Forestry Services ltd. have been involved in forestry investment since its establishment in 1985. Clients include Pension funds, Investment funds, Individual investors, Farmers and the directors of the company. Initially all forestry investments were based in Ireland but the company has now diversified into international forestry investments.
To see a sample Forestry Cashflow Summary, please click here.
Forests provide the following investment benefits:
- Forest land is an attractive investment form, offering yield, value appreciation, capital preservation and risk diversification.
- The returns come from two components – short term low risk cash flow yield from timber sales and long term value appreciation.
- The investment risk is mitigated by the inflation hedge and renewability properties of owning forestland. As trees grow they increase in value. There are no warehousing costs as trees are effectively stored on the stump. Therefore harvesting and sales can be tailored according to the prevailing prices with increased harvesting an option in buoyant markets.
- Forest land offers portfolio diversification as the returns have low correlation with other investment classes.
- Due to the long production cycle, timber supply cannot be dramatically increased in a short time period, as is the case in other commodities such as grain. Forestry is subject to strict regulations scrutiny in the European Union.
- The National Council of Real estate Fiduciaries ( NCREIF) index, an index based on the North American forest holdings can be viewed as an industry benchmark for returns. The 20-year data show an average return of 15% per annum.
- The Kyoto protocol and more recently the Coppenhagen conference stipulates a trend towards lowering carbon emissions, with tradable carbon credits being of potential benefit to a forest owner.
- A recent trend in the Nordic regions is the proliferation of the both biofuel plants producing cellulosic ethanol and biodiesel and the use of wood as an energy source. The EU 2003 biofuels directive set a target of 5.75% share of biofuels in the overall transport fuel supply. Cellulosic ethanol is produced from wood and has energy yield of between 4-6 times the energy expected during production.
- The green energy business is creating a new and vibrant demand for wood and wood residues. RecentlyEU countries set a target of reducing greenhouse gas emissions by 20 % by 2020 and up to 30% if other countries follow European ambitions. Biomass and particularly timber can play a major role.
- January 2007 - European commission established a target ( mandatory) of 20% energy from renewable sources by 2020.
- Timber can contribute in 3 sectors.
- Electricity from the biomass sector.
- Heating and cooling - share of renewables could more than double - most of this growth could come from biomass.
- Sugar cane and agriculture is expected to contribute the most when it comes to transportation biofuels, these will later be complemented by cellulosic ethanol from timber.
- Global trade for woody biomass, primarily for energy was just over 11 million m3 in 2007, up from 5.6 million m3 in 2003. This trend is set to expand in line with renewable energy targets.
- Increasing demand and consequently price for timber internationally due to;
- Increasing world population, from 6 billion people in 2002 to 7.9 billion by 2025(Source UN population division).
- Increasing use of renewable fuels as laid down in the Kyoto protocol and the EU white paper on renewable energy (From 6% to 20% by 2020).
- Decreasing supply from Russia due to export levies.
- Forest area decreasing worldwide annually. Net loss to agriculture and other uses is estimated at 7.3 million hectares per year. (source : www.fao.org).
- Emerging markets in China and India. China’s consumption of sawn wood is expected to double by 2015.
- Amenity value in certain circumstances.
At a special function in Dungarvan, MEP Sean Kelly launched foresttomarket.ie website, a first for the Irish Forestry Industry in Ireland. This new website is a dedicated platform for investors to source existing forestry and land suitable for forestry for sale by auctioneers across the country.
For forest investment opportunities please visit www.foresttomarket.ie