Foresight Forestry takes root – On 7 March 2022, Foresight Sustainable Forestry completed its seed assets transactions with the purchase of Blackmead Forestry Limited and Blackmead Forestry II Limited from Foresight Inheritance Tax Solution for a total cost of £113.4m. The fund gets 27 sites – 11 afforestation sites, 15 forestry sites and one site which is both afforestation and forestry. By value, 29% afforestation sites and 71% forestry sites. By area, 41% afforestation sites and 59% forestry sites. The portfolio is located across the United Kingdom split between Scotland (80%), Wales (13%) and England (7%). The total area of the acquired portfolio extends over 8,117 hectares, of which 4,182 hectares is stocked or stockable with commercial conifer trees.
More deals are in progress and, once the acquisition of this immediate pipeline is complete, the percentage by value of afforestation sites in the portfolio will increase to 34%. At this point, the fund will also be substantially invested. Successfully developing land for afforestation (which drives returns through capital appreciation and access to voluntary carbon credits) is a core part of the fund’s strategy.
Portfolio Update – Maescastell Acquisition
Foresight Sustainable Forestry told us in its announcement of 25 January 2022 that the seed assets transaction consisted of 26 sites. Since that announcement and before the completion of the seed assets transaction, Blackmead Forestry bought Maescastell, an afforestation site, for a total cost of £0.5m, pushing the total number of sites to 27.
The funds says that Maescastell adds to a synergistic collection of afforestation properties in Carmarthenshire, Wales. The site is located within 1km of land acquired from Cwmban Fawr Farm and Pistyll South, both existing properties in the portfolio. The total area of all three sites is 177 hectares, of which 158 hectares is plantable with new forest and woodland.
Consulting closely with the local community, FSF will now further develop the preferred planting design across the three sites and will continue the development and application process in line with national and regional regulations. As with all FSF’s afforestation schemes in Wales, no arable land will be planted on and a diverse species mix across the sites is expected to consist of c.75% varied commercial tree species (the trees which create maximum climate change impact) and c.25% non-commercial broadleaves (including rare and endangered species). Each scheme will also include un-planted open ground areas providing additional diversity of natural habitat, complementing the forest and woodland areas. Under FSF’s ownership, the sites are expected to deliver material biodiversity improvements. An independent ecologist will be appointed to evaluate the impact on biodiversity of the finalised scheme’s design using the UK Government’s Department for Environment, Food and Rural Affairs’ Biodiversity Metric 3.0 methodology. Following completion of the above, planting at all three sites is planned to commence later this year.
Wales is one of the least forested countries in Europe with c.14.5% of land area tree covered in 2020. As a result, Welsh timber production is insufficient to support domestic demand, with 80% of timber imported from outside the UK. The three sites will contribute towards the Welsh Government’s aim to increase tree cover in the country to c.17.8% – 20.7% by 2050. The Welsh Government, as part of its 2050 Net Zero plan and in response to the climate emergency which has been declared by the Environment Minister in Wales, has a stated target to increase tree planting to at least 2,000 hectares per year.
Portfolio Update – Commencement of planting at Mountmill Burn
Mountmill Burn, located in Oxton, Scotland, has now received full planning approval and confirmation of grant funding from the Scottish Government. These are key development milestones which have allowed planting activities to commence. Mountmill Burn consists of 119 hectares and has a plantable area of 101 hectares. Planting at the site commenced in February 2022 and is expected to take 6-8 weeks. The project aims to plant approximately 240,485 trees and the commercial tree planting is forecast to deliver 51,000 tonnes of sustainable timber production for each c.35-year rotation. The scheme is registered on the UK Land Carbon Registry and the Woodland Carbon Code (WCC). Once planting is complete, the process for full accreditation and award of carbon units by the WCC can take place. Once fully established, the site is expected to sequester 21,000 tonnes of CO2 and generate associated voluntary carbon credits.
Local opposition
A few news stories have popped up describing opposition to the Welsh schemes in particular from local farmers and the National Farmers Union. This Sky News story – click here, this story in The Times – click here (paywall), and this story from Wales online – click here give a flavour of local people’s feelings on the topic. There are a lot of moving parts to this story – the degree to which FSF’s new planting plans counter the biodiversity argument, the extent to which these farms are viable without large subsidy, and the potential benefits of reducing soil erosion from hillsides, for example. There’s a lot of anti-English/anti-London sentiment as well which is unfortunate. When we have a chance to sit down with Foresight Sustainable Forestry’s managers, we’ll explore these topics in more detail.
FSF : Foresight Forestry takes root