Overstory #151 - Risk Management for Farm Forestry: Tips for farmers
Plantations are variously susceptible to such risks as drought, pestilence, vermin, disease, fire, flood and wind as well as poor management and neglect. Even if they are well managed and grow well there are still market risks. Fortunately, farmers are well placed to minimise risk by reducing costs and carefully designing their forests so as to capture multiple benefits. Good design can provide real benefits in the short-term which make waiting for the trees to mature much more enjoyable and far less risky. Below are some of the ways farmers can 'insure' against risk associated with growing trees for timber - while saving on the premiums.
Network: Increase your knowledge
Develop and maintain knowledge about farm forestry in your area including the available markets. Learning from others allows you to adapt their experience to suit your own circumstances and ensures that you have a clear vision of what you are trying to produce. It also provides the opportunity to avoid making the same mistakes yourself.
A useful means of exchanging information and discussing ideas with others is via agroforestry and farm forestry networks. Networks combine landholders, industry and government people interested in agroforestry. Collectively, networks produce and share information providing a link into what is happening in other areas. If your area doesn't have a network, start one.
Select a low risk site for your trees
Site selection includes considerations of soil type, climate, rainfall, topography, alternative land use options, adjacent land uses and access for harvesting. Clearly some sites, such as those close to roads or native forest, are at greater risk of fire than those surrounded by summer crops or grazed pastures.
Land with little or no value for agriculture may be quite suitable for trees. Alternatively, land fenced out from erosion control or shelterbelts may be ideal for timber production. Using such land reduces economic risk by reducing the opportunity costs of lost agricultural production. In fact, most farmers identify as much as 10% of their farms that can be planted to trees with no loss of agricultural production.
Roads and creek crossings required for extracting logs can be expensive. Small areas or mixed species planting are more expensive to harvest than large areas. The more expensive the harvesting costs the greater must be the value of the product if harvesting is to be viable. Log size is the key. Research suggests that small scale manual harvesting is only likely to be viable if tree diameters are large (say over 45 or 50 cm).
Use your agriculture to reduce your forestry risks
The simplest thing a farmer can do to reduce the fire risk is to graze in and around their plantations or grow summer crops beside them. By using (or adapting) their existing equipment, farmers can reduce the costs of establishing and managing their forests. Those farmers with employees may even find that forestry work provides an opportunity to keep their workers fully engaged during the quiet times or when waiting for other jobs to start.
Aim for a quality product suited to many buyers
To attract market interest farmers must be able to differentiate their product from that available from native forests or industrial plantations. The most effective way is to ensure your trees best match the market specifications. For sawlogs this may mean minimising defects (knots, gum veins, bends, end splits and other timber distortions) and maximising log diameter - within limits.
High value logs can also be transported further. The costs of harvesting and transport can make a standing tree worthless for firewood, chip or pulp markets at more than 200 km from market whereas high quality sawlogs may still be valuable at more than 400 km. This opens up many more buyers and the opportunity for farmers to sell into more competitive markets.
Keep your options open as long as possible
When starting out it is hard to predict which species or provenance is going to be the best for you and your site. This is especially important if the soil varies over the area or if little is known about which trees produce the best products. Rather than taking a stab and picking just one species or provenance it may be worth planting a mixture. When it is time to thin, you will be able to keep the best performers and cull the rest thereby putting off the tough decisions for 3 or 4 years.
Another way of keeping your options open is to aim to produce a product that is suited to more than one market. A forest managed for sawlogs can still be harvested for pulp but the reverse may not be so.
Keep an eye on your trees and good management records
Farmers are able to keep an eye on their trees. Problems caused by pests, wandering stock or disease can be spotted early. Written records documenting all stages of management will help verify past management and the quality of your stand when the time comes for marketing. Buyers may want to know the genetic origin or the trees or the thinning and pruning history. They may also have concerns about any hidden defects caused by fire, disease or nails. You can allay their fears by providing a documented history of the stand including dated photographs. The information will also allow you to learn from your own experience.
Treat the timber as a bonus
What if there is no market when your trees are mature or the price being offered is too low? If your trees are providing other benefits it may not matter. As farmers we are able to capture a wide range of environmental, agricultural and aesthetic benefits from our trees. We also have sites on our farms where we need trees. Having built the fences and planted the trees the only additional cost required to make the trees commercial is the management. Compared to timber investors who are dependent on receiving a commercial return that pays for the land and all the management costs farmers can avoid most of the risks by integrating their trees into their farms and ensuring they get a range of benefits along the way.
This edition of The Overstory was adapted with the kind permission of the author from the original:
Stewart, A. 2003. Risk Management for Farm Forestry - Tips for farmers. Agroforestry News Autumn 2003 - Volume 12, Issue 1.
For more information about the excellent periodical Agroforestry News, visit: http://www.agroforestry.net.au/
About the author
Andrew Stewart and his wife Jill work and manage the family grazing property of "Yan Yan Gurt West," situated in southern Victoria, Australia. The property has integrated forestry with grazing enterprises. Andrew is coordinator of the Otway Agroforestry Network and has worked with the network since its inception ten years ago. Andrew is also the Victorian Farmers Federation Farm Forestry Development Officer. Andrew has a Bachelor of Agricultural Science, a Diploma of Education and a Graduate Certificate of Forest Science (Farm Forestry).
Related editions to The Overstory
- The Overstory #148--Markets for farm forestry products and services
- The Overstory #121--Getting Started in Farm Forestry
- The Overstory #112--Farm Forestry Extension
- The Overstory #98--Integrating Forestry into Farms
- The Overstory #88 - Revegetation Planning for Farm Forestry
- The Overstory #73--Buffers, Common-Sense Conservation
- The Overstory #67--Optimising Commercial Timber Potential for Farm Forestry
- The Overstory #59--Choosing Species for Timber Production and Multiple Benefits
- The Overstory #56--Integrating Understory and Tree Crops
- The Overstory #48--Farm Forestry agroforestry.net/overstory/overstory48.html
- The Overstory #36--Silvopasture agroforestry.net/overstory/overstory36.html
- The Overstory #32--Multipurpose Windbreaks