Why Invest in Timber?
 


Why Invest in Timber?

Why Invest in Timber?


The 21st century will be a century of chronic and intensifying shortages of energy and raw materials. The prices of oil and gas, and of basic products with a high energy input (such as steel, aluminium and concrete), will be rising faster than the general price level over the long run. This will encourage substitution towards other carbon-based products, particularly if they are renewable. As timber is the main kind of renewable carbon-based product, its price should benefit from deeply-entrenched global economic trends. The investment case in the UK is strengthened by four further considerations.

First, although the UK is a big timber importer, stumpage prices seem to be lower in the UK than in continental Europe. This must be an anomaly, reflecting the increase in the recycling of fibre in the 1990s and under-investment in timber processing capacity. Secondly, UK timber prices have recovered a bit since a tough in 2002, but are still only a quarter of their level in real terms in the mid-1970s and late 1980s. Thirdly, trees here enjoy faster biological growth than, for example, Scandinavia and Russia, because of the UK's most and relatively mild climate. Finally, the tax advantages are compelling!!