The two key factors that determine the returns from investment in forestry are the biological growth of the trees and timber price movements. On biological growth, Ireland has a number of distinct advantages over other European countries:
a) Growth rates are 2-3 times greater than those achieved in mainland Europe; and
b) Ireland’s relatively low incidence of tree diseases means that growth losses are minimal in comparison with other countries.
Timber prices in Ireland have traditionally been higher than those achieved in our nearest neighbour in the UK. Over the years timber prices have kept pace with inflation and many analysts believe that timber prices especially within Europe will increase relative to inflation in the long term due to a combination of emerging energy markets, compliance with EU renewable energy targets and the forecast supply demand for traditional wood products.
Irish Timber Prices
In 2010 the UK was the third largest global net importer of timber after China and Japan. The UK will continue to be one of the world’s largest importers due to the relatively small volumes forecast to be available into the future. Ireland is ideally positioned to access this major market and this proximity to the UK combined with our excellent growth rates provides forestry investors here with a competitive advantage over their counterparts on mainland Europe and elsewhere.
Income from the occupation of woodlands in the State, managed on commercial basis and with a view to the realisation of profits, is exempt from Income Tax for individuals and companies to an exempt amount per person of €80,000 per annum, assuming total income exceeds €125,000 for that person.
Sample Investment Return of a 8 ha (20 acre) site planted with Sitka Spruce, Yield Class 24 on a 35 year rotation: