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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 buyers 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 forestrys 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 costsfor
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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