There’s not so much a gap between the commercial performance of UK forests and those of the north-eastern US, it’s more of a chasm.

That’s the verdict from forestry management specialist fountains plc.

“If you had a timber price index of 100 seven or eight years ago, UK prices would be down around 35 today. In the US we’re looking at 300 to 400,” said chairman Barry Gamble.

He acknowledged that we are not exactly comparing like with like here. The woodlands fountains manages for investors in the UK are predominantly softwood, while those in the northeast US are high-value hardwood. However, it says that softwood forestry in the US has also provided a return way ahead of the UK. “Our price experience compared to Europe, Australia, and New Zealand is also appalling.”

Mr Gamble said there were a number of factors involved, but he’s in no doubt where the blame for the transatlantic discrepancy chiefly lies. His finger points straight at the Forestry Commission (FC).

“It’s something we’ve believed for a while, but we’re now really coming out of the closet on the issue,” he said. “The FC is a complete anachronism and its existence runs counter to the interests of private forest owners and, we feel, the entire UK timber chain.”

fountains maintains that having in the FC a government forestry advisor, regulator and “dominant commercial operator” rolled into one skews the whole forestry investment and timber production picture.

“They are timber seller in the last resort – if they don’t get sufficient income from wood, they just get a government top-up. This naturally tends to devalue the market,” said Mr Gamble. “By contrast, the private sector has to get a return from its timber.”

fountain’s vision for the future includes the establishment of a separate forestry regulator which applies the rules even-handedly to the private sector and the FC’s ‘commercial arm’ Forest Enterprise, with public and private competing on equal terms for grants.

He stressed that fountains was not demanding privatisation of the UK’s state-owned forests.

“The way forward is commercialisation of these forests in public ownership on a similar model to that adopted very successfully in New Zealand and Australia.”

The end result, he maintained, would be more forestry investment and a “better timber supply market” which would benefit everyone involved.

Transatlantic contrasts

&#8220The way forward is commercialisation of these forests in public ownership”

Barry Gamble, chairman, fountains plc

The contrasts between the relative states of US and UK forestry investment were further emphasised by Bruce Jacobs, who runs fountains’ Pittsfield, New Hampshire-based office.

The American operation launched in the 1980s to satisfy the diversification needs of UK investors who wanted to reduce their reliance on then heavily tax-relief dependent UK softwood forestry. Later it also courted American clients and today manages 350,000 acres across seven north eastern states and down to Tennessee (in the UK fountains manages 200,000 acres).

“All our US forests are self-regenerating and the timbers we target are highest value species, like cherry, sugar maple and red oak which are always in demand,” said Mr Jacobs.

Besides the inherent value of the wood, fountains says growing interest in forestry investment in the US has also been fired by the tendency of the traditional owners among timber and paper producers to offload forest holdings to balance their portfolios and focus more on manufacturing.

“We’re now attracting a new breed of investors. In particular we’ve seen growth in the number of private individuals and smaller businesses, alongside the institutions, putting money into forestry,” said Mr Jacobs.

NGO interest

Adding to the diversity of the market place, has been increasing interest in forestry investment among environmental NGOs.

“Initially they were aiming to buy forest to take it out of timber production,” said Mr Jacobs. “But now they’re looking to ensure only that the land cannot be developed, while having us manage it for sustainable timber production.”

fountains sees potential for further growth in environmentalist investment and others evidently agree. “At the World Forest Summit in Oregon, where Barry was a speaker, the question was asked ‘who’s going to own the forests in the future?’. The consensus was that it would be the institutions and green groups!” said Mr Jacobs.

Another attraction for the NGOs in fountains tending their forests is its extensive experience in overseeing certification of its woodlands under the US Sustainable Forestry Initiative and Forest Stewardship Council schemes.

“The environmentalists also find the detailed data we generate on our forests, the mapping of where the trees are, the different habitats and so on, very attractive,” said Mr Jacobs. “It’s exactly the information they value too.”

Of course, fountains also clearly makes a success of its forestry management in the UK (overall profits last year were up 8%). But whether the forestry industry environment here will achieve the dynamism and diversity of the north-eastern US remains to be seen. Mr Gamble though is hopeful. “We’ve put our views on what should happen with the FC to the UK Forestry and Timber Association and our private woodland owners,” he said, “and we’ve had a very supportive response.”