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Developing a microsimulation model for farm forestry planting decisions

  1. Mary Ryan  Is a corresponding author
  2. Cathal O’Donoghue  Is a corresponding author
  1. Teagasc, Rural Economy & Development Programme, Ireland
  2. National University of Ireland, Ireland
Research article
Volume 12(2) Summer 2019
Cite this article as: M. Ryan, C. O’Donoghue; 2019; Developing a microsimulation model for farm forestry planting decisions; International Journal of Microsimulation; 12(2); 18-36. doi: 10.34196/ijm.00199
2 figures and 9 tables

Figures

Figure 1
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Timelines of financial, policy and leisure components of the utility associated with the land use change from agriculture to forestry

Source: Ryan et al. (2015).

Note: Agri GM = Agricultural Gross Margin = Agri Market Income – Agri Costs.

Figure 2
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Life-Cycle Pattern of Incomes and Costs by yield class over 1 rotation (2015) for conifer thin (ct) and conifer no thin (cnt) options

Tables

Table 1
Impact of planting on income, land and labour
Proportional change in
Market income Gross margin Net margin Land value Hours worked
No Forest −0.1953 −0.1397 −0.25 −0.051 −0.034
Has Forest −0.1948 −0.11396 −0.246 −0.034 −0.033
Table 2
Proportion of Farms where the Forestry AE is greater than Agriculture AE
Classification Market income Gross margin Net margin
Has Forestry
0 0.527 0.298 0.596
1 0.629 0.454 0.703
Never Plant
0 0.633 0.387 0.658
1 0.538 0.303 0.616

  1. Source: Teagasc National Farm Survey 2012–2015 and Teagasc ForBES/ForSubs Models.

Table 3
Components of Income 2012–2015 by relative AE
Forest mkt income per Ha Forest subs income per Ha Farm income per Ha Farm subsidy per Ha Overhead cost per Ha Difference MI Difference GM Difference NM
For > Ag* Has forest
A 0 0 490 329 1,827 415 876 −1008 −1423 −547
0 1 494 329 1,651 400 803 −828 −1228 −426
B 1 0 475 329 369 390 419 435 44 463
1 1 470 328 270 389 386 528 139 525
  1. *

    Farms where potential forestry income is greater than or equal to potential agricultural income

Table 4
Deciles of gap between forest and agriculture (Market Income)
Has forest Never plant
1 0.073 0.924
2 0.153 0.854
3 0.168 0.877
4 0.163 0.883
5 0.136 0.820
6 0.118 0.824
7 0.189 0.853
8 0.172 0.849
9 0.238 0.799
10 0.319 0.798
Table 5
Deciles of forest–agriculture gap (Has Forest) by income definition
Decile Market income Gross margin Net margin
1 0.073 0.065 0.091
2 0.153 0.180 0.135
3 0.168 0.157 0.161
4 0.163 0.138 0.154
5 0.136 0.132 0.117
6 0.118 0.176 0.179
7 0.189 0.150 0.206
8 0.172 0.247 0.227
9 0.238 0.208 0.242
10 0.319 0.276 0.211
Total 0.172 0.172 0.172
Table 6
Income characteristics by decile of forest-agriculture gap (Market Income)
No forestry Forestry income per Ha Farm income per Ha Farm subsidy per Ha Overhead cost per Ha Difference MI Difference GM Difference NM
1 825 2,974 407 1,176 −2149 −2555 −1379
2 820 2030 386 970 −1210 −1595 −625
3 819 1,550 409 808 −731 −1140 −332
4 816 1,142 439 662 −326 −765 −103
5 813 820 451 582 −7 −459 124
6 816 604 419 505 212 −207 298
7 806 457 408 438 349 −59 379
8 803 321 371 403 483 112 515
9 792 186 349 334 605 256 590
10 794 −13 362 314 807 446 759
810.39 1007.02 400.04 619.04 −197 −597 22
Has Forestry
1 821 2,876 403 1,120 −2055 −2458 −1339
2 823 2083 389 942 −1260 −1648 −707
3 825 1,574 371 777 −749 −1121 −344
4 820 1,163 434 689 −342 −777 −88
5 822 823 420 574 −1 −420 154
6 802 577 435 487 225 −210 277
7 808 468 378 400 340 −39 362
8 805 333 389 448 473 84 532
9 799 190 382 345 609 228 573
10 781 −19 374 292 800 425 717
810.67 1006.78 397.50 607.30 −196.10 −593.61 13.69
Table 7
Farm/farmer characteristics by decile of forest-agriculture gap (Market Income)
Decile Family farm income per Ha Dairy cows per Ha Labour units Age Farm size Teagasc Has reps Has off farm income Best soil type
No Forestry
1 1,652 2.36 1.39 50 57 0.75 0.25 0.51 0.72
2 1,085 1.88 1.42 53 71 0.72 0.15 0.45 0.65
3 880 1.48 1.36 54 67 0.68 0.27 0.52 0.65
4 717 0.73 1.28 57 66 0.63 0.22 0.57 0.61
5 548 0.24 1.18 56 56 0.57 0.24 0.68 0.57
6 419 0.15 1.14 58 54 0.56 0.15 0.64 0.62
7 357 0.05 1.08 58 53 0.54 0.14 0.65 0.52
8 239 0.04 1.06 58 46 0.45 0.18 0.62 0.48
9 174 0.01 1.01 58 48 0.45 0.20 0.67 0.38
10 51 0.03 1.11 60 87 0.36 0.09 0.67 0.41
612.13 0.70 1.20 56.22 60.49 0.57 0.19 0.60 0.56
Has Forestry
1 51 0.03 1.11 60 87 0.36 0.09 0.67 0.41
2 1,629 2.39 1.37 51 61 0.82 0.11 0.66 0.64
3 1,157 1.98 1.49 53 78 0.70 0.14 0.52 0.67
4 929 1.48 1.41 53 84 0.72 0.18 0.56 0.71
5 724 1.01 1.50 55 89 0.57 0.40 0.55 0.65
6 546 0.53 1.52 55 74 0.78 0.30 0.45 0.68
7 462 0.14 1.23 55 70 0.62 0.28 0.56 0.44
8 403 0.04 1.02 56 52 0.69 0.16 0.77 0.49
9 255 0.09 1.02 54 68 0.71 0.15 0.67 0.49
10 270 0.01 1.15 56 67 0.69 0.24 0.75 0.44
642.51 0.77 1.28 54.84 72.85 0.67 0.21 0.61 0.56
Appendix 1—Table 1
Teagasc ForBES Model : Detailed Cost assumptions
SS (€/ha) Ash (€/ha)
Forest establishment % of costs covered by Afforestation Grant dependent on year of planting Allocated to Year 0 2,860 4,280
Forest maintenance up to end year 4 Costs covered by Maintenance Grant Payment allocated equally over years 1,2,3 & 4 790 1,155
Annual management cost Incurred annually 20 20
Insurance Initial payment in year 5 – runs to year 20 Recurring annually 20 20
Brash/inspection paths One-off cost of cutting inspection paths through conifers Not relevant for ash Incurred in year 14 35 0
Second fertiliser Relevant only for unenclosed sites with additional nutrient requirements Not relevant for SS-GPC3 or for ash
Cost of Sales % reduction in revenue Lower in high value sites Clearfell –12% Clearfell – 12%
Road costs Only applicable if thinning Not necessary in many small farm forests Assume that road grant covers cost 0
Harvest losses Timber losses due to difficult site conditions Binary – Yes/No 1st Th: 14%

2nd TH: 12%

3rd /sub TH: 8%

C/fell: 5%
Reforestation Cost of replanting with same species post clearfell May be allocated to first or second rotation 3,500 0
Appendix 1—Table 2
Model Estimates, On-Farm Hours and Land Value per hectare10
Logged (On-Farm Hours Worked) Logged (Land Value per ha)
Variables Coefficient SE Coefficient SE
New forest planting −0.0351*** −1.72 −0.0529* 0.0293
Land Value (lagged : t-1)/ha −0.0299*** −6.35 0.0075*** 0.0008
Farm Size 0.0009*** 6.21 −0.0071*** 0.0002
Farm Size Squared −0.000001*** −4.24 *** 0
Age −0.0053*** −24.76
Age Squared −0.000003*** −19.03
Has Off Farm Employment −0.1731a −32.25
Spouse Has Off Farm Employment 0.019** 3.35
Share of Tillage Area −0.0966*** −4.08 0.1257*** 0.0331
Share of Dairy Forage 0.2241 11.12 −0.0658** 0.0286
Share of Sheep Forage 0.049* 2.91 −0.0782a 0.0242
Sheep Number of Livestock Units per ha 0.0049** 1.82 0.001 0.0041
Cattle Number of Livestock Units per ha 0.0294** 6.89 0.0313*** 0.0066
Dairy Number of Livestock Units per ha 0.001** 0.16 0.0435*** 0.0089
Teagasc Client −0.01*** −2.22
Has REPS payment 0.0133** 2.46
Unpaid labour 0.4188 66.04
Good soil 0.463*** 0.0246 0.0455* 2.66
Medium soil 0.2435*** 0.0243 0.0352* 2.11
Constant −0.4719*** 0.0197 7.1293 3.65
Share of Variance due to Fixed Effect 0.58 0.69
R2 0.3309 0.3021
N 29,567 27,219

  1. Note: Regional, Soil and Year dummies ignored.

  2. ***significant at 1% level;* significant at 10% level

Data and code availability

The data used in this model are partially publicly available, accessible through the Irish Social Science Data Archive (https://www.ucd.ie/issda/data/teagascnationalfarmsurveyteagascnationalfarmsurvey/); partially available for scientific research only upon registration with Teagasc Rural Economy and Development Programme (contact Brian.Moran@teagasc.ie).

The paper is model-based. The code is based upon a number of programmes, coded in Stata. The authors are willing to share the code, but advise that given the complexity, the multi-disciplinary nature of the code and its length (1000+ lines of code), it is likely to be challenging for someone to use it without assistance.

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