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Why Plant Trees? / Making Money from Farm Forestry / Growing Forests For Money
Why Farm Forestry
Why Plant Trees
Markets for products & services
Designing a Farm Forest

Growing forests for money

Individual farmers have different motivations and expectations when they establish forest farms. Similarly, the opportunities and potential for selling products and services vary between farms. It is important for farmers to clarify their expectations - financial and otherwise because this will help them design the most appropriate forest farm for their needs.

In a competitive market, farmers are often small producers selling into markets dominated by large players. Farmers need to identify where they have a competitive advantage over other producers and look at how to maximise the return on their investment while achieving their goals.

There are many ways that farmers can receive financial benefit from their forests or improve their competitive advantage. These include:

• making sure their forest products and services match the buyer’s specifications

• designing forests for multiple values and thereby sharing the costs between several potential products and services

• value-adding or direct marketing forest products to avoid monopoly buyers and increase the number of potential purchasers

• involving off-farm family members who can take advantage of forestry’s investment and taxation advantages

• using otherwise idle farmland, labour or equipment to produce, or add value to, forest products

• enhancing property value by using forests for beautification, shelter and wildlife

• using forest products on farms to reduce living costs—for example, heating, fence posts etc.

• reducing the effect of generation transfer by building wealth in an investment that can be separated from the land

• developing on-farm business activities that are supported by the farm forest such as farm-stays, nurseries, contracting or tours

• using the forest to support professional activities in areas like natural resource management and financial services

• diversifying the farm business to reduce exposure to fluctuating agricultural markets and climatic risks

• using the environmental values provided by the forests as leverage when dealing with local government.

The buyer ultimately judges the quality of a forest product or service in any market. Farmers must follow the market and accept that changes in the market, or in harvesting and processing costs, can lead to changes in product preferences. Markets can also change when government regulations change and product certification is introduced.

In long-term investments such as forestry, farmers carry the market uncertainty through the rotation. But they can minimise the uncertainty by forward selling, entering into secure long-term leases or selling the property rights of their forest before maturity. Being aware of existing market opportunities and how they might change over time provides valuable information that can guide planting design and early management.

Governments and industry spend a lot of time trying to predict future markets for forest products and services, but these predictions should be treated cautiously. International trade negotiations, government policy, intergovernmental agreements on environmental issues, forest certification and consumer trends will influence the supply of, and demand for, forest products and services in the future. Given the difficulty of predicting market trends, farmers should trust their own judgement and perception about these factors rather than relying on government and industry predictions.

Marketing forest products and services

Forestry for economic diversification

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