The Rettie Ruminant—Forestry: The Hill Farmer's Friend
Could forestry be the hill farmer's friend?
It is now over 25 years since the landowner and the then Nature Conservancy Council disagreed on planting trees in Glenlochay Estates.
The outcome was substantial compensation paid to the landowner to not plant trees (primarily commercial conifers) in blocks designed to combine commercial timber production with landscape enhancement and shelter for hill sheep. Fast forward 25 years and about half of what then constituted Glenlochay is currently up for sale with about 1306 acres of native woodlands having been established with the benefit of significant Grant Aid to plan and recreate the ancient deer forest of Mamlorn.
What is the purpose of this tale? It merely highlights how priorities change over time.
More acres of broadleaves of limited commercial value have probably been planted than conifers in Scotland. The upshot now is that Fergus Ewing, the Cabinet Secretary for the Rural Economy, has launched his forestry strategy for Scotland with Cross Party Support, with the aim of substantially increasing the volume of forestry planted to 37,500 acres per annum from 2024 onwards. The great majority of new plantings are targeted at commercial conifers for timber production to sustain the Scottish Timber Processing Industry, which is a substantial employer. To put this into context, rarely in the last ten years have more than 40,000 acres of farmland been offered for sale on the open market in Scotland in any one year. Read Scotland’s Forest Strategy 2019-2029 here.
There is currently unprecedented demand for both land suited for afforestation and commercial forestry from a range of investors, including some very well-funded investment funds. These investors are willing to buy upland and hill grazings for afforestation without the benefit of planting consent (which can take up to 12 months to achieve) so long as there are no obvious impediments to the likelihood of obtaining planting consent. Typically, the same block of land that has no constraints for afforestation might be worth 50% more than the block that has a constraint.
In recent months Rettie & Co. have acted in the acquisition of two 500 to 600 acre blocks of grazings for forestry investors. In both instances the land had no obvious constraint to prevent it from being afforested. Consequently, the sellers obtained a premium of circa 40-50% over agricultural market value andwere able to retain the part of the hill that they favoured for ongoing farming. They plan to re-invest the sale proceeds in whole or in part in ploughable lowland grazings, which will carry significantly more stock, and allow home grown winter forage to be grown and stock to be finished rather than sold as store.
These sellers made forestry their friend with the benefit of current market conditions and I wonder if other upland/hill farmers and estate owners should be considering whether they have 250 or 500 or 1,000 acres that might make sense to sell when all these factors are given due consideration.