Log price beats rate of inflation

TIMBER prices have rebounded from the low levels of Ireland’s construction crash and are likely to stay strong for the next decade, says a leading forestry expert.

Donal Whelan of the Irish Timber Growers Association (ITGA) said foresters are enjoying pre-bust 2007 level prices, having endured 60% price drops in 2008 and 2009. Effectively driven overseas by the domestic property crisis, Irish foresters and timber producers are now enjoying great success in export markets.

EU demand has soared for all types of roundwood (the generic term for any pre-processed tree). The current range of roadside prices being paid to timber growers includes: Pulpwood, €22-26/m3; Stakewood, €40-45/m3; Boxwood, €48-52/m3; Sawlog, €61-66/m3.

“Timber is now selling above the 10-year Consumer Prince Index adjusted average for roundwood prices,” said Donal Whelan of the ITGA, which represents private sector Irish foresters. “The sector is going through huge positive changes. In the boom years, 60% of all Irish timber went into the domestic construction sector. In just two years, that has all switched to exports.

“Even as late as last year, 90% of all Irish timber came from Coillte. That is changing rapidly. Supply from private sector growers will grow tenfold over the next 17 years. The focus is now on exports. The demand is very strong. Due to a shortage of roundwood here last year, some Irish sawmills actually imported round logs from Scotland, processed them here and then exported them back to the UK.

“Our biggest market right now is the UK. Companies like Medite and Smartply in Clonmel, which are both owned by Coillte, export 80-90% of their product. A few years ago, we simply didn’t have strong exporting companies like the Glennon Brothers in Fermoy. I think that because forestry is a primary sector producer, it doesn’t get the same attention as other export-led industries.”

Mr Whelan notes that Mike and Pat Glennon are among the companies helping to put a spotlight on Irish forestry. Named Ernst & Young Entrepreneur of the Year for 2010, Glennon Brothers Ltd has grown from an €8m business in 1991 to a €70m today.

A fire at their original home base in Longford in 2004 saw the Glennons shift headquarters to Fermoy, Co Cork, where luckily they had already invested €25m developing the loss-making plant they acquired from the Smurfit Group into a world class timber processing facility. Some 30 staff moved from Longford to Fermoy to work on a double shift.

Glennon Brothers are just one of a growing number of success stories in Irish forestry. Plantations developed with Government grants in the 1980s and 1990s are now coming on stream for thinning. Further millionaires are sure to emerge from last year’s spectacular lift in roundwood prices.

The current 10-year price peak has not gone unnoticed by farmers and other landowners. The Forestry Service has seen an increasing number of General Felling Licence (GFL) applications from timber growers in recent months.

In the first two months of 2011, applications were submitted for GFL licences on 2,360 hectares of private woodland. This compares to 1,573 ha for the first two months of 2010, and represents an increase of over 50% for this two-month period.

This increase is on the back of the significant increase in GFL applications in the 12-month period to the end of December 2010, representing a private forest area under application of 14,886 ha for that period.

Donal Whelan explains: “This demand and the corresponding prices paid were driven mainly by export demand for timber products and, at the time, a lack of supply of roundwood in Ireland to meet this demand. Those in the timber trade said that last summer’s high roundwood prices were not sustainable, and that they were a response to short term market demand and supply conditions.

“This proved to be the case, with prices coming back from the 2010 highs. “Nonetheless, current prices remain very good when one compares them with historical price levels. The longer term prospects are also good, and the ease with which the sector has switched its focus to exports has been very encouraging.”


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