This document analyzes the costs and benefits of introducing woody belts on farms. It finds that while woody belts provide environmental benefits like carbon sequestration and ammonia recapture, they are not financially viable as timber production alone due to high opportunity costs from sacrificing agricultural land. Factoring in subsidies and environmental benefits improves the financial case. Woody belts have the best returns when shielding intensive livestock units due to high ammonia emissions reductions.

1. Profitability/cost
implications for farmers
24th November 2010
Daniel L Sandars
Research. Fellow
daniel.sandars@cranfield.ac.uk

2. Motivation
• The introduction of woody belts onto farms is
potentially a significant financial investment and
commitment
• This is notwithstanding that are also numerous
intangible benefits:
• To the farmer of planting trees, for instance; rough
shooting, wind shelter, [real] estate enhancement, privacy,
and forestry products
• To society, for instance, landscape character, carbon
sequestration, biodiversity, and ammonia recapture

3. Aim
• The aim of our work is to systematically quantify cost
implications of novel woody belts on farms
• From here one has the basis to contemplate the
financial trade-off required in order to access the
other less tangible benefits that arise

4. Method
• The basic method for the analysis is the Discounted
Cash Flow
• This handles the uneven cash flow due to
substantial initial capital investment being offset
by long term benefits and costs
• It deals with the time preference of money – that
money today means more than money tomorrow
• We use a Treasury standard 3.5% but recognise
that it is a subjective term and consider the range
2.5-4.5%

5. Cost Centres
Over view
• Obtaining the land
• Ground preparation
• Planting
• Staking & guarding the trees and or perimeter fencing
• Fertilising & spraying for weed control – first 5 years
• Routine maintenance activities
• brashing, thinning, hedge trimming
• Managerial oversight

6. Income streams
• Woodland Grant Scheme (England)
• Broadleaves £1800/ha and/or Conifers £1200/ha
with 80% payable on establishment and 30% 5
years later
• Farm Woodland Payment (England)
• £300/ha per annum for the first 15 years –ex
arable AAPS land
• Single Farm Payment
• £244/ha per annum

7. Timber sales
• Standing broadleaves
• Yield 2.3 m3/annum ≈ 0.1-0.14 m3 per tree @ 40
years ≈ £10 m3
• Standing conifers
• Yield 5.7 m3/annum ≈ 0.1-0.3 m3 per tree @ 40 years
≈ £10 m3
• NB: harvesting assumes a continuous cycle of thinning
and renewal from 40 years –not clear felling at maturity.
Shrub & hedge components are assumed managed as
part of maintenance costs

8. Tangible environmental
benefits
• Carbon sequestration, £ 25/tCO2e
• The above ground biomass represents a
significant store of carbon over annual arable.
• From year 40 we assume that this is managed at
equilibrium – no net carbon sequestration
• Ammonia recapture, £1840/tNH3
• We assume that the canopy –recapture efficiency
grows linearly to achieve maximum annual
recapture from year 40

9. Downwind woody belts
Key scenarios
• We’ve looked at the cost implications of introducing a
number of woody belt scenarios onto typical farms
• The original 30 and 60m designs as drafted by
John Blyth for the AMBER project
• A revised and simple design originating from this
project (SAMBA) with variable central lengths and
also variable depths of back stop zone

10. Woodland chickens
Key scenarios
To qualify for the Sainsbury’s premium at least 20% of
the range area has to be wooded
• Increase that to 100% cover over the paddock and
place variable lengths of down wind backstop around
it
• Leave the paddock cover at 20% and just add the
down wind backstop
NB The decision to plant the 20% cover and collect the
premium has been taken a priori

11. NPV Downwind woody
belt. £k/ha
Design
Width of facility being protected
50m +(2* 25m
ends)
100m + (2* 25m
ends)
200m + (2* 25m
ends)
400m + (2* 25m
ends)
AMBER, 30m deep
design -£4 -£6 -£9 -£17
AMBER, 60m deep
design -£7 -£10 -£17 -£30
SAMBA, 5m backstop -£2 -£4 -£7 -£14
SAMBA, 10m backstop -£4 -£6 -£11 -£21
SAMBA, 25m backstop -£7 -£10 -£17 -£29
SAMBA, 50m backstop -£16 -£20 -£29 -£45

12. NPV for woodland
poultry systems,
£k/ha
Design Backstop only
80% tree cover+
backstop
SAMBA, 5m backstop -£2 -£2
SAMBA, 10m backstop -£8 -£7
SAMBA, 25m backstop -£12 -£10
SAMBA, 50m backstop -£22 -£17

13. 1 ha Woody belt, 50m
central section and 25m
backstop zone
£-
£5,000
£10,000
£15,000
£20,000
£25,000
£30,000
£35,000
Discounted Income
Timber Income
Single Farm Payment
FWPS
WGS
£-
£5,000
£10,000
£15,000
£20,000
£25,000
£30,000
£35,000
Dicounted Costs
Opportunity Cost
Brashing/ thinning
Backstop maitenance
Managerial oversight
Planting costs
Perimeter fencing
Spraying
Fetilising
Ground preparation

14. Sensitivity to discount
rate and agricultural
opportunity costs
-100%
-75%
-50%
-25%
0%
25%
50%
75%
100%
125%
150%
175%
200%
225%
250%
275%
300%
325%
350%
375%
400%
425%
0 200 400 600 800 1000 1200 1400 1600
NormaliseddiscountedNetPresent
Value
Annual agricultural opportunity cost, £/ha
2.5%
3.5%
4.5%
Higher discount rate reduce the burden of high
long-term opportunity costs, the converse is
true at lower values

15. Sensitivity –opportunity
costs and subsidy
Total subsidy £6000 = £1500 establishment and £4,500
(15years * £300) maintenance. Scaling both parts
together.
Subsidy of much >
threefold to make
competitive to arable
farming!

16. 1 ha woody belt overall
costs and benefits,
£k/ha
Discounted Income Discounted Expenses
Woodland grant £ 1.4 Ground preparation £0.1
Farm woodland payment £ 3.5 Fertilising £0.2
Single farm payment £ 7.3 Spraying £0.3
NH3 abatement £ 92 Perimeter fencing £ 6.4
C sequestration £ 5.7 Planting costs £ 4.8
Timber Income £ 5 Managerial oversight £0.8
Backstop maintenance £0.2
Brashing/ thinning £ 1
Opportunity Cost £ 18
TOTAL £ 115 £ 32
Assumes 2* 50,000 place layer units shielded with a
downwind woody belt with a 25m backstop zone (1ha total area)
Internal Rate of Return 15%

17. Woodland chickens +
trees costs and
benefits, £k/ha
Discounted Income Discounted Expenses
Woodland grant £ 2.5 Ground preparation £0.2
Farm woodland payment £ 5.8 Fertilising £0.4
Single farm payment £ 6.3 Spraying £0.6
NH3 abatement £ 5.2 Perimeter fencing £ 3.0
C sequestration £ 9.3 Planting costs £ 7.9
Timber Income £ 9.2 Managerial oversight £1.3
Backstop maintenance £0.4
Brashing/ thinning £ 1.7
Opportunity Cost £ 15
TOTAL £ 38 £ 21
Extra 0.8 ha of broadleaved in the paddock + 25m downwind
backstop –total 1.675 ha new trees for 2500 layer-unit
Internal Rate of Return 6.9%

18. Key points
Financial
• As timber production units woody belts are not financially
feasible because of their small scale of organisation and
the high annual opportunity cost of sacrificing arable land.
• If by chance that arable opportunity cost is low because of
land quality or, in the case of woodland chicken,
production will not be affected then there is a better
financial case.

19. Key points
-Environmental
• Once ammonia recapture and carbon sequestration are
accounted for there is a good public case to plant and
manage them. – IRR 15% and 6.9%
• Ammonia recapture is the dominant term for woody belts
around strong point source emissions. Carbon
sequestration is useful but reaches steady state (no
further gain) from year 40.
• Poultry account for 14% of the UK NH3 emission and
housing is 50% of that!
• For woodland chickens the honours are equally divided.

20. End

21. Obtaining the land?
• We have used the Silsoe/Cranfield Whole Farm
Planning model
• The model calculates the maximum profitability of a
farm subject to its constraints and agro-climatic
situation
• The annual opportunity cost of obtaining land is
obtained by forcing the model to have 1 ha of un
cropped land compare to the profit of the unrestricted
case

22. Obtaining the land
detail
• We assume median farm of 250ha of the following
types:
• Arable & arable with root crops
• Dairy with arable & dairy with arable and forage
maize
• To give a reasonable coverage of scenario we
assume light, medium and heavy soils with 600, 900,
or 1200 mm annual rainfall.
• The financial data comes from NIX and ABC 2009-
2010 costings books

23. Reduction in profit for
1ha - Arable
Arable
Soils
600 900 1200
Light -£572 -£555 -£522
Medium -£705 -£660 -£600
Heavy -£740 -£665 -£585
Arable & Roots
600 900 1200
Light -£887 -£830 -£741
Medium -£904 -£820 -£706
Heavy -£768 -£674 -£587
Mean annual rainfall, mm

24. Reduction in profit for
1ha - Dairy
Dairy
Soils
600 900 1200
Light -£846 -£875 -£732
Medium -£985 -£1,063 -£991
Heavy -£1,106 -£1,162 -£1,023
Dairy & Forage Maize
600 900 1200
Light -£580 -£568 -£542
Medium -£714 -£755 -£674
Heavy -£775 -£836 -£793
Mean annual rainfall, mm

25. Opportunity costs, £ha
1995, 2002, & 2010
in current terms
Arable
Annual Rainfall, mm
Soil 600 900 1200
Light 544 (516 to 572) 580 (554 to 607) 602 (521 to 682)
Medium 595 (485 to 705) 618 (577 to 660) 633 (600 to 665)
Heavy 601 (463 to 740) 610 (556 to 665) 593 (585 to 602)
Dairy
600 900 1200
Light 723 (423 to 900) 772 (366 to 1074) 754 (313 to 1218)
Medium 755 (381 to 984) 822 (334 to 1070) 829 (284 to 1213)
Heavy 781 (325 to 1106) 846 (289 to 1161) 813 (256 to 1160)

26. Planting costs detail
• Ground Preparation using farm resources
• Spray off weeds, subsoil, apply base fertiliser,
and plough -£110 (£52-253)
• Planting
• Broadleaved 2.5 ‘000/ha @ 32p each
• Conifers 2.5-10 ‘000/ha @ 21.5p each
• Shrubs 4.4 ‘000/ha @ 33p each
• Hedge 10 ‘000/ha @ 31p each
• Labour: 56 plants/hr @ £10/hr

27. Tree protection costs
• Choose the cheapest of:
• Perimeter rabbit-stock proof fencing @ £7/m, or
• Tree guards and stakes @ 42.5p each and 56
trees guarded and hour @ £10 hr for labour
• NB stronger measures will be needed for serious
deer nuisance
• From year 5 assume a 2% of initial cost maintenance
charge c. £22/ha per annum

28. Other costs
detail
• Weed control £38/ha in the first year followed by £68
for the next four years to allow for knap sack spot
spraying
• Fertilising £115/ha in the first year followed by £25 a
year for the next four years
• Brashing/ hedge maintenance –from year 15 assume
£77/ha per annum charge
• Managerial oversight £119/ha for planting and then
£22/ha per annum there after