Business plan 2020-21
Our activities and finances 2020–2021
Natural Resources Wales (NRW) is the largest Welsh Government Sponsored Body which brings together and operates many of the tools and mechanisms needed to manage Wales’ natural resources coherently and in an integrated way.
Our 2000-strong staff undertake a multitude of responsibilities, ranging from regulator to advisor, landowner and operator and emergency responder. We are also responsible for the management of the Welsh Government Woodland Estate (WGWE) on behalf of the Welsh Government.
Timber production contributes to a prosperous timber processing and forestry sector and is recognised as a key contributor to a healthy rural economy and sustainable forest and natural resource management in Wales.
Managing forests sustainably contributes to improved biodiversity and natural habitats, improves the water quality of wooded catchments, and provides attractive places for recreation and community involvement. It also plays a key role in the net emissions reduction process as, when the tree is harvested, the carbon remains stored in the timber until the end of its physical life.
As the largest supplier of certified timber in Wales, NRW’s ability to contribute towards and to achieve these wider goals, is influenced by its timber harvesting and marketing operations.
The land managed by NRW includes 7% of all land holding in Wales and the sale of timber from the WGWE allows us to generate an economic return that we can reinvest in the forest estate to support our future work.
This timber sales and marketing plan communicates our approach to the harvesting and marketing of timber from the WGWE for the period 2021-26. It has been written following a public consultation between 1 September 2020 and 3 November 2020. The responses submitted as part of that consultation has aided and informed the direction and actions determined in this plan.
NRW operates within key legislation related to the management of the WGWE. The type of activity that takes place on the estate, commercial or otherwise, is influenced by this legislation, including how that activity is executed.
All NRW commercial activities must comply with applicable Welsh and UK legislation including the Public Contract Regulations 2015, Welsh Government and NRW policies and procedures and, where appropriate, voluntary regulation such as the independent certification of the WGWE.
This timber sales and marketing plan is also influenced by the commitments stated in the Welsh Government’s Woodlands for Wales Strategy and the Role and Purpose of the WGWE.
Our marketing objectives for this period will be underpinned by our commitment to offer timber for sale from the WGWE in an open and transparent way which demonstrates best value for money for the public purse.
Our management of the WGWE is externally audited each year to international standards of forest certification, as set out in the UK Woodland Assurance Standard (UKWAS). Certification against UKWAS is a verification of our sustainable management of the WGWE, reaching Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification (PEFC) international standards. This ensures that we are able to certify our forest products to both FSC® and PEFC.
We will continue to provide an annual statement of timber supply commitments in October preceding a given sales year and manage and communicate any changes to supply with 12 months’ notice wherever possible.
We will play our part in helping to tackle the climate and nature emergencies, whilst fulfilling our responsibilities as landowner, and where appropriate Forest Works Manager (FWM), and will require customers to fulfil their responsibilities as set out in industry guidance Managing Health and Safety in Forestry.
Our active engagement with the forest and wood processing sector will also continue. This includes our ongoing collaborations with FISA (Forest Industry Safety Accord), Confor (Confederation of Forest Industries) and our work with customers and timber contractors to help protect their safety and livelihoods as well as seeking to develop wider opportunities for community engagement.
For the duration of the plan we will seek to improve safety and environmental performance of timber sale activities on the WGWE.
We will reinforce our commitment to deliver environmentally responsible, socially beneficial and economically viable forest management by introducing what is historically known as a triple bottom line approach in the awarding of timber sale contracts. This will be delivered under the key title of People, Planet, and Prosperity.
Over this period, we will offer a consistent and sustainable timber supply to the market which complements the sustainable management of the WGWE and as a general duty of afforestation, production and supply of timber. The volume of timber we bring to market each year will be with the range 735,000m3 to 835,000m3. The volume to be offered for sale will be set out in the October of the preceding year.
We will work alongside the Welsh Government to promote the wider use of timber ‘Made in Wales’ in the housing development sector, and encourage more access to timber for niche markets, communities and innovative enterprises.
We will continue to sell at least 70% of our timber on the open market and explore the role of alternative sales models to further develop how our timber supports enterprise development and sustainable management of the natural resources in our care.
Current opportunities identified on the WGWE are focussed on encouraging investment in timber harvest equipment to manage steep ground working, thinning operations and work on wind farm developments on the estate. In these areas, we will review an approach to develop long-term or medium-term contracts, to facilitate such investment requirements – particularly where a supply chain is weaker. We may also explore other models.
Such alternative sale methods may account for up to 30% of any given year’s timber sales plan.
This will be a transitional plan that will bring about change for the future. Beyond 2026, the five-year production forecast reduces in available volume. The volume of timber delivered to market in this current five-year period will assist in smoothing volumes in the future and offer longer-term security of supply to the industry.
Our annual customer liaison event will continue and will provide detail on the forthcoming financial year and timber sales programme by region, volume and sale type. We will also provide performance figures of timber sales activities to include sale volumes, production volumes and replanting targets achieved. We will provide end-of-year figures for roadside and standing timber sales, considering any impact market forces and resource capacity will have on the volumes of each type and to ensure value for money.
Wales’ natural resources are vast and varied. From our uplands to our woodlands, our coastlines to our mountains, our landscapes underpin every facet of our modern life. They provide the basic things we need to live, support our health and wellbeing, our food and water supplies and support jobs for thousands of people in the farming, forestry and recreation sectors.
NRW’s core purpose is to pursue the Sustainable Management of Natural Resources (SMNR) and to apply the principles as set out in the Environment (Wales) Act 2016.
Sustainability is at the heart of our forestry policies and practices so that we can realise the full potential of our woodlands as economic, environmental and social resources now, and in the future.
We are proud that the Welsh Government Woodland Estate is part of the longest running continuously certified state forests in the world. When first certified in 2001, it received a “Gift to the Earth” accolade from the World Wide Fund for Nature (WWF).
This timber sales and marketing plan covers the period 1 April 2021 to 31 March 2026 and replaces the Timber Marketing Plan 2017-2022.
It focuses on a transitional period that will set the pace and direction for the future, taking into consideration, and being flexible to, any potential impacts on future trading positions and opportunities resulting from the UK’s exit from the European Union.
It also considers the production forecast of the WGWE (see figures at Annexe A) which is expected to reduce from 2027, and as NRW implements the ambitions of new legislation set out in the Well-being of Future Generations (Wales) Act 2015 and the Environment (Wales) Act 2016.
We are implementing this new plan to enable us to outline a change in approach to how we sell and market timber and to outline how current activities have evolved beyond the commitments made in the previous plan. This includes ending our current long-term contracts and standing sales plus contracts. It also includes the change in commitment between the standing sale and roadside sales offer that has taken place over the lifespan of the previous plan.
We recognise that the previous timber marketing and sales approach of all timber offered on an open market platform is time consuming and resource intensive for both NRW and our customers. It also prevents any potential opportunity to meet wider ambitions and for the industry to seek assurance of supply volumes to facilitate investment. This plan seeks to address this.
It explains our approach to sales and marketing of the WGWE timber reserve, which represents 38% of the Welsh forest resource and currently 60% of the harvested timber volume.
Like others, we have had to rise to the challenge of working and delivering our key services during a global pandemic. Throughout this challenging time, the need for forestry has not only remained but, in many ways, has been accentuated with the sector continuing to play a critical role in the supply of materials essential to our response to coronavirus.
We have an important role to play in Wales’ green economic recovery from Covid-19 and believe that sustainable development and supporting a circular economy is key to Wales’ recovery and future prosperity.
EU exit is likely to present both challenges and opportunities for the wider commercial sector in Wales and at the time of writing, it is still not clear how the UK’s exit from the European Union will impact the services that NRW provides. Alongside having an impact on our own work, we recognise that potential changes could impact how others operate. We believe that the best response to EU exit is to continue with our core business and to not hold back on new developments or partnerships. NRW believes this to be a positive message for Wales and its businesses, many of whom in some industries are heavily dependent on the local supply chain. We will continue to monitor the situation and will continue to take guidance from the UK and Welsh Governments on the issue.
Our vision and values are at the heart of who we are as an organisation and how we deliver our objectives. They outline what is important to us and the standards we live by.
Our vision is to ensure that the environment and natural resources of Wales are sustainably maintained, sustainably enhanced and sustainably used, now and in the future.
Our #TeamNRW values are:
In delivering this plan, we will focus on the following marketing objectives:
The timber sales and marketing plan is influenced by overarching Welsh Government policy as highlighted in the Woodlands for Wales strategy and supported by delivery of forest resource plans and NRW’s corporate and business plans. It may also in the future, be influenced by local well-being plans as determined by Public Service Boards in regions as identified in the Well-being and Future Generations (Wales) Act.
The marketing objectives will be delivered by maintaining and introducing the following approaches for the duration of this plan period.
The timing and broad type of harvesting we intend to carry out are set out in Forest Resource Plans (FRP). These are developed via stakeholder consultation and describe the vision and planned woodland management over 50 years, with regulatory approval for 10 years.
Adding up the proposed harvesting in all FRPs provides us with the “production forecast” set out on a five-year basis. The production forecast is the maximum amount of timber that would be produced if we were to do all the felling in each FRP to the predicted volume.
The production forecast for the WGWE shows a steady reduction in the volume of available timber over the next 20 years (Annexe A).
In order to smooth supply in the long-term and to reflect the accuracy of volume predictions, we plan for a maximum volume brought to market about 15% below the production forecast.
During this five-year plan period the production forecast is for an average of 982,473m3 of timber per year, which gives us a maximum volume per year brought to market of 835,000m3 each year.
The actual volume of timber we plan to bring to market each year will be based on a combination of variables:
We will communicate the future financial year’s sales plan in October of the year before.
Over the course of this five-year plan the volume we plan to deliver to market will be within the range 735,000m3 to 835,000m3 per year. The top of the range is the production forecast reduced by 15% as set out above. The bottom of the range is set by the flexibility we need to manage within the variables above while still providing the Welsh timber industry with a predictable and reasonably stable supply. Specifically, 735,000m3 per year represents what we would bring to market if we maximised the rate of our thinning programme and somewhat reduced the rate of clear-felling.
We anticipate being near the top end of the range for at least the early years of the plan period. In terms of our commitments in this Timber Sales and Marketing Plan, each year’s planned volume is independent of the next. We will not carry over volume from one year nor have we set a five-year volume target. In 2021/22 the volume we plan to bring to market is 830,000m3.
The amount of timber we offer to market may vary within year depending on industry performance. We monitor the forward sold position of timber sales in contract and where such volumes exceed a year’s supply, we may consider reducing the volume offer to market until such time as industry performance improves. This approach will aim to avoid major fluctuations in market values impacting on both the wood processing and wider forest grower sector. In addition, this approach will benefit medium to long-term timber availability.
Barring any impacts from catastrophic events or adverse market conditions, we will aim to give customers 12 months’ notice of a change in programme during the period of this plan. For example, if it has become necessary to move outside the range of annual volumes set out above.
Where we are considering changes to timber sales programmes or considering the adoption of new approaches such as the People, Planet and Prosperity approach, NRW will seek to engage with our key stakeholder groups at the earliest opportunity to ensure any potential impacts and risks are fully considered. We would then anticipate piloting schemes and evaluating their success before considering introducing any changes to business activity or a sales model.
NRW manages the WGWE on behalf of the Welsh Government and as such is bound by Welsh and UK legislation including the Public Contract Regulations 2015.
Timber sales on the WGWE will be offered in a fair, open and transparent way that fulfils value for money requirements.
Timber sales contracts are awarded following scrutiny and consideration of a pre-sale valuation following an agreed valuation and reserve setting policy. The sales and marketing team considers market intelligence based on several factors including imported timber prices, current open market values, and local variations based on location, haulage rates, tree species, contractor availability and immediate market demands.
The offer of timber to the market does not guarantee all timber will be sold. However, where the current market value can be obtained, a recommendation will be made subject to additional scrutiny on a case by case basis.
Our tree harvesting operations and timber sale type will always be considered within the context of our wider purpose around the sustainable management of natural resources, our general duties around afforestation and timber supply, and the demonstration of value for money.
To be eligible to bid and to attain an award of timber sales offered on our open market tender platform, all customers will have obtained an approved timber sales pre-qualification. They will also be required to complete a health and safety pre-qualification questionnaire to provide assurance that they are competent operators.
This approach and requirement has been in place since 2019. Any changes to this requirement will be communicated to the forest and wood processing sector at the earliest opportunity.
Two methods of timber sales activities are currently undertaken as either standing sales or roadside sales.
Most of the timber is sold by weight as timber uplifted by the customer, though NRW reserves the right to offer alternative sale methods dependant on scale and value of a given product. Any variance of sale method will be clearly indicated in sale particulars. An alternative sale method is likely to be via volume in cubic metre or hoppus feet measurements for high value hardwood sales when offered.
Most of the timber will be sold via standing sales. Roadside sales will continue where the private sector is unable to deliver the requirements of timber operation activities needed to manage the WGWE and to retain UKWAS accreditation.
Roadside sales will be maintained in those regions where negative timber returns are required of an individual activity for the long-term benefit and value of the estate. Such negative timber sales will be undertaken as a service contract deriving timber at roadside to generate income to offset, in-part, the cost of the service provided. This approach enables work to be carried out in a sustainable way and to ensure compliance with the governance arrangements required of a public body.
We may consider alternative methods throughout the duration of the five-year plan, engaging with the trade as these are considered.
Other methods of sale will require equally robust methods of qualification and assessment.
We are considerate of the benefits that access to long-term timber supply contracts on the WGWE can have on the wider wood processing sector, and the contribution it can make to a sustainable, vibrant future for the industry. Any such opportunities will also need to demonstrate the social, economic, and environmental considerations under the People, Planet and Prosperity approach. We will be required to demonstrate the best value for money, delivered in a transparent and fair playing field.
We will consider alternative sale types which will not exceed 30% of any given year’s timber sales plan.
The sale of trees from the WGWE enables us to generate an economic return that we can reinvest to support our work on the estate and helps pay for the environmental benefits, facilities and the public use of our woodland.
We will continue to publish an annual statement of the timber sales plan and the dates of intended sales events in October preceding the next 12-month sales year (1 April – 31 March). This will be aligned to the NRW Land Stewardship and Commercial Service Plans. We will formally present this information at our annual Customer Liaison Meeting which is typically held in January before the start of the new sales year from 1 April.
Timber sales for each of the scheduled sales events will continue to be offered via the electronic timber sales platform originally introduced in January 2017. This service is delivered in collaboration with Forestry and Land Scotland and Forestry England.
The e-auction offer also provides more opportunity and allows more flexibility in how we sell and offer timber to the market annually.
We will offer a minimum of four sale points each year via the open market approach. We may increase that offer through interim sales where the opportunities or demands arise for the benefit of the WGWE, and where we can uphold compliance of timber sale activities.
Any future approach or offer to market that can benefit innovative or niche market opportunities and long-term contracts will be a maximum of 30% of our total volume offer, so the main sale programme will be a minimum of 70% of our volume offer each year.
Our management of the WGWE is externally audited each year to international standards of forest certification, as set out in the UK Woodland Assurance Standard (UKWAS).
Being certified against UKWAS shows we sustainably manage the WGWE reaching Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification (PEFC) international standards and can certify our forest products to both FSC® and PEFC.
NRW will fulfil its responsibilities as landowner, and where appropriate Forest Works Manager (FWM), and will require customers to fulfil their responsibilities as set out in industry guidance Managing Health and Safety in Forestry.
NRW is a signatory of the Forest Industry Safety Accord (FISA) and we remain dedicated to playing our role in helping improve standards of safety in forest operations. We will also play an active role in supporting FISA initiatives to improve safety performance and will expect customers and contractors to take a positive approach to supporting improvements in safety culture and performance.
The Timber Sales Pre-qualification questionnaire and Health and Safety Questionnaire approval will remain a pre-requisite for customers when considering any bids for timber sale activities on the WGWE.
There will be no compromise on safety performance on sound silvicultural, environmental or health and safety standards on any types of contract, including community or social enterprise agreements.
NRW will make a contribution to sustainable local and community development through the demonstration of multipurpose use of our woodland. We will manage these commercial activities in the context of NRW’s Well-being Objectives and within the remit to deliver against the Sustainable Management of Natural Resources (SMNR) principles.
We will develop ways of using our timber to support community and other social enterprise activities as well as developing supply chains for beneficial activity, such as timber in construction. For this and the alternative supply models discussed earlier, we will use up to 30% of the volume of timber we produce for such innovative and new emerging market opportunities in Wales, all the while upholding the commitment to compliantly deliver a timber supply to the forest and wood processing sector.
We will work alongside our forest and wood processing sector partners and the Welsh Government to identify opportunities and risks to create an enabling provision to work with others.
Since its inception in April 2013, all timber sales and marketing plans developed by NRW have included a commitment to provide access to woodland and timber for the benefit of community and other social enterprises.
During this plan period we aim to establish a mechanism that enables us to work with communities and the third sector for the provision of access to timber on the WGWE.
This work will be strengthened by collaboration, openness and consultation with our partners. We will also work closely with the Welsh Government to ensure key outputs align with wider government policy and ambition.
Such an approach would need to be undertaken with due diligence and scrutiny to demonstrate such added value beyond monetary values.
Wood, as a natural and renewable material, has huge advantages for sustainability, and it is becoming increasingly necessary to think beyond its first use. As well as caring about how our timber is grown and managed, we also need to consider the next steps of its journey.
With the use of correctly managed forests, timber can make a significant contribution to Wales’ circular economy and create a more sustainable construction industry by locking in carbon in wood used in housing developments.
It is a significant ambition of the Welsh Government and of our customers, to see more of the timber grown on the WGWE used in housing development in Wales.
This may be enabled and supported by the provision of a chain of custody from sawmill to the end user which will provide data by which to benchmark the amount of timber entering the Welsh housing market year-on-year.
Some of the current supply chain for Welsh timber is bound for markets beyond Welsh shores. Ensuring more ‘Made in Wales’ timber is used in buildings or wood-based construction products in Wales will enhance the nation’s circular economy and will, in time, offer the potential for an increased timber value.
We will work in collaboration with the forest and wood processing sector and with the Welsh Government to identify any opportunities that exist to make a greater contribution to the Welsh housing sector and, ultimately support a burgeoning circular economy for the nation.
In order to be sustainable, decisions that affect woodlands shall be measurable with economic, and environmental considerations, and consider present and future needs.
When the three pillars are effectively considered, decisions have a greater chance of achieving sustainability.
As part of NRW’s wider ambitions to embed good governance arrangements, to achieve our sustainability goals and in compliance with The Well-being of Future Generations Act (2015) and the Environment (Wales) Act (2016), we will aim to apply a measurable Planet, People and Prosperity (PPP) approach to how we sell timber.
In doing so, we aim to give assurance to our partners, customers and wider stakeholders that we will demonstrate a high standard of corporate governance and a commitment to environmentally appropriate, socially beneficial and economically viable forest management.
We recognise that this will signal a new approach for many in the Welsh forestry sector. As such, we will seek to deliver a pilot scheme in collaboration with industry representatives to enhance the marketing and promotion opportunities of Welsh timber.
We will continue to provide annual updates against performance of delivery of the timber sales and harvesting activities on the WGWE as retrospective sale figures through the provision of:
NRW is committed to deepening our relationship with our customers and partners to support their evolving needs, as well as the needs of the customers they serve.
We work to our customer care and service standard which applies to all our areas of work and clearly explains what customers can expect of us.
Timber haulage is an important part of the forestry life cycle in Wales, but often relies on using roads that were not designed for heavy traffic.
NRW will support timber haulage best practice and will aim to minimise the environmental and social impact by:
NRW recognises the impact unforeseen events such as forest fires, disease outbreak and extreme weather events can have on our customers, on the wider forest and wood processing sector and on tourism and recreation activities.
In such circumstances, NRW will:
Trees and plants in the UK are vulnerable to a range of new pests and diseases such as Chalara ash dieback and larch disease Phytophthora ramorum. Outbreaks can seriously threaten sustainable forest management, lead to economic losses and impact on tourism and recreation activity.
Plant health and disease management will remain a strong focus for the duration of this plan.
The remaining identified larch volume available for felling and removal in the five-year period is 331,340m3 and will be brought to market to mitigate or slow down the spread of Phytophthora ramorum disease.
Wherever possible we will avoid stem injecting larch stands to comply with Statutory Plant Health Notices. We will adjust immediate sales plans as required to accommodate prompt felling and removal of diseased larch stands from the WGWE.
We will continue to manage Chalara ash dieback infected trees on the WGWE and where opportunities arise to market produce from these operations we will do so. Many of the ash stands are of low volume and are likely to be undertaken as a service contract with timber derived, sold as a roadside sale.
NRW will continue to prioritise sanitary fellings as necessary and will reserve the right to adapt programmes to accommodate such immediate operations as necessary.
With climate scientists predicting more frequent periods of extreme weather events in the future, we will aim to minimise the potential impacts on our timber sales, our customers and our operations wherever possible.
We will do this by:
Figure 1. Maximum clear fell and thinning volumes from Forest Resource Plans covering the Welsh Government Woodland Estate.
Annual average volume in m3 for each five-year period, as at March 2020.
|Five year period||Fell volume||Thin volume|