Coillte and much of our timber industry are in line to be the major rural victims of Ireland’s huge debts, according to economist Peter Bacon’s report on the proposed sale of Coillte’s timber-harvesting rights.
He holds out the prospect of a foreign buyer exporting the timber without processing.
A new private owner could also maximise short-term gains by increasing the timber supply when prices rise, and decreasing the supply when prices fall.
Either way, a shortage of raw material could decimate the Irish sawmilling sector, or at the very least, seriously set back the potential of the forestry sector.
This sector now depends on Coillte’s policy of placing a specified amount of timber on the market each year.
Coillte forests will be the main supplier to Irish sawmills up to and beyond 2030, according to the ‘Assessment of the Consequences of the Proposed Sale of Coillte’s Timber Harvesting Rights’ report on the Government’s proposal to forward-sell Coillte’s timber output for the next 80 years. The report was prepared by Peter Bacon and associates for the Coillte branch of the Impact trade union.
Ireland has 750,000 hectares of forestry, or 11% of the land area. Coillte, our largest landowner, was formed in 1988 to commercially manage the land under its control — 445,000ha, of which 351,000ha is forested, including both commercial forestry and forest parks. Coillte has 94,000ha of unforested land, comprising mountain tops and areas of water, open spaces, and biodiversity.
The remainder of Ireland’s forests are in private ownership. The report explains how the private sector has continued to plant up to 10,000ha per year — although the area planted has decreased, and is now below national targets.
While Coillte is replanting 6,000-7,000ha each year, after harvesting its forestry, net afforestation by Coillte has fallen almost to zero in the past decade.
But the importance of the Coillte timber supply cannot be understated, according to Bacon. Private plantations have increased for almost two decades, and the supply of timber from the private sector will increase over the next decade, but it is still small, with most privately owned plantations less than 15 years old.
The report says that almost all timber from the private sector over the next decade or more will be “thinnings”, or small diameter logs. Consequently Coillte will remain the mainstay of sawmill operations and almost the only source of supply of large diameter mature timber, up to and beyond 2030.
Bacon reveals that just 4% of clear felling licences go to private forestry.
So Coillte still accounts for more than 80% of the timber on the Irish market (81% of round-wood in 2011), and will remain dominant in the supply of sawn timber, particularly at larger diameters.
While Bacon estimates that Coillte’s share of total supply will fall below 50% by 2028, the report says it should stabilise between 45% and 55% beyond 2040, continuing to account for about half of the timber on the Irish market for the foreseeable future.
Bacon estimates the value of the forestry sector to the economy in 2010 as €673m; and direct employment at 3,125, plus an estimated further 2,406 indirectly supported (not including timber processing or other associated sectors).
Bacon estimates that timber processing alone employs 1,800 full-time, worth €90m in wages each year, with additional spin-offs in both employment and spending.
The regional dispersion of employment was also highlighted by Bacon as an important economic impact, with over 37% of forestry jobs in the border-midlands-west region.
Exports of forest products were estimated in 2011 at €286m.
The sale of the Coillte crop, Bacon says, would represent an abrupt change, which could disrupt the processing sector due to lack of certainty of future supply.
Almost all the timber output from Irish forests is used to supply domestic processing demand, the report outlines — going to sawmills, panel board mills, for firewood, and the emerging biomass industry. Biomass, which Bacon says is an increasingly important use for timber, is forecast to double by 2020, and supply will not meet demand until about 2030.
The new owners of Coillte’s timber-harvesting rights, Bacon says, would be free to sell the timber as they decide. He foresees two problems for the processing industry arising out of a sale.
Firstly, a foreign buyer might export the timber without processing.
Secondly, a new private owner would be unlikely to commit to placing a specified amount of timber on the market each year, which Coillte has done for a number of years. The report states that the evidence suggests that private plantation owners are more likely to attempt to maximise short term gain by increasing supply when prices rise and decreasing supply when prices fall.
A recent report by EPS Consulting for the Irish Timber Council claims that allowing a purchaser to export significant volumes of unprocessed saw log would force the closure of every sawmill in the country, and warns that a disruption of supply to sawmills will have the knock-on effect of a shortfall of residue product used by the board mills. This report calls for conditions to any sale — including minimum provisions to saw mills, and a fair market price.
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