The Role of Forestry in Farm Diversification

By Tracey Simm, Business Development Manager – South West, UK Agricultural Finance

In an era of rising input costs, shifting subsidy regimes and climate uncertainty, many farmers are rethinking how their land is used and where their income comes from. Forestry — once seen as a long-term, specialist investment — is fast becoming a realistic and rewarding diversification option. Whether for timber, biodiversity, carbon, or tourism, integrating trees into your business can bring both environmental and financial benefits. And with the right finance in place, it’s more accessible than you might think.

Why Forestry? Understanding Its Growing Appeal

Across England, I’m seeing more farmers explore forestry as part of their diversification plans — and it’s not hard to see why.

With traditional margins under pressure (particularly in beef and upland grazing systems), forestry offers a way to repurpose underperforming land while contributing to national environmental goals. Whether through woodland creation, agroforestry or combining trees with other uses like holiday lets or sporting enterprises, planting trees can create a new layer of resilience for farm businesses.

It’s also aligned with increasing government support for environmental stewardship. Through schemes such as the England Woodland Creation Offer (EWCO), landowners can access funding to support tree planting — making it a more viable option than ever before.

Forestry as a Diversification Tool

Forestry doesn’t have to mean handing over acres of your best land to sit idle for decades. In fact, modern approaches often focus on integrating trees into existing systems — improving biodiversity, land quality and business performance all at once.

Common forms of forestry in farm diversification include:

  • Planting new woodland on marginal or steep land, enhancing the overall land value and ecological resilience.

  • Agroforestry, which combines tree planting with productive farming, such as grazing cattle under shelter belts or integrating fruit and nut trees into pasture systems.

  • Commercial timber production, offering long-term returns with tax advantages.

  • Leisure and eco-tourism, including woodland walks, glamping pods, foraging experiences or shooting rights.

  • Carbon credit income, with some landowners now registering new woodland under carbon schemes as an additional income stream.

Woodland also supports soil health, improves drainage, and provides essential shelter for livestock — especially valuable in areas like the Pennines where exposure and harsh winters are a constant challenge.

Considerations Before Investing in Forestry

Forestry is not a quick return investment — and it’s important to go in with clear goals and professional advice. Here are a few key considerations:

1. Land Suitability

Before planting, assess:

  • Soil type and pH

  • Drainage

  • Altitude and exposure

  • Access for planting and future management

The Woodland Trust and Forestry England both offer guidance and schemes to help landowners plan and plant appropriately.

2. Environmental Designations and Regulation

Planning permission is not usually required, but you’ll need to comply with:

  • Environmental Impact Assessment regulations (depending on size)

  • Protected species and habitats

  • Local authority and Forestry Commission oversight

Engaging with reputable advisors early on will help navigate these processes smoothly.

3. Scheme Eligibility and Grants

The England Woodland Creation Offer provides:

  • Up to £10,200 per hectare in capital grants for planting and establishment

  • Additional payments for delivering public benefits (biodiversity, flood mitigation, etc.)

  • Maintenance payments for 10 years

These grants can go a long way toward reducing your financial outlay, especially when combined with bespoke finance.

4. Management and Maintenance

Forestry is a long-term commitment. You’ll need to:

  • Establish a management plan

  • Budget for initial and ongoing maintenance (fencing, weed control, thinning)

  • Consider insurance and risk management

You may also want to engage contractors or work with organisations like the Woodland Trust for support and delivery.

Financing Forestry as Part of a Diversification Strategy

While grants are available, there’s often a funding gap — particularly in the early stages before trees are established or if your plans go beyond what the grants cover.

At UK Agricultural Finance, we provide loan facilities designed specifically to support rural diversification, including:

  • Woodland creation loans for planting, fencing, and access infrastructure

  • Diversification finance for projects that combine forestry with leisure or tourism

  • Infrastructure loans for tracks, buildings, or accommodation in wooded areas

  • Bridge finance to cover timing gaps between grant payments and expenditure

We lend based on the value of your land and business potential, not just last year’s trading figures. That makes a real difference for farmers who may be asset-rich but cash-flow constrained — especially during periods of transition or investment.

We also understand that diversification isn’t always a straight line. Whether you’re combining forestry with beef production, or looking to restructure your finances to free up capital, we’ll work with you to tailor a solution that fits your goals.

Why Now is the Time to Explore Forestry

There has never been more support — financial, regulatory and public — for trees on farms than there is today.

Woodland creation is no longer just about timber in 30 years’ time. It’s about:

  • Accessing environmental funding

  • Meeting net zero targets

  • Supporting biodiversity

  • Creating alternative income streams

  • Protecting your land from erosion and weather extremes

As more markets emerge around carbon and natural capital, the role of forestry will only grow. Being ahead of the curve — with the right financial backing — could be a game-changer for your business.

Building a Future with Trees

Forestry isn’t a silver bullet, but it can play a powerful role in building long-term resilience, especially when integrated into a wider diversification strategy. Whether you’re looking to future-proof your land, supplement your income, or leave a legacy that balances production with protection, trees can be part of that solution.

At UK Agricultural Finance, we’re here to support farmers who are ready to invest in change. We understand the opportunities — and the challenges — that come with diversification, and we’re committed to working alongside you every step of the way.

If you’re exploring forestry as part of your farm’s diversification journey, I’d be happy to discuss how we can support your plans. Whether you need to fund a woodland creation project or blend forestry with another enterprise, we can help you move forward with confidence.

– Tracey Simm, Business Development Manager –South West 

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