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There are two sets of key economic issues which individual farmers must consider before deciding to plant some land. Firstly the key issues directly related to forestry are:
• The level and availability of the annual forestry premium payment,
• The inflation proofing of the annual forestry premium payment,
• The continued availability of planting and maintenance grants at the 100% rate,
• The continued tax free status of forestry.
Secondly the key issues related directly to farming are the impact of a change in land use to forestry on payments from:
• The area-based compensatory allowance payments (paid in Disadvantaged Areas).
• The per-hectare entitlement payment scheme (current CAP reform).
• The Early Retirement from Farming Scheme.
• The Rural Environment Protection Scheme (REPS).
Forestry land is excluded from:
• The area on which compensatory allowance payments are paid,
• The area on which per-hectare entitlement payments are paid (current CAP reform),
• Area on which the Early Retirement from Farming Pension is based,
• Area on which the REPS payment is based.
Forestry and the Early Retirement Pension
• A transferor (retiring farmer) who already has some land planted before retiring from farming may retain that land and continue to receive forestry premium payments after retirement together with the EU pension.
• This option is very attractive for farmers with over 24 hectares i.e. the number of hectares required to maximise pension payments.
• If the forest land is transferred, the young farmer who receives it can apply for the forestry premium payment.
• The young farmer may plant some of the land he or she receives but he or she should first check that the farming and farm income conditions of the particular retirement scheme are satisfied.
Forestry premium payments are income-tax free. Retiring farmers who want to retain some of the farm should plant the forest ground prior to the transfer of the remaining land. In this way, they can avail of forestry premium payments on the planted land and the retirement pension on the remainder of the farm. However it is crucial to retain enough land in farming to satisfy the farming and farm income conditions of the scheme prior to availing of the EU Early Retirement from Farming Pension. Check the details with your Teagasc agricultural adviser/agricultural consultant.
Forestry and REPS
• REPS participants who farm more than the maximum REPS area of 40 hectares can plant the excess land without a reduction in REPS payment. Forestry can be a very attractive option for this group of farmers,
• REPS participants are free to plant land without incurring any penalties,
• REPS participants should carefully plan the timing of their afforestation. Land should not be taken out of the REPS plan until written approval to plant has been granted,
• Areas planted are excluded from REPS payment,
• Areas listed as REPS “habitats” cannot be planted.
REPS planners are required to identify areas suitable for forestry during the REPS planning process leading to closer integration between EU forestry and REPS schemes. This will result in greater emphasis on landscape enhancement and broadleaf planting within the context of REPS plans.
The key requirement in relation to EU schemes is to get the optimum mix of forestry area and agricultural area so that total income is maximised on your farm.
The Decision to Plant
• Will planting increase total farm household income?
• Unlike many other farm enterprises, forestry is a long-term investment;
• The market for land sales with growing plantations is not yet well structured unlike that for unplanted land;
• There will not be subsidies available to compensate farmers if timber prices fall;
• Well managed forests need labour and management time input particularly during early establishment and when pruning or thinning is required;
• Land in forestry is eligible for the Forestry Premium only;
• In the years after year 20 and prior to clearfelling the income from sales of thinning and small sawlog may be significantly less in real terms than the current forestry premium levels or the current income per hectare from farming.
• Farmers with very low farm incomes should carefully consider the health and social welfare implications of a change in land use. Many prefer the status quo. Forestry premium income is assessed as means for all non-contributory social welfare payments e.g. Unemployment Assistance, The Farm Assist Scheme and Non-Contributory Pensions.
Plan Well in Advance
Area Based Compensatory Allowance, new CAP reform entitlement per hectare, Farm Retirement and REPS schemes all have (or will have) different area limits on which payments can be maximised. The cost of not having all the forms and paperwork related to these schemes completed properly can be very significant. Taking land out for forestry has an impact on eligible areas for all EU schemes.
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Forestry & EU Farm Schemes 
