This sale document says:
On 2 December 2010, Ministers announced that approximately 40,000 hectares of land currently managed by Forestry Commission England would be sold over the four year period 2011/12 to 2014/15.The consultation document says that the Forestry Commission owns 258,000 hectares, so the sale document is for about 16% of their land. It is important to point out that this document says that the government has already agreed that they would sell this 40,000 ha, there is no consultation on this 16% of the Forestry Commission estate. The sale document says that preference will be given to voluntary or community groups. There is ample evidence that at the moment woodland is valued at least at the price of bare agricultural land (currently ~£5,200 per acre or £12,800 per ha), however some woodland in 2010 sold for up to £15,000 per acre. 40,000 ha is about 100,000 acres, if we assume woodland fetches about £5,000 an acre this means that voluntary groups will have to find about £500m. (We have to assume market rates because the sale criteria document says "This will be an open market valuation carried out by the FC’s selling agents".) There will either have to be a lot of very rich volunteers, or maybe the government is expecting to go for their second preference: commercial timber companies.
Half a billion pounds is a lot of money, even spread over four years, however, note that the sale document says that the land will be sold at market value, so this £500m assumes that land will retain its value. Basic economics says that if you flood the market the price will plummet. According to chartered surveyors SmithsGore every year around 100,000 ha of agricultural land is sold. Woodland would make a tiny proportion of that figure, so (an average annual figure of) 25,000 ha of extra woodland on the market would depress the market considerably. But I must stress again, this is only for the 40,000 ha that the government has already agreed to sell.
The consultation on the remaining 84% (218,000 ha):
the Government is proposing a mixed-model approach with the following elements:(That term "lease reversion" is interesting, isn't it?)
In addition, the Forestry Commission is increasing its estate rationalisation through open market sales (and lease reversion).
- Inviting new or existing charitable organisations, to take on ownership or management of the heritage forests to secure their public benefits for the long-term future;
- Creating opportunities for community and civil society groups to buy or lease forests that they wish to own or manage;
- Finding commercial operators to take on long-term leases for the large-scale commercially valuable forests. By leasing rather than selling, it will be possible to make sure that these forests continue to deliver public benefits through lease conditions.
The preference is for voluntary or community groups to buy the land. Let's do some calculations with those figures. This is for the remaining 218,000 ha (540,000 acres). Again, assuming a commercial value of £5,000 per acre, this would bring in a cool £6.75bn. I never thought that charities and "community groups" were so rich!
However, if the government is likely to sell (on average) 64,000 ha of woodland per year in a market that is usually a few hundreds per year, the value of woodland will plummet, and potentially it would be next to worthless. This may be good news for community and voluntary groups to whom the woodland would be sold at "market value", but it is also good news for the commercial companies who hope to get their hands on 150 year leases on the commercial plantations.
Whatever way you look at this, the policy seems totally ill-thought out and designed to fail. It is no wonder Cameron is making noises about stopping this silly sale.