Farmers told to follow rules for forest funds
LANDOWNERS applying for government-funded tenders to plant woodlands should follow a few simple rules to ensure success.
Midlands farmers have until the end of March to bid for a share of this years National Forest tenders, worth £1.5m. Other bids in the Grampian region are due later in the year. But confusion reigns over likely costs and benefits, says Fountain Forestrys Richard Camilleri.
Landowners must depreciate land values when switching from agriculture to forestry. "This is the most important factor in controlling the tender bid price and often makes up 70% of the final bid." Land worth £10,000/ha (£4000/ acre) could be depreciated to £1250/ha (£500/acre), with the difference added to the tender price (see table).
The tender price is tax-free and is paid in two instalments – 80% on completion of planting and 20% after five years. Annual payments (which are liable to tax) start in the year of planting.
Planting and maintenance costs should be included at realistic levels, about £3600/ha (£1440) a year for five years. and ponds.
Sample bid for 20ha of broadleaf woodland*
Land depreciation (£8750/ha) £175,000
Cost of planting and maintenance (5 years) £71,300
Total tender bid price £246,300
Annual payments for first 15 years (£300/ha) £6000
* On registered arable land (all paths and tracks as mown grass).