor before agreeing terms.
Maximise the clearfell value by "warehousing" the growing crop until crop volume and timber prices are optimum