Forestry in the UK has risen in the public and political consciousness and has not been as high on the national agenda since the Forestry Commission (FC) was set up in 1919.
That was the message from Sir William Worsley, chair of the FC, speaking at the annual Forestry Conference, organised by the Country Landowners Association (CLA), the FC and Grown in Britain, which took place online in October.
It was also an over-riding theme of the conference, which was split into three sections: Good for business; Good for the planet; and Good for the future.
Sir William said that political parties had “haggled” over their tree planting ambitions during the last election.
“The reason is that planting trees is the most cost effective way of sequestering carbon,” he said.
The government’s target of bringing all greenhouse gas emissions to net zero by 2050 had led to identifying the scale of expansion and a replanting target of 30,000ha per year by 2025 was set.
“The Covid crisis focused on immediate needs but we are now considering the medium and long-term economic and green recovery,” said Sir William.
“Forestry is becoming mainstream alongside agriculture,” he continued. “The size of the £640m nature recovery fund announced in the last budget sets the scene.”
He added that the 30,000ha per year by 2025 target was very ambitious and “a huge increase on what we are currently achieving” but that government funding for planting and managing woodlands remained an important part of the toolkit. He said the rates “are pretty good” and he encouraged landowners to use them to meet their needs.
He also acknowledged, however, that countryside stewardship is not fit for purpose and that a simpler, less bureaucratic grant system is necessary.
“Alongside traditional grants we are supporting new markets for wider benefits, such as the Woodland Carbon Code and the Carbon Guarantee Fund. To date there have been two auctions attracting 180 individual bids, 45 of which have been successful, leading to the creation of 1,700ha of woodland.”
Sir William said that government supported a “blended finance” solution, adding that there is increasing private sector interest in forestry investments, often motivated by corporate social responsibility (CSR) goals and net zero carbon interests and that this made woodland expansion attractive.
The FC is also supporting an increase in biosecure tree stock sourced and grown in the UK. This summer it announced £2m of financial support for forestry businesses, which included investment in private nurseries to help increase capacity.
“We are also investing in Forestry England (FE) nursery expansion and improvement, to increase capacity but also to widen the range of species and provenance of tree stock, which will improve resilience to climate change and other threats.”
Sir William added that increasing forestry sector capacity and improving practices requires collaboration and that the Forest Skills Action Plan had been published in February 2020 “with the support of all the main national forestry organisations”.
Sir William said that for many years there had been a lack of woodland management and creation due to the perception – and often reality – of it being “a cost and a liability, not a profit”.
“But timber markets have grown in recent years and prices have much improved and previously difficult early thinning, essential in the development of a productive woodland, has become easier with improved markets – and particularly for wood fuel opportunities and outlets for hardwoods.”
Speakers in the “Good for business” session echoed Sir William’s view that this was a good time for the forestry sector and Mark Bridgeman, president of the CLA had some advice for government on how it could achieve its 30,000ha per year by 2025 target.
Mr Bridgeman, who manages the Fallodon Estate in Northumberland, 10% of which is woodland, said that it was important that the government retains and properly resources the FC. “We as private landowners will need advice if we are to increase planting and management,” he said.
He added that the grant system needed simplification and proportionality. “The whole process is too complicated and long winded.
It needs to work for individual farmers/ landowners – the odd quarter acre – as well as the major reforestation projects. It’s important that trees work in the landscape and that they are placed on all farms where trees can have benefit.”
He said landowners need clarity on where woodland “is going to fit in”.
“Environmental Land Management (ELM) schemes pilots start in 2021 and won’t be running until 2024, but it’s unclear what it means on the ground. We need to know more about it so we can weigh it up against other options. A huge proportion of woodland is unmanaged and there is potential there.”
There is a need to develop domestic markets for British-grown timber, said Mr Bridgeman.
“There’s a role here for government, particularly around the housing sector where carbon can be locked up in houses. Timber frame dominates in other countries but not in ours. Perhaps the government should step in to promote the use of timber construction.”
The government should also address what for some landowners is the sticking point – the idea of permanence.
“Once the trees are there they are there forever,” said Mr Bridgeman. “If they are harvested they must be replanted. Trees are a very long-term game and although most landowners think long-term they need support for management, particularly if they are taking land out of agricultural development.”
Oliver Combe, manager at Timber Auctions Ltd and a woodland owner and manager, highlighted supply and demand dynamics and the consequent rising value of roundwood and sawn timber, all of which should make tree planting and woodland management more attractive to landowners and farmers.
He said that woodland cover had increased between 1970-80 and that the UK had become “world leaders of amenity and productive woodlands” but that there had been a steady decline in woodland creation since the end of Schedule D in 1987, which effectively scuppered tax relief on woodland purchases and forestry activity.
There had also been a marked change in the mix – with a significant fall in the creation of softwood and an increase in the creation of broadleaf. On the flip side, the UK market is 95% softwood and 5% hardwood – “and that hardwood is heading towards 95% oak”.
“We’ve gone from large scale productive woodlands to small scale and multi-purpose woodlands, which are going to be very difficult to access for timber,” said Mr Combe.
“There is now a significant gap between supply and demand, which is good news for growers,” he said. “And [the sawmilling] industry has a well capitalised and modern market to take advantage of the resource.
“Global markets are having an impact on us and in the last half of 2020 it became more difficult to source timber, either roundwood for sawmills or sawn for merchants. The main driver is China, which is becoming hungrier and spreading its net wider.
“Now there is a global shortage of timber, which is impacting the UK. The US is paying the best price and China is an easy market to access, so they are both pulling timber in.
There has been a spike in prices – in the US the price is £1,000/thousand board feet (the previous high was £600/thousand board feet in 2018) and there is no sign of the price falling back.
“UK prices seem to be six months behind the US and China but demand for timber is outstripping supply. I don’t know if this is a long-term trend or a spike but in 30 years in the business I have never seen a market – or prices – like this.”
The situation was entirely different for hardwood, added Mr Combe. “There has been a loss of confidence and oak prices have fallen due to over-supply.”
Niel Nicholson, director of Nicholsons and the recently founded Forestry Canopy Foundation explained his theory of “coopetition” – or co-operating with the competition. The Forestry Canopy Foundation is an amalgamation of competitors and is a “professional forestry response to climate change and targets”.
It’s aim, said Mr Nicholson, was to plant well-planned, quality woodlands in England to mitigate climate change and add natural capital to the national resource.
The network includes Sylva Foundation, the National Trust, the Blenheim Estate, the Royal Forestry Society, FE, the National Forest, the CLA, Climate Solutions Exchange, Water Resources East, J7L Gibbons, the Trust for Oxfordshire’s Environment and Pollination.
Supported by blended finance and Defra’s Nature for Climate Fund, pilot planting is being undertaken this winter and Mr Nicholson invited private sector forestry companies, landowners, corporates, philanthropists, charities “and other sources of finance” to join in.
Defra’s chief scientific adviser, Professor Gideon Henderson, shed some light on the government’s intentions in the “Good for the planet” session of the conference.
He said that, as the UK deals with Covid-19 and adjusts to Brexit, 2021 will be a challenging year but also one of huge opportunity.
“It takes over the presidency of the G7 and will host the UN Climate Change Conference (COP26) in November, so it will have a great deal of international influence next year, particularly around biodiversity.”
He added that, at government level, carbon budgets were being set and there was a focus on how the UK can “up the ante” on decreasing carbon. “Trees have a huge part to play,” he said.
Prof Henderson said that the Net Zero by 2050 target would be very challenging and would involve substantial change in every sector of the economy over the next 30 years.
“An increase in tree planting is the first part of that and the biggest challenge is competition for land. We need to free it up for tree planting, which will have to be done in conjunction with changes to agriculture. The UK will also have to be more aware of peat restoration in carbon reduction targets, and of the role of biomass.
“If we’re going to meet the tree planting target we’ll have to do it in a varied and very flexible way – we’ll have to plant in cities and towns, peri-urban spaces and on government land,” he said.
Prof Henderson added that the current government assumptions were that planting would be 70% broadleaf and 30% conifer.
“We recognise the virtues of commercial forestry and the significant role it has to play in achieving the net zero carbon target,” he continued. “Forestry also produces timber for construction, displacing cement, which is a big carbon emitter – so it’s a double whammy for timber.
“Forestry is also better for biodiversity than many other sectors and it’s an important employer. We should try to increase our domestic production and cut our reliance on imported timber,” he said.
On the subject of biomass, which he said “can be controversial”, Prof Henderson said the United Nations Framework Convention on Climate Change (CCC) saw biomass as significant in meeting targets and that the biomass that could be sourced from trees would be as important as the trees themselves in terms of carbon.
“We could think about dedicated forestry for biomass – short rotation, different species,” he said, adding that agriculture had a part to play in biomass.
“We might see a blurring of boundaries between agriculture and forestry leading to the increasing development of agroforestry.” He added that trees are important in the preparedness for the effects of climate – flood mitigation, for example – but the challenges of planting should not be ignored, neither should the impact of climate change on the trees themselves be underestimated.
“We need to see that coming in the way we plan for our forestry in the future. We should maximise natural diversity in our trees.”
In other presentations in the session, Vicky Fletcher, general manager of the National Trust’s Mottisfont and South West Hampshire portfolio spoke about the organisation’s determination to decrease carbon.
“Our targets are in line with the CCC,” said Ms Fletcher, adding that the National Trust will have established 18,000ha of new woodlands and improved the management of existing woodland by 2030.
In the final session of the conference, “Good for the future”, Sarah-Jane Chimbwandira, CEO of the Surrey Wildlife Trust shared details of the organisation’s core mission of increasing biodiversity and engaging people in the natural environment.
Surrey is the most wooded county in England, with 23% woodland cover, comprising 38,000ha of mixed woodland and 12,000ha of ancient woodland – but much of the woodland is small and unmanaged.
The Trust recognises that bringing small woodlands into management and creating a market for their products will have economic and ecological benefits.
David Robertson, director of investment and business development for Scottish Woodlands shared his view on investors in forestry and the current and future drivers.
Historically, investors were individuals and institutions and the major driver was tax.
“Schedule B/D tax allowed offset of tax liabilities into forestry,” said Mr Robertson.
“This drove huge expansion and not just a little bad practice. Income tax on timber income was abolished following the changes to B/D tax.”
Inheritance Tax also played a big part, with woodland owners looking to protect wealth for the next generation and Capital Gains Tax was “an added benefit, especially if gains elsewhere are rolled over into planting land”.
“The financial return was probably low down the list for many from the 1980s to early 2000s because the taxation benefits were king,” said Mr Robertson.
The new breed of investors now includes funds, which are mainly focused on wealth preservation and capital growth; and institutions who look for long-term stable growth, security of asset class and income.
The third group of new investors – corporates – “is where it’s getting interesting”.
“There is significant and growing interest from UK and EU-based companies in forestry investment with the UK being a focus due to stable and secure land ownership structures,” said Mr Robertson.
He added that carbon is becoming a massive driver for corporate investment and that investment returns are not seen as a top priority – “they are looking at what they can provide in ESG (environment, social and economic) returns”.
Steph Rhodes, FC delivery director for the England Tree Planting Programme, outlined the government’s 25-year plan to improve the environment. “The Green Future” plan includes supporting larger scale woodland creation; incentivising extra planting on private land; identifying areas most suitable for woodland creation; and increasing the use of British-grown timber in construction.
“We know good forestry can be part of the solution to climate change crisis and biodiversity crisis, so there are reasons to be cheerful,” said Ms Rhodes. In addition, she said, the forest products sector had coped well with the impact of Covid and timber demand and prices had increased.
“The end of the EU exit transition period presents challenges but also opportunities for the UK to redefine how it wants to move its forestry policy forwards,” she said.
