Investing in Forestry
ADDENDUM

Further to the article in the May 2007 edition of WRMM concerning investment in forestry I requested that the figures were rechecked. This was prompted by a number of emails I received from subscribers who had looked into the claims in the article and discovered they didn’t add up.

Before I go any further I want to personally thank you all for taking the time to email me. Corny as it might sound, it does mean a lot to know that you investigate opportunities thoroughly and that you’re looking out for one another.

As you know any facts and figures I usually publish in WRMM are checked, checked and checked again because we know how important it is when you’re pursuing an opportunity you get the whole picture.

As forestry isn’t a specialist area of mine I commissioned the services of a researcher. The guy took facts and figures from the website, which he says the Forestry Commission then confirmed over the phone as being relevant.

After the feedback I got here at WRMM I contacted the Commission myself and requested a full information pack with complete details of their current grant schemes.

And I’m sorry to say that the grant payment figures included in the article were for the creation of new woodlands, not sustaining them.

There are grants available for sustaining and preserving existing woodlands. Similarly in England at least there are grants available for ‘improving’ existing woodland (basically you fell so many hectares of trees to sell as timber, then restock the land with different species).

There’s a chance the improvement grants could still mean forestry and woodlands offer a way to make some decent money. Doing a quick calculation on the back of a napkin say you bought 40 hectares in Devon for £80,000 (this is a genuine piece of land advertised on Fountains Plc website).

Now say you’ve got spruce on the land, then you can grow between 4,500 to 7,500 trees per hectare. That sounds like a hell of a lot to me and we’re talking some very dense forest here, but this figure comes from a report put together by Ireland’s Agriculture and Food Development Authority.

So let’s say you have 5,000 trees per hectare – play it safe. Fell the trees for timber and that gives you £12,500 per hectare on the basis of £2.50 profit per tree.

So to get your £80,000 back you’d need to harvest 6.4 hectares.

This is where the Woodland Regeneration Grant could kick in. The idea is you restock the land with other tree species… and then these are the sort of grants that could apply on a per hectare basis:

Which could give you an additional £2304 to £7040 depending on what you replant your hectares with.

Now spruce can take between 3 to 6 years to reach maturity. So you could theoretically fell your full 40 hectares – making £80,000 a year – and then collecting a few grand extra when you replant the area you’ve just harvested.

That might all sound good and well, but there are some inconsistencies that worry me about this, which is why I can’t endorse it right at this moment.

First of all the information I got – the hard copy from the Forestry Commission who pay the grants – is for 2006 (and even included some stuff relevant to 2005!) So the figures above might change when it comes to Autumn this year when the next grant information is published.

That could mean the payments improve… but it could also mean they go down.

Secondly, there’s information in the hard copy, which isn’t on the website.

And lastly in April, around the time the article was written and researched, there was a bit of an upheaval in the grant system.

For one thing a whole series of grants which had been paid automatically before have become means tested because there’s been so much abuse of the system.

I think there’s a good chance there’s still some mileage in this opportunity, but not right now.

So what we’re going to do is revisit the opportunity when the new grant payments are definitively published – in 3 to 4 months time – and make sure that when we come back to you later in the year every single figure stands up (otherwise it won’t just be the researcher’s head on the plate!)

And finally, here’s an extract from an email I received from the researcher earlier today:

“Dear Nick

I must express my profound apologies for the inaccuracies concerning the figures I sent you regarding grant payments and the types of grant they apply to.

The grant system can be difficult to decipher at the best of times, but ultimately I must take responsibility for this situation.

I would also like to extend my apologies to your subscribers for the inaccuracies in the article. I hope this will not reflect badly on you as the mistake was by no means yours or WRMM’s…”

And so it goes on.

I guess the lesson learnt here is – ‘if it sounds too good to be true, then it probably is!’

Anyway as soon as I know more, I’ll let you know and get some current (and accurate) facts on how much money there really is to be made from owning your own forest.

Thank you for your understanding