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Above: The value of a stocked hectare soared by 46% in the last year
timber and has huge afforestation potential “is not lost on people and that opportunity is being increasingly spotted, not just domestically but also internationally”. “If we want to solve this problem of a lack of commercial forests to have and to sell to people then, as hard as it might be, we have got to plant new ones.”
While England lags behind in terms of transactions in commercial forestry and plantable land, it is at the top of the list when it comes to mixed woodlands – although the market is one-tenth the size of the UK’s commercial forestry market. In this segment, market value was 81% up on 2021 at £19.4m. The area traded was also up, by 30% to 3,300 acres and England – especially the south-east – dominated with 80% share by value.
“It is very challenging to do commercial forestry in England and this is where amenity value is highest, so there could be a really interesting opportunity for natural capital in England,” said Mr Mahoney. He added that Wales is “uniquely suitable” for both commercial forestry and for acquiring carbon credits but that this had become a lot more challenging with changes to the Woodland Carbon Code and the Welsh afforestation grant scheme in 2022. Mr Mahoney also noted the local resistance to tree planting in Wales, saying that there was a feeling among Welsh farmers that their way of life was going to disappear forever because of afforestation. “We do need to be sensitive about that and figure out how we share the value with the local community,” he said, adding that at the current rate of afforestation it would take “centuries to plant up all the farms in the country”.
To summarise, Mr Mahoney said that 2022 had been another year of forestry gains but that we were now in an economic climate with a huge amount of uncertainty. However, he remains of the view that forestry will continue to present market opportunities thanks to other factors, such as the net zero agenda. “We are still going to be decarbonising everything because otherwise we’re all going to be toast,” he said. “And that is going to mean not just picking out the cheapest product or supplier but rather the one that is the best value given its carbon footprint. “We are probably also going to think about on-shoring strategic resources after the disruptions we’ve seen from Covid and what is happening in Ukraine,” he continued. “The globalisation process has driven down prices in the post-war or ‘rise-of-China’ period and we might be starting to reverse that long theme a little bit.
“Both those things – decarbonisation and de-globalisation – have the potential to put upward pressure on prices beyond the current cost of living climate, and who benefits from that? Well, timber fits those themes perfectly. And so does clean energy. What this says to me is that we want to keep going.” Fenning Welstead, a founding partner of Goldcrest Land & Forestry Group, agreed that “there is a massive future for forestry”. “We need to be aware that these values come with a potential risk and that it is a developing market, but it has a very strong future,” he said at the FMR launch. And he also followed up on the message of the need for afforestation, saying that there needed to be major changes in the generation and use of energy and sourcing raw materials. “To date we have been tinkering around
the edges,” he said in the report. “A future with much greater emphasis on renewable energy and raw materials will surely have to rely more on trees. Whatever the vicissitudes along the way, the future of human activity will need more timber. We must keep planting.”
And, as the FMR highlighted, the market value of forests is underpinned by the predicted long-term healthy demand for timber and strong prices. “Timber was subject to mixed fortunes in 2022, impacted by factors from constrained global supply due to the war in Ukraine and an over-supply of logs in the UK after Storm Arwen forced harvests, to sharp increases in energy demand,” it said. “However, while the market saw major falls in the price of standing timber, this came after previously steep price inflation and values now equate to those seen just three or four years ago.” “Timber prices tend to be cyclical,” said
Mr Welstead, in the report. “UK home-grown timber fell steadily in price from the 1950s through to the early 2000s. The long term trend hid peaks and troughs. We are now seeing rising timber values, which are likely to behave in a similar fashion. “We are currently in a trough, but the expectation is for prices to recover again and move ahead. The simple laws of supply and demand will apply.” ■
FURTHER INFORMATION The UK Forest Market Report can be downloaded from the Tilhill or
Goldcrest websites at
www.tilhill.com or
www.goldcrestlfg.com
www.ttjonline.com | January/February 2023 | TTJ
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