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Interaction of forestry with other farm schemes

Forestry continues to be highly attractive for many farmers and landowners. The decision to plant is a long term land use change and consideration of all implications is recommended, including its potential to compliment other farming enterprises and to provide financial, environmental and social benefits. The merits of the forestry option should be explored with family members, including issues such as future objectives and succession planning.

It is strongly recommended that farmers review current and potential gross margins available from current farm enterprise(s) when considering alternatives. Tools such as the Teagasc eProfit Monitor are invaluable in this regard. The Teagasc forestry financial calculator (FIVE) can be used in a complimentary manner to provide indicative returns by comparing forestry planting scenarios. Important indicators include the annualised value of a future timber crop in today’s money, the Annual Equivalent Value. Potential tax benefits and tax planning should also be considered.

A whole farm planning approach requires analysis of how planting land may interact with other important farming issues such as stocking rates and nitrates calculations. The interaction of forestry with other farm schemes is also critical and these interactions are generally well disposed towards forestry. Some of the main issues are summarised below.

Eligibility for forestry premium payments

The new Forestry Programme 2014-2020 does not differentiate between ‘farmer’ and ‘non farmer’ premium rates. Unified forest premiums will now be available to approved applicants. These enhanced premiums will be paid to compensate for potential income foregone over a 15 year period.

Eligibility criteria still apply in relation to the sale or transfer of pre-2015 plantations. For example, if the owner of a plantation, established at the farmer rate of premium, plans to sell or transfer all or part of his/her planted land during the term of contract (normally 20 years, corresponding to the previous premium payment period), the transferee may be eligible to continue claiming the farmer premium by meeting the criteria for farmer status. This requires either an active herd number in the new owner's name or documentary proof that 25% of income is from farming, as appropriate.

Forestry and the Basic Payment Scheme (BPS)

The Single Payment Scheme (SPS) is replaced by the Basic Payment Scheme from 2015 onwards. Eligible land planted with forestry since 2009 and which will be afforested under the new Forestry Programme 2014-2020 can be used to activate BPS entitlements. This is a major advantage for applicants in a position to benefit. Similar eligibility rules as before apply, including:

  • The land to be planted was declared on a 2008 SPS application.
  • The declared land was eligible for SPS in 2008.
  • The applicant who declared that land was paid under the 2008 SPS.
  • Applicants, who plant part of their holding from 2009 onwards must retain at least 10% of the eligible hectares declared in 2008 (by themselves or their predecessor) in an agricultural activity, subject to a minimum area of 3 hectares.
  • If the applicant is a new entrant to farming, the minimum area to be retained in an agricultural activity will be fixed by the Department on a case by case basis.
  • Applicants who wish to benefit from the Basic Payment on afforested land must continue to be an active farmer, as defined, and also be the person or persons in joint management or receipt of the afforestation premium. This applies to members of the same family.
  • Afforested land must continue to meet all requirements of the relevant Forest Service scheme under which it was afforested.

Applicants who will plant their lands should ensure the correct crop category and parcel use are entered on the Basic Payment Scheme application form at the time of its completion. If planting takes place after the BPS submission deadline, a BPS amendment form must be submitted, notifying the change to eligible forestry.

Forestry and Greening

Payment for ‘Greening’ measures will be calculated as a percentage of the BPS payment. While all farmers are required to comply with greening requirements, many farmers will be exempt from taking action in this regard. Tillage farmers with more than 15 hectares of arable land must ensure that at least 5% of their arable land is an ‘Ecological Focus Area’ (EFA).

These EFAs can include landscape features such as hedgerows and drains/ditches, nitrogen fixing crops, buffer strips, arable fallow lands and catch crop/Winter cover. Existing SPS-eligible forestry and newly planted BPS-eligible forestry will also be acceptable towards meeting EFA requirements.

Forestry and Early Retirement Scheme (ERS)

While the Early Retirement Scheme (ERS) is now closed to new entrants, the new single category for forests premium may act as an incentive to retired farmers to plant, particularly where lands they had leased to qualify under the ERS are returned to them.  The following general rules apply:

  • Where the pension period has expired and land leased for the purpose of ERS is returned to the retired farmer, s/he may qualify for the Afforestation Scheme, including new premiums, in respect of these lands
  • If the retired farmer is still in receipt of ERS pension s/he must comply with the condition of that Scheme that the pension land be farmed by an eligible transferee for the period of the pension.
  • If the retired farmer acquires land that is additional to the pension land s/he can plant that land and receive payment of premium in the same way as all other applicants.

Forestry and Areas of Natural Constraint

The Disadvantaged Area Scheme (DAS) has changed to an Areas of Natural Constraint (ANC) scheme in 2015. This is an annual area payment based on minimum stocking density. The threshold payment area for most farms is 30 hectares (or 34 hectares on mountain land) as per the Disadvantaged Area Scheme.

Planting a forestry plot on a farm holding whose total eligible area is equal to or lower than the threshold (30 or 34 ha) would result in a pro-rata reduction in ANC payment. In the case of holdings above the threshold area, there may be opportunities to maximise ANC payment and also plant some land.

Forestry and Agri-Environmental Schemes (incl. GLAS)

The Agri-Environmental Options Schemes (AEOS 1, 2 and 3) are  not whole farm schemes. There may therefore be scope for landowners to incorporate some forestry on non–AEOS parcels within their holding without compromising AEOS requirements. It is also possible for AEOS parcels to be considered for afforestation within the five year contract without penalty. Applicants should plan well in advance, discuss options with their planner/advisor, and keep DAFM informed as appropriate.

The Green Low Carbon Agri-Environmental Scheme (GLAS), similar to AEOS, is not a wholefarm scheme. Successful applicants must choose appropriate options, some of which are area based.

Parcels that are in GLAS cannot be converted to forestry. However, opportunities continue to exist for afforestation and for other forestry schemes on parcels which are not in GLAS. Applicants and their Advisors should look at the opportunities afforded by both schemes when planning for GLAS.

Further information

The forestry option has many benefits but it is important that farmers and landowners are fully aware of the implications in advance of informed decision making. For further information, contact your local forestry advisor will be able to provide you with independent and objective advice.

Please note:
Regulations may change over time. Before making an application, please check that you have the most recent information.