Farm Ireland
Independent.ie

Tuesday 12 December 2017

Evidence from home and abroad pours cold water on proposed Coillte sell-off

William Merivale

The controversy surrounding the proposed sale of Coillte, or rather the harvesting rights for a period of up to 80 years, continues unabated.

There is considerable uncertainty and confusion throughout the industry, not helped by a lack of any clear statement by the Government of its intentions.

The fear at this stage is that if a sale is to go ahead, it will be purely the result of a knee-jerk reaction to the need to raise short-term cash with little or no thought given to the strategic consequences to the industry.

While the proportions vary from country to country, a mix of State and privately-owned forest is the norm throughout the developed world and the State is almost without exception the largest single forest owner.

Currently, in Ireland, the respective proportions of public and private ownership are 54pc and 46pc respectively, putting us in the same general bracket as countries such as Germany, Hungary and the Netherlands.

In Austria, France and Britain, for example, there is a greater proportion of private ownership, whereas public ownership predominates in the Czech Republic, Sweden and Switzerland.

Privatisation did hit the agenda in some of these countries in recent times, but these plans have since been dropped. In Sweden, 65pc of the State forest was privatised but was subsequently restored to public ownership. Last year a decision by the British government to sell up to 300,000 hectares of Forestry Commission land was rapidly shelved following a public outcry.

Proponents of a sale of Coillte's harvesting rights frequently point to New Zealand as an example of a 'successful' privatisation of public forest.

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However, even following this move the State remains by far the biggest single owner.

In any event, the New Zealand and Irish situations are hardly comparable. Both countries have a similar population but New Zealand's land area is three times that of Ireland and its total forest area is over 8m hectares, compared to our 250,000 hectares.

In all, 6.4m hectares of New Zealand's forests are natural forest, 77pc of which remains in public ownership. The forests that were sold comprised vast areas of uniform (90pc single species) and undiversified plantations of appeal to commercial interests only.

The trade union IMPACT and the Irish Timber Council (ITC), the representative body of the sawmills, have both recently published independent reports on the proposed sale of Coillte forests. Both authors, Peter Bacon and EPS Consulting, conclude unequivocally that the sale of the harvesting rights on Coillte land serves neither the national nor the sector's interests and cannot be justified.

The Bacon report argues that the proposed sale is not based on any assessment of the performance of Coillte, nor the market for timber.

Furthermore, it states that the impacts of a sale include the loss to the State of future profits. The need to fund a projected future deficit in what would remain of Coillte – as there would be no income from timber sales to fund the State agency's future operations – could also prove a serious burden. In addition, the cost of expected job losses in the company and across the sector as a whole, and the risk of reduced public access to forests and associated recreational benefits would be other negatives.

Bacon estimates these costs to have a present value of €1.3bn, therefore the sale of the harvesting rights would have to exceed this amount "to make the proposal at least as good as would be likely to evolve in its absence".

Bacon calculates that to generate a sale of €1.3bn would require an average timber price of €78 per cubic metre, which is clearly unattainable. The average price achieved over the last few years, and during a period of strong prices, is €43 per cubic metre.

Following publication of the EPS report, the ITC has stated that the sale could lead to the closure of all 10 of Ireland's major sawmills with the loss of as many as 2,500 jobs.

According to the report, any benefit to the Exchequer will be small and disproportionate to the negative impacts on the sawmill sector, which could include the export of logs in the round to be processed elsewhere.

Furthermore, a disruption of supply to the sawmills will result in a shortfall of residue product (woodchips, sawdust, bark), which Ireland's board mills are completely dependent upon.

The strategic consequences of the proposed sale are considerable, and of great concern. At the moment it appears doubtful that much thought has been given to them.

William Merivale is national secretary of PEFC Ireland and a forestry consultant based in Cork. Email: william@cjandco.net

Irish Independent