Construction costs rise as forest industry warns of irreparable damage due to timber shortage

The forest industry says 1m tonnes of timber is held up as appeals by members of the public against 500 felling licences are dealt with. A further 2,000 applications await approval by the Department of Agriculture, which can take up to two years.

Irreparable damage is being caused to the forestry sector, and there will be no timber industry left in Ireland by the middle of next year, unless the new regime for forestry licensing is changed, said representatives of Forest Industries Ireland last week.

Meanwhile, the Irish Timber Frame Manufacturers’ Association has said the licencing issues have added to a perfect storm of supply pressures hitting the construction timber market.

The Association said construction timber prices have increased 35% this year.

“Tree planting has been decimated, and our sawmills have run out of timber,” said Mark McAuley, director of Forest Industries Ireland, which has members throughout the supply chain from nurseries that grow the saplings up to the factories that convert the forest crop into construction timber, panel products, fencing materials, packaging, biofuel, and other products.

“Jobs have been lost and companies are in danger,” Mr McAuley told the Oireachtas Committee on Agriculture, Food and the Marine.

“We have a minimal winter planting programme, and are having to import timber from as far away as Russia, in order to supply the market.

“That is akin to Ireland having to import milk because farmers cannot get a licence to milk their cows.

“It has been caused by the introduction of a new regime for forestry licensing, and a failure of this new process to provide the licences that are needed to plant trees and fell timber.

“There is a huge backlog in the Department [of Agriculture, Food and the Marine] and a further backlog of appealed licences in the forestry appeals committee, FAC.

“Farmers cannot plant new forestry or get a licence to fell their crop of trees.

“There are 2,000 applications awaiting approval from the Department and the run-rate of licences being issued is far below what the sector needs.

“It is absolutely essential that the Department finds a way to quickly deal with the backlog and dramatically increase the supply of licences.”

Mr McAuley said the core industry requirement is that the licensing system must be capable of delivering licences within 120 days of application. “The industry believes the system needs complete reform if it is ever going to work.

“The industry is 100% reliant on a functioning licensing system, without which we are at nothing, and no Government ambitions in respect of forestry and timber will ever be delivered.

“Forestry companies, contractors and hauliers have lost their jobs, and the machines have been sold off.

“Irreparable damage is being caused to the sector.”

Referring to 500 licences granted, but appealed against by members of the public, Mr McAuley said the recently passed Forestry Act set out a path to reform the forestry appeals committee (FAC) and deliver much greater output.

With one million tonnes of timber involved, Mr McAuley said the FAC needs to implement the Forestry Act, work in multiple divisions, deal with appeals jointly and be resourced efficiently.

Peter O’Brien, chairman of the Forest Industries Ireland forestry group, said in the Department’s October figures, more than 200 felling licences were approved, but only 19 roads were approved for construction.

“How does the Department expect us to get the timber out of the forests?”

He called for last February’s recommendations by Scottish planner James Mackinnon to be implemented. As a result of Mackinnon’s recommendations in Scotland, planting there increased from 3,500 ha to 11,000 ha within four years.

Referring to Mackinnon’s report and recommendations for Ireland, Mr O’Brien said, “To be perfectly honest, I believe it has been buried.”

Last week, Agriculture Minister Charlie McConalogue said he is acutely aware of the forestry sector’s challenges, “not least the ongoing difficulties with issuing licences for felling”.

“In terms of felling licences, we are seeing early progress, and we expect to issue licences for over 750,000 cubic metres of timber in October, which will be the highest amount in 15 months.

Meanwhile, the Irish Timber Frame Manufacturers’ Association (ITFMA) said the cost of house building will rise due to timber market trends.

A spokesperson said the market is fuelled by an explosion in demand for timber in the US housing market, the Covid-19 crisis, and a subsequent upsurge in demand in the global DIY market.

“Licencing issues related to Irish tree felling, and Brexit stockpiling, have added to the problem, resulting in a perfect storm of supply pressures hitting the market.”

ITFMA Chairman Peter McCaughey said, “The building sector experienced substantial price increases for other timber products this year, as suppliers such as builders’ providers have already passed on costs to them”, he said.

“As structural timber accounts for about 21% to 25% of the sale price of a timber frame house, the situation has now moved beyond a point where our members can bear the increased costs.”

Timber frame accounted for approximately 5,400, or 35% of new house units built in Ireland last year.

The timber frame industry uses mostly graded softwood imported from Scandinavia and mainland Europe.

These producers are now exporting large quantities of timber to the USA.

While some timber supply issues will be addressed in the coming months, sustained US demand means that purchasers will continue to pay a premium for imported timber for the foreseeable future, according to the ITFMA.

Irish construction consumes an estimated 625,000 cubic metres of sawn timber per annum, excluding panel products such as OSB and plywood, which are also increasing in price.