The Irish Forest Owners (IFO) has warned private forest owners and their families to exercise caution about selling harvesting rights to their woodlands.
The representative body highlighted that based on today’s prices, “the final harvest value of a conifer forest is likely to be in the region of €10,000–€15,000 per acre”.
IFO is concerned that many private forest owners may not realise the true value of their asset.
A number of investment companies are seeking to buy the harvesting rights from private forest owners, offering a lump sum upfront with annual payments until clearfell, it stated.
Chairperson of the IFO, Nicholas Sweetman, said: “Many landowners have invested in forestry, especially over the last thirty years”.
“Owners should be cautious of relinquishing the value of their timber mid-way through the life cycle of their trees. They should not become sharecroppers on their own land.”
“It is of particular concern that these companies are cherry-picking softwood plantations that have recently come out of premium payments and that the owners are not being offered the true value of their forest,” he said.
Independent expert’s valuation
The IFO recommends that any forest owner considering these offers gets a valuation of their forest from an independent expert.
“Forest owners can also benefit from information and support from their local forest owners group, as well as independent advice from their local Teagasc office.”
Tax
Forest owners, the group, added, also need to consider the tax implications of selling their harvesting rights carefully.
At present, there is a “favourable” tax regime for forest owners for profits relating to forestry and for the transfer of forestry to the next generation.
“It is possible that relinquishing harvesting rights may have unforeseen adverse tax implications for the landowner and their family. Detailed independent legal and taxation advice is vital.”
According to group, the carbon embedded in private forests has an important potential value that must also be considered.
“The IFO will energetically demand that these values are properly quantified and vested in the forests for the benefit of the owners.”
Furthermore, the IFO confirmed that it will resist any move to “place the future of private forestry in Ireland in the hands of a few investment funds”.
