Could forestry help protect farm incomes as Brexit looms?

Brexit is probably the biggest political and economic event of recent times facing Ireland’s economy and, also, its forestry sector.

Given the Irish agricultural sector’s dependence on the UK market, particularly for beef exports, farmers may need to look at alternative methods of protecting their income as Brexit looms on the horizon.

In April 2019, the UK is set to depart the European Union; but it doesn’t change the fact that it will remain as our nearest trading partner to the east.

The hard-Brexit scenario that currently appears inevitable will raise barriers around the UK. The British population will be the biggest losers in this, as trade-tariffs raise the price of the contents of their shopping baskets.

Nonetheless, they will still need their basic raw materials. Timber is one such raw material for which the UK is significantly dependent on imports.

Irish exports to the UK

The UK is Ireland’s largest export market for sawn timber products. Equally, Britain is hugely important for Irish wood panel producers; so Ireland’s timber sector must pay attention to the challenges of Brexit.

However, in 2015 the UK imported a total 6.3 million m³ of sawn softwood while Ireland’s total exports of sawn softwood (UK and others) were 701,000m³ – the UK’s reliance on imported timber is clear.

The Irish Forestry and Forest Producers Association (IFFPA) reports that Ireland was the second largest exporter of oriented strand board (OSB) and particleboard to the UK.

Ireland was also the largest exporter of medium density fibreboard (MDF) to the UK in 2015. Importantly, our major competitors in these product categories are other EU nations.

In relation to sawn softwood, Ireland exported €67.13 million to the UK in 2015. This ranked Ireland in fourth place on the exporters list, behind Sweden, Finland and Latvia.

Again, it’s important to note that these are all EU nations that will face an identical trading arrangement with the UK post-Brexit. Additionally, the UK sourced just 37% of their sawn softwood needs from the domestic market.

And, given that the Irish timber supply is set to increase over the coming decade, Irish producers could be well positioned to fill the UK’s timber requirement.

The total harvest of commercial roundwood in Ireland in 2015 was 3.02 million m³. This is forecast to increase to over 6 million m³ by the mid-2020s and increase further still to 7.8 million m³ by the mid-2030s.

Protecting farm incomes with forestry

With Brexit looming in the background it makes more sense now than ever before to protect future income streams and take advantage of the grants and premia payments available from the Forest Service.

Veon is Ireland’s leading forestry company and it has expanded over the past year to meet the professional forestry needs of farmers and its forest owner clients.

With an additional seven foresters, including two additional regional managers appointed, it is now a truly nationwide company and is at the forefront of delivering government targets for the Irish forestry industry.

Veon has offices in Dublin; Enniscorthy Mart, Co. Wexford; Drumshanbo Mart, Co. Leitrim; Athenry Mart, Co. Galway; and Castleisland Mart, Co. Kerry.

“We have experienced a notable increase in the number of farmers who have contacted us to discuss the impact of the new Forestry Act and how we can help them diversify their farm incomes with forestry now playing an increasingly important part of the mix,” said Veon Sales Director Joe Codd.

As Ireland’s private forestry estate nears maturity, farmers and forest owners increasingly realise the importance of the value of their forests.

Therefore, it makes sense to manage the thinning regime correctly to ensure that the final tree crop is properly prepared to maximise the final value of the remaining tree crop at clearfell stage.

The ultimate income tax-free reward at clearfell is payment for the forest owner’s patience and good management practices during the time the crop was growing. The difference in final reward between a well-managed forest and a poorly-managed forest is stark.

Veon’s Director of Operations, Hugh Cawley, said: “Veon has 25 years unrivalled harvesting management experience and it would be a foolhardy farmer who entrusts his most valuable crop to a company with little or no experience of harvest management.

“It is the farmer who pays for the mistake of inexperience and it’s not the time to be a guinea pig when choosing the right forest manager,” he said. For more information on the services provided by Veon – Click here