Opportunity knocks for forestry sector
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
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.
changing dynamic in timber supply in Ireland has led to concerns by
private owners that prices will fall just as the crops mature
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.
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
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
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.
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.
production forecasts show that private forest owners, particularly
farmers, will hold the "balance of power" in future increases in timber
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.
Key messages for forest growers
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
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
The commercial aspect of the Forestry South Africa (FSA) website, as well as the commercial side of the FSA Newsletter, is managed and run by Fevertree Media (Pty) Ltd which is a separately run entity to the non-profit organisation Forestry South Africa.