Forestry sector: strengths, challenges, and prospects

Ireland has traditionally had the lowest level of forestry across the EU, where forests, on average, make up 34 per cent of agricultural land compared to as low as 3 per cent in Ireland up to the 1980s. In terms of the national plan for the sector, afforestation is targeted to grow substantially with forest plantations planned to account for 18 per cent of land use by 2030, compared to 11 per cent currently.
The latest afforestation plan also includes measures to support planting of native varieties and create a more balanced approach to afforestation which was in the past dominated by planting of Sitka spruce variety because it had a quicker growth profile.

Off the mark
Crucially and critically, the annual target of adding 8,000 hectares of forest plantings annually, which underpins the national target, has not been achieved in 2024 or 2025, with annual plantings at 1,573ha in 2024 and 2,527ha in 2025.
This speaks not only to the legacy of the administrative difficulties of recent years, but the business risk elements of changing agricultural land to forest and the direct experience in recent years of both storm damage and disease issues.
According to the forestry sector and the Irish Farmers Association (IFA) the main reasons why the current planting target has not started strongly include low farmer participation (farmers historically drove most private planting, but current incentives fail to re-engage them, leading to low uptake), as well as licensing and approval delays. Bureaucratic hurdles and slow processing times for forestry licences have previously stalled projects, leaving large, approved areas unplanted.

Economic value and output
In terms of the diverse aspects of the forestry sector’s contributions across the economy, comprehensive assessments by the Department of Agriculture, Food and the Marine (DAFM), Teagasc, the Central Statistics Office (CSO), and the Council for Forest Research and Development (COFORD) outline its diverse economic and societal impact. 

Economic contribution
In terms of annual economic contribution, the total annual value of the forestry and timber processing sector is estimated at €2.3bn when indirect and induced multiplier effects are factored in. In relation to gross value added (GVA), Eurostat and Teagasc data track the precise GVA of the sector at factor prices. The combined GVA for forestry and logging, and the manufacture of wood and wood products stands at €699.2m. 

The multiplier effect
CSO input/output models and other research highlights what is described as a ‘type 2’ output multiplier of 1.85 for forestry. This means that for every €1 direct economic value created, an additional €0.85 is generated in the wider economy, particularly within rural supply chains. 

Employment and rural livelihoods
The sector is heavily distributed across rural Ireland and often characterised as providing alternative employment outside of traditional agriculture. 

Combined employment
According to definitive COFORD socio-economic working group data from 2022, the industry supports 9,400 jobs. These are split between 3,500 jobs in the direct forestry and harvesting sector, and 5,900 jobs in the manufacturing of wood and wood products (such as sawmills and panel board processing).

The private estate role
Over 24,200 unique private forest owners (the vast majority being farmers) have utilised state grant aid to plant forests since 1980. A key issue in terms of meeting national targets is the complex question of whether forestry competes with or complements mainstream agriculture in Ireland which, as we know, is dominated by livestock production at 80 per cent of gross agricultural output, according to the CSO.

A diversified approach
Farm income and land economics analysis based on the Teagasc National Farm Survey economic modelling posits that incorporating timber systems heavily diversifies farm risk. This survey data indicates that nearly 80 per cent of cattle-rearing farms and 70 per cent of cattle-finishing farms would generate a higher family farm income by converting a portion of their land to forestry. Conversely, only 11 per cent of highly intensive dairy farms would yield a higher financial return from forestry.  Moreover, Government sources would point to significant tax-free incentives in the latest plan with sector’s stability ‘underpinned’ by the Government’s €93m budget allocation for the Forestry Programme 2023-2027, administered by the DAFM, providing income tax-free annual forest premia and upfront creation grants. 

Non-timber and macroeconomic impacts
Much of the harvested material is processed domestically into construction-timber, wood panels, fencing, and pallets. Due to high domestic processing capacities, the sector is export-oriented, predominantly supplying construction timber markets in the UK. Economic studies value forest recreation and tourism at roughly €179m to €400m per annum, based on approximately 29 million annual visits to Irish public and private woodlands, according to COFORD.

Environmental impacts 
Irish forests remove approximately 1.8 million tonnes of CO₂ annually, according to 2021 stats from the DAFM. Under international climate accounting, this carbon sequestration acts as an economic shield, offsetting national greenhouse gas compliance penalties for the broader agricultural sector. 
By far the most significant challenge to the Irish forest sector in recent years has been the impact of severe weather events, namely Storm Darragh in December 2024 and particularly Storm Éowyn in late January 2025. These combined events resulted in devastating impacts to over 26,000ha of both private and State-owned forests. This equated to over 2.5 times Ireland’s annual timber harvest. Overnight, it presented many logistical and financial challenges for forest owners. The extent of storm damage necessitated substantial re-planting of forest operations over the short and medium term to facilitate the harvest, recovery and marketing of windblown timber. It seems to be a general theme of observation of the impact of non-livestock farming activities in Ireland such as fruit and vegetable growing and forestry that, while there may well be complex reasons why these sectors are not meeting growth aspirations, or indeed might be in decline, a key factor is often declared to be over-focus on, or even direct subsidisation of the beef and dairy sectors.
I would suggest that this is a diversion from the core principle of focusing on providing incentive levels that reduce the business risks specific to the sector including storm damage and disease such as ash die-back.