Agribusiness News March 2024 – Sector Focus: Forestry

Forestry Grant Scheme Updates and Availability

On Tuesday 5^th December 2023, Scottish Forestry implemented a series of changes and enhancements to the Forestry Grant Scheme (FGS) which were designed to aid delivery of woodland creation and work to restore/regenerate Scotland’s Rainforest and Caledonian Pinewoods.

Key changes included:

• All new FGS deer fencing in Scotland now qualifies for “high cost” grant (£9.90 per metre), an uplift of £2.30/m in some areas;
• An extension of the “Central Scotland Green Network- Fringe Area Contribution” to cover all of Scotland, providing an extra £750/ha for new woodland (up to 40 Ha);
• Doubling of the natural regeneration grant for expansion of native woodland to £600/ha;
• Increased grant for manual or mechanical bracken control – now £720/ha;
• Improved support for deer management and Rhododendron control within priority areas;
• Improved accessibility for “Small or Farm Woodland” creation grants

Further details can be found within Scottish Forestry’s “Briefing Note 45- December 2023”.

Whilst these improvements are positive news for new FGS applicants in eligible areas, Scottish Forestry has been severely impacted by the draft SG Budget Bill of 19^th December 2023 – one of the most challenging budgets ever received in Scotland.

As a result of a 41% cut in budget for new woodland creation funding for 2024/25, Scottish Forestry are having to optimise the current 2023/24 claim year, and make difficult decisions affecting the 2024/25 claim year to maximise woodland creation within a heavily constrained budget.

Any party working with a current FGS contract, or with future FGS applications/contracts in pipeline, is strongly advised to review Scottish Forestry’s “Briefing Note 46- February 2024” to ensure their project aligns with newly released claim guidance, and with budget availability for the year ahead.

Timber Markets

The most recent Timber Price Indices from Forest Research were released in November 2023, publishing averages based on timber sales figures from Forestry England, Forest and Land Scotland, and Natural Resources Wales up to 30^th September 2023.

The results show a 28.1% fall in real terms in comparison to previous year, with average price for conifer standing sales of £30.33 per cubic metre (overbark standing) in nominal terms compared to £38.81 the previous year.

Whilst these are averages taken from a whole of Great Britain dataset only showing public sector timber sales (and current to September 2023), they do reflect today’s challenging markets which are facing a contraction in demand for construction timber due to a slowing of the house-building sector, higher interest rates, and continued economic uncertainty with all markets acting more cautiously as a result.

Average prices in real terms in £ per cubic metre overbark (real terms= 2021 prices)

Land Prices for Woodland Creation

The increase in market caution has also hit land sales – crucially for the rural sector, the price of land suitable for commercial forestry planting has fallen dramatically by 22% in Scotland over the last year, falling to a market average of £9,900 per hectare.

In direct contrast, prices for land suitable for commercial forestry in both England and Wales have increased within the same period by 42%, rising to £16,600/ha and £13,400/ha respectively.

ben.law@sac.co.uk