Money Can Grow On Trees
Forestry will continue to offer sound investment opportunities post Brexit according to CKD Galbraith.
CKD Galbraith, which advises clients on woodland management across Scotland, said that forestry would continue to offer stable investment platforms whilst more common investment routes are subject to continuing uncertainty.
With Scotland’s agricultural sector witnessing low commodity prices and falling subsidy payments, now is an optimum time for farmers and landowners to branch out and consider creating woodland on their land.
Woodland is a popular long-term investment opportunity given the high value of productive forestry land and strong timber prices. According to the Forestry Index, the returns from woodland have averaged around eight per cent for the past 20 years.
CKD Galbraith’s forestry department has advised a number of clients on land diversification and have witnessed a recent increase in demand from buyers seeking land for planting trees who recognise the investment potential.
At present there are government tax incentives and funding for commercial tree planting, a segment showing significant growth within the industry and it is also an activity that doesn’t require ongoing subsidies. Given the significant political change, there has been a level of uncertainty within the sector regarding the future level of forestry grants however, the Scottish Government remains fully committed to increasing woodland cover and the forestry sector as a whole.
The Scottish Government’s climate change advisory committee recently recommended increasing the target for creating new forests to 16,000 hectares a year. Creating modern forests is highly imperative in helping meet the country’s carbon reduction targets which aims to cut greenhouse gas emissions by 80 per cent by 2050.
CKD Galbraith was recently involved in the sale of Westloch Farm, a 2,500acre farm in the Scottish Borders. A substantial area of this outstanding livestock farm was particularly suited to tree planting and included 160 acres of existing woodland. The sale generated interest from a number of parties with the successful bidder particularly keen on the forestry investment aspect of the land.
Gordon Brown, senior associate and head of the forestry team in CKD Galbraith’s Inverness office, said:
Scottish forestry is one of the most vibrant industries in the country at present and has sustained continued growth over the past eight years in terms of its economic contribution and increased employment levels. Forestry has provided good returns compared to more obvious choices such as stocks and shares.
A long-term plan is required if planting for commercial purposes however, the integration of woodland management into existing farming practice is certainly a great opportunity for more marginal farms to consider, whilst reducing your carbon footprint in the process.
There are many reasons why farmers and landowners are increasingly engaging in this concept especially where less productive farmland can be utilised for tree planting as opposed to crops which would offer a lower yield. Woodland can be created as a source of fuel and it allows for greater biodiversity where an abundance of plants and wildlife can thrive. It also offers shelter for farm animals particularly sheep.
Plots of woodland throughout Scotland are also selling well and can command between £1,000 and £5,000 per acre depending on age, species and location.
Currently for sale through CKD Galbraith is South Teuchan, in Aberdeenshire, presenting a rare opportunity to purchase a Christmas tree farm comprising a crop of over 14,000 plants plus an established mixed species woodland extending to approximately 11.68 ha (28.86 acres) in total. For sale at offers over £150,000.
Also for sale is Cornabus Forest, located on the Isle of Islay, Argyll, a maturing commercial forest planted in 1985 and consists mainly of Sitka spruce (61%) with small areas of Lodgepole, Larch and broadleaves. For sale at offers over £290,000.
The Scottish forestry sector contributes almost £1billion to the economy through forest management, timber processing and recreation, with employment in the forest management and processing sector having grown by 50 per cent to over 19,500 since 2008 (Forestry Commission Scotland Report: Economic contribution of the forestry sector in Scotland – Sep 2015).
CKD Galbraith’s forestry department currently manages over 18,000 hectares of woodland ranging from commercial plantations and conservation restoration to traditional mixed policy woodlands and offers a comprehensive forestry agency and management service.