Sustainable Forestry and Forest Carbon Sequestration: Discussion

Members are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to the committee. If they are directed by the committee to cease giving evidence in regard to a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

There are three groups making presentations today. We will hear their presentations and then there will be an opportunity for questions and answers. The three groups are the Irish Timber Growers Association, None-So-Hardy nursery and the IFA farm forestry group, and I welcome their representatives today. I will now ask Mr. Brendan Lacey of the Irish Timber Growers Association to begin his presentation.

Mr. Brendan Lacey

I thank the committee members for giving us the opportunity to meet them to outline our view of the importance of forestry and a sustained planting and management policy that meets Ireland's commitments and obligations in the area of climate change mitigation and renewable energy production. The national forest estate is now around 737,000 hectares, of which about 339,000, or 46%, is privately owned. The Irish Timber Growers Association is the national representative association for private timber growers, and it was formed in 1977 to promote private forest management in Ireland. The association has many activities but its objectives can be summed up in two main categories. The first is to educate and inform members on sustainable management of their forests. We do this through publishing information and guidelines on forest practice and timber market information. Our activities also extend to organising field meetings, seminars and demonstrations on current forestry issues. The second main category is the representation of our members at national level, by liaising with the forestry service of the Department of Agriculture, Fisheries and Food and by promoting a national forest certification standard with the programme for the endorsement of forest certification, PEFC, schemes.

It is clear from the reports and work of this committee and others that climate change is an issue which must be addressed and that forestry has an important role to play in this. It is also clear that long-term commitment and strategies with continuity are required. The second report of this committee stated that regardless of what combination of political parties is in power, meeting the challenge set by climate change will be a central task for any Government. It said this committee has highlighted the need for co-operation across the political spectrum and within Government structures. The report also said the potential role that forestry can play is unparalleled, and continuity and cross-party support for forestry policy is necessary to deliver its potential and is critical to Ireland in meeting its climate change and alternative energy goals.

The chart on page 4 of our presentation shows the way in which planting, primarily private planting, has progressed between 1980 and 2009. In the absence of State planting, private growers have shouldered the responsibility of growing Ireland's forest estate and continue to so do. However, we are not doing as much as there is potential to do. Decreases in planting largely have been due to shocks, that is, sudden short-term changes with regard to planting policy implementation. A commitment by a landowner to forestry is unlike any other rural land use commitment. A tree is not just for Christmas but is for life. The decision to afforest is a long-term commitment and cannot be changed like other crops, such as, for example, the way in which one can change from potatoes to wheat. The life cycle of a forest crop takes approximately 40 years and the decision to plant requires confidence in the continuity of national policy implementation. It takes time for such confidence to be re-established when it has been undermined.

On forestry and carbon sequestration, I refer to the most recent carbon fund annual report produced by the National Treasury Management Agency, NTMA, which is the body responsible for Ireland's trading in carbon credits. It notes the European Union has agreed that it will set demanding targets for the post-2012 period and has unilaterally committed to reduce by at least 20% from the 1990 levels by 2020. This reduction will be increased to 30% if a satisfactory global agreement is reached. The Irish economy undoubtedly will recover and grow and this inevitably will create pressure to purchase carbon credits. However, we have a realistic and better alternative that can be maximised before resorting to the carbon fund to bridge the gap. Forestry sequesters carbon and produces an energy supply in the form of biomass from sustainable forest management practice, enhances national economic development, generates export revenue and creates jobs. Why spend money overseas to purchase carbon credits when the same funds can be invested to achieve the same carbon benefits and give the added employment and economic benefits to Ireland?

Sustainability in planting levels is essential to meet the sequestration potential from our forest estate and because of falls in planting levels that have occurred in the past, there is a potential drop in sequestration levels after 2035. We can act now on this potential issue by ensuring planting gets back to a level of 15,000 hectares per annum. In quantifying the CO2 benefits from forestry, the Environmental Protection Agency report of 2008 on Ireland's greenhouse gas emissions projections to 2020 breaks down individual additional measures that can be undertaken to mitigate the country's projected greenhouse gas emissions. It is clear from the figures that forestry probably has the greatest potential of all the measures outlined, namely, approximately 4 million tonnes of CO2 sequestered per annum by 2020. This figure is close to all the other additional measures included in the draft energy action plan combined. This is of great advantage to Ireland in the short to medium term, and a direct benefit from the planting programme of the late 1980s and early 1990s is the ability of our forests to produce biomass as well as generating the carbon that will enable us to sequester up to 4 million tonnes up to 2020 and beyond. The policy must be continued, however, and requires commitments. Incidentally, it also should be recalled that improvements in the management of existing forests can also substantially improve sequestration levels. I will ask my colleague, Mr. Donal Whelan, who is the technical director of the Irish Timber Growers Association, to make a few comments on energy.

Mr. Donal Whelan

As my colleague has pointed out, an important point is that 46% of the forest estate is now in private ownership. This constitutes a major change on foot of a huge planting programme by the private sector over the past 20 years. The balance is almost half and half and this is a critical point. If one considers forestry and energy specifically, we have a growing forest estate and, in the medium term, benefits can come from that private forest estate through good sustainable forest management. Much research work has been conducted in respect of the future forecasted supply from the forest estate, both State and private. It reveals that because of the age structure of the State forests, the supply is plateauing, whereas the increase in supply primarily will come from the private sector. This is a critical issue because at a time when the Government is trying to achieve its renewable energy targets, one must remember that biomass, specifically wood biomass, is second only to wind energy. We must get that supply from our forest estate and this additional supply is going to come from the private sector. In the coming weeks, COFORD will launch a forecast of supply of round wood from the forest sector and this will be one of its results. This is a critical point.

In respect of renewable energy, much of that material must come from the private sector because that is where the increased supply will come from. These thinnings will be used both for renewable energy and for products such as wood pulp and panels for the board mills and the important point is there will be a range of markets.

A point of equal importance for the joint committee to consider is that proper management of the private forest estate will ensure energy supply security, which is a critical issue. One must remember that Coillte has in place its infrastructure to get its material to market, simply because of the age structure as its forests are older. The private forest sector must put this in place and it is in the national interest that this be done. Moreover, from the end of the rotation, the bigger material to be used in construction and so on will come from both the private and the State forests.

There is a huge potential to increase the supply of energy and energy resources and this will come from the private sector. Moreover, it is forecast that demand potential will outstrip supply. One figure on which we have been working, and as the national council for forest research and development, COFORD has done a lot of good work in this regard, is that, effectively, by 2020 there will be a shortage of supply over demand for all wood products in the order of 1.7 million cu. m. To put that figure in context, at present, the forest estate, both State and private, is selling approximately 3 million cu. m in total. By 2020, it appears as though there will be a critical shortage of supply and, consequently, it is vital to do two things. First, we should continue to plant to a level of at least 15,000 hectares per annum and, second, the present private estate should be managed properly to use that timber resource. This is a critical issue and I suggest this joint committee should examine the supply-demand balance when the aforementioned report finally is released. Ireland will fall short of achieving its targets for renewable energy unless we plan to add a lot more forests and manage the existing private forest areas. Obviously, the supply to 2020 is based on a reasonable thinning of the private sector and this pertains to the infrastructure that will feed into renewable energy resources. As I stated, we also must increase planting and must consistently achieve a planting programme of 15,000 hectares per annum in the future.

Mr. Brendan Lacey

From what we have outlined so far, it is clear that the dual objectives of climate change mitigation and energy security are both served by forestry. New planting and increased productivity in forests sequester more CO2 while sawmill residues and thinnings, that is, the removal of small trees to allow remaining ones to increase in size, serve to support alternative energy. In addition, all this can be achieved with the added bonus of economic development and jobs.

I ask the committee to examine slide No. 11, which displays an interesting chart of the progression of carbon sequestration in a forest when it is managed according to best forestry and sustainable management practice. Young trees are planted and grown. When they reach 17 or 18 years of age, we start to thin our forests, which removes the smaller trees. This is a resource for the pulp and panel sector and the bio-energy sector. The act of removing small trees facilitates an increased level of carbon sequestration from the remaining forest. As such, we are not considering a forest in isolation. Rather, we are considering a definite serving of the two key objects of providing an energy source and increasing carbon sequestration, all because one is managing one's forest properly.

Mr. Whelan will make a number of points on the potential to expand the forestry sector.

Mr. Donal Whelan

The committee will be aware of the forecast emissions. If I am correct, it has been forecast that, by 2020, the agriculture and transport sectors will be responsible for approximately 70% of the State's CO2 and other greenhouse gas emissions. I understand that agriculture will account for 39% or 40%, which constitutes a large proportion of our national emissions.

Forestry has a critical role to play in abating these emissions. There is no other significant carbon sink we can use. Let us consider the expenditure on forestry as a proportion of the expenditure on agriculture. Forestry accounts for just 3.6% of current agricultural spend. If we are to be serious about ameliorating climate change, we must examine forestry's role. Only 10% of our land area is under forestry compared with the EU average of 36% and trees grow faster in Ireland than they do in most other European countries, yet forestry is in the ha'penny place when it comes to securing funding from the Department that has responsibility for it. This situation must be examined. The importance of forestry and the amount of funding it gets as a proportion of the total agricultural spend must be increased for a variety of reasons, including climate change and energy security. One cannot argue with the rural employment and economic spin-off provided by forestry as an industry. There is a good return. This is a significant point.

Climate change and renewable energy issues aside, forestry generates approximately €1.89 billion in annual output. This figure is set to grow, but we must sustain the industry for that to occur. We will receive more money from the private sector, but we must keep planting. This figure is almost 1% of GDP, so it is not insignificant. We have considerable scope to increase the amount of land area under forestry from 10%. Ours is one of the lowest levels in Europe. Ireland compares with Luxembourg and Holland, which do not have large areas where forests can be planted. Ireland grows trees more quickly than most European countries.

We have outlined the savings to the taxpayer by substituting for the purchase of carbon credits from overseas. One could argue that what the Government is saving by not needing to purchase carbon credits is a significant proportion of State expenditure on forestry every year. This does not even take into account any of the other economic, rural employment or biodiversity spin-offs that forestry produces. Forestry generates employment, particularly in rural areas. As the next presentation might show, forestry is an important indigenous industry, one that we must grow for a variety of reasons. Two of those reasons are the committee's responsibility, although I could refer to other responsibilities as well.

I thank Mr. Lacey and Mr. Whelan.

Mr. Brendan Lacey

The climate change Bill and international targets are based on five-year periods or carbon budgets. To maintain confidence and continuity in tree plant, forestry should also be considered in the context of multi-annual commitments. This could be achieved by matching forestry budgets with the five-year carbon budget periods. Ireland should budget for a 15,000 hectare per annum planting programme to meet its carbon commitments and to bridge the renewable energy gap. We should also ensure that policy addresses the optimum management of the existing forest estate in an effort to achieve our carbon and energy objectives.

I call on Mr. Pat Hennessy, the IFA's farm forestry chairman. A third group is waiting, but we will take Mr. Hennessy and then hold a questions and answers session with the first two groups, given that their interests and submissions are closely related. Following that, we will invite the third group to contribute. Is that agreed? Agreed.

Mr. Pat Hennessy

I thank the committee for the opportunity to address it on the important link between sustainable forestry and carbon sequestration. I am accompanied by Ms Geraldine O'Sullivan, secretary of our farm forestry and bio-energy executive.

I recognise the work of this committee and that of the Joint Committee on Agriculture, Fisheries and Food in the excellent report produced earlier this year on protecting Europe's forests against climate change. The negotiations towards a new agreement on climate change under a UN Framework Convention on Climate Change, UNFCCC, have put sustainably managed forests at the heart of the agenda. Forest carbon sequestration is a safe, environmentally acceptable and cost effective way of capturing and storing sustainable amounts of carbon. The forestry and forest-based sectors can sequester carbon and contribute to climate change mitigation in a number of ways, such as the establishment of new forests, the sustainable management of existing forests to maintain and increase the amount of carbon stored, the greater use of wood for energy generation by replacing fossil fuels and their consequential emissions, the replacement of other materials with wood, particularly in the construction trade, and the emergence of new carbon sequestration options in harvested wood products, which offer a larger carbon cycle base.

While forests, particularly sustainably managed forests, can play an important role in climate change mitigation, the negotiations have raised important questions about measuring the permanence, leakage and additionality of carbon storage. These concerns have led to a complex set of rules for recognising and rewarding forest carbon storage. Developing a carbon accounting system to satisfy these complex rules represents significant challenges, namely, measuring the additional carbon stored through afforestation and harvesting, monitoring and verifying the results and preventing leakage. It is unclear how a system of measuring and monitoring can be implemented without creating a significant administrative and financial burden for the State and forest owners, particularly in the fragmented private forest sector. Many questions remain unanswered and additional research is required to address these complex challenges.

Forest offset schemes only form a small part of the current carbon market and most of the programmes are at their inception stages. There is a great deal of opportunity, but also uncertainty, in the market. The success of forest offset schemes is heavily dependent on the price of carbon. Even so, it is clear that sustaining and enhancing the value of forests, both to society and to their owners, is essential to meet our climate change and renewable energy targets.

The larger we grow the carbon cycle in sustainably managed forests, the better it is for Ireland's climate change and renewable energy policies. Sustainable forestry will not only have a positive role in carbon sequestration but can also contribute to Ireland's economic stabilisation efforts, especially through job creation and expanding the forest resource.

Forestry's potential for employment generation stems from several factors. One is low capital requirements. Forestry is labour intensive with relatively low capital investment. Labour and land are the key inputs in the production of wood and non-wood forest products, and environmental services and investments in private forestry generate more jobs than most other sectors. With regard to the multiplier effect, the major share of a farmer's and forest worker's income goes to the purchase of goods and services, mainly at local level. It is estimated that for every job created in forestry, an additional 1.5 to 2.5 jobs are generated in the economy. Regarding flexibility and adaptability in diverse situations, the variety of the tasks and the levels of mechanisation offer various employment options during the production cycle. Forest owner groups are an important tool to increase the level of sustainable forest management and the carbon sequestration performance of forests.

More effective policies are needed to support and encourage the development of well-functioning forest owner organisations with strong technical and marketing services. Timber production for the private forest sector is forecast to increase eightfold, to nearly 3 million cu. m. by 2028. The volume of timber currently harvested from the private forest sector is still relatively small. Significant capital investment is required to construct forest road infrastructure to access and mobilise the resource.

Policies to encourage increased forest management and harvest levels must be based on the co-operation of forest owners. Fragmentation of ownership and lack of knowledge are considered the main obstacles to sustainable forest management. Supporting organisational structures to develop and co-ordinate management is of paramount importance.

This organisational structure will also make it easier for private forest owners, through group schemes, to satisfy the requirements of forest certification. Forest certification demonstrates that the forest has been managed sustainably to an agreed international forest management standard. Certification is increasingly important for timber trade, particularly in the UK market, and could also be used in the future to quantify carbon sequestered in sustainably managed forests. This year we saw an increase in timber prices, despite the downturn in the construction sector, mainly due to the ability of Irish sawmills to get immediate access to English markets. Certification helped this process.

The increased use of wood and bioenergy offers a quick and cost-efficient carbon mitigation measure as well as stimulating new rural development opportunities. Some farmers are now adding value by harvesting and processing timber on the farm to supply firewood, log or woodchip to the wood energy market, creating new green enterprises to sustain the farm. That is why forests are so important in Ireland's climate change mitigation strategy. They are not just pools of carbon. They perform other important roles in the provision of wood, biomass, water and other ecosystem services, and they sustain many local communities and support the livelihoods of thousands of people. Some 16,000 farmers benefit from forestry.

The forestry sector's contribution to climate change mitigation is not guaranteed. The climate change benefits of Irish forests are only maintained with an annual afforestation programme of 10,000 hectares and an adequately funded support programme to manage and mobilise the resource. Forest owners have already taken serious cuts, the 8% forest premium cut, closure and restrictions to other support schemes, especially the road schemes as well as the introduction of a 2% income levy on previously tax-free income. Farmers need confidence in the scheme to convert their land. This involves converting it for all time to an afforestation programme that cannot be reversed. Maintaining forest premiums and support for the forestry programme is vital to the success of Ireland's climate change strategy. I thank the committee for its attention.

Having heard both submissions, we will take questions on them before a special session on the None So Hardy nurseries.

I welcome the witnesses to this meeting. It is useful that the private sector is represented by the IFA. We had a presentation from Coillte and I raised the question of whether there should be a joint approach between Coillte and the private sector. Certain themes have been reinforced by both presentations. In some sense, the witnesses are preaching to the converted because we are on their side, but it is important that this be put on the record. Apart from our economic problems, the real trigger in ensuring carbon value is put on timber lies with the EU, which is outside our control. If this was credited, it would unleash much activity, presumably because it would give added value. Perhaps the witnesses can comment on this.

I do not know how far away we are from the multi-annual approach to which Mr. Hennessy referred. A terrifying multi-annual approach was presented by the Government an hour ago. The witnesses can talk about how this may be developed and how far we are from it. I am encouraged when I hear about the increasing timber prices. This is especially pertinent for someone from County Wicklow. We can grow this resource and it has a value. It may have the double value of a carbon value and a timber value. In the times we live in, it is essential to develop this industry as far as we can. Anything that can be done through this committee, we will do it. We have examined this carefully and Deputy Andrew Doyle produced a thoughtful report. He is not present because he must attend another meeting. I wish the witnesses well.

The witnesses are aware of the presentation made by Coillte to the committee a few weeks ago. I found it very interesting and there are areas Ireland can exploit provided a proper policy is put in place and there is an agreed vision in the country to maximise the benefit from our natural resources. Coillte has a vision of attracting inward investment from private investors and dealing with carbon value, as referred to by Deputy McManus. What level of consultation has taken place between the IFA, the Irish Timber Growers Association and Coillte? Are they all moving in the same direction with that vision? We are all on the same side and it is a matter of putting the pieces of the jigsaw together. More can be achieved by a common purpose and common vision. Coillte said it does not have a vested interest and is more interested in developing the whole forestry sector for all, including the private sector. I would like to hear the views of the witnesses on this point. Are the levels of consultation appropriate? Is there a need for further consultation and engagement between the witnesses and Coillte as the State forestry body?

I met IFA representatives in Waterford and I was concerned to hear that young farmers and landowners who entered into long-term commitments are concerned about the reduction in the forestry premium. They pointed out that this is a personal commitment of their investment and a commitment of their land. It is important the committee takes this on board because the goalposts appear to be shifting. The viability and sustainability of that commitment is being called into question. Some of these farmers have committed large tracts of their land to forestry and it behoves all of us to ensure the future viability of forestry here and to reinforce confidence in the sector, particularly in private farmers and landowners to ensure they will continue to commit to investment in this area. As both contributors stated, Ireland has the natural environment to exploit forestry.

I am particularly interested in the renewable sector. I am concerned that much of our natural resource of timber will be sucked into wood biomass where the efficiencies are not quite as high as in the Coillte-run SmartPly and Medite factories. I am sure the Irish Timber Growers Association also supplies these factories. As I have stated previously, these factories have a very high efficiency model, whereby almost all of the natural resource is manufactured into board and exported at huge value for the country. Employment is also created.

Forestry is a labour-intensive area. In the past, my family was involved in timber harvesting; unfortunately, they are not involved in it now. The country should look back to this area and fully exploit it to create jobs. The committee can play an important role and I will be interested to hear what the next contributors will state. If we agree a common vision, take on board the views of today's contributors, Coillte and other stakeholders, this sector can grow and be fully exploited in the future. I thank the contributors for coming before the committee today.

I welcome the Irish Timber Growers Association and the IFA. Following what Senator Coffey stated, it is important to put on record that from the point of view of the Green Party and the Government there is clear recognition that confidence must be maintained and that those engaged with forestry premia need to have their commitment recognised. Whatever happens in future it needs to be clearly articulated that those involved at present need to have confidence. I have been making this point to senior colleagues in advance of the budget in particular.

I am interested in the employment potential and I see in an article in theIrish Farmers’ Journal by Donal Magner that one of the difficulties in terms of employment is that there is a long-term lead-in but there is also a short-term need. I was interested to read in the Irish Independent farming section an article by Mr. Joe Barry discussing diversification when it comes to employment. As well as the timber element, there are bio-fuel, logs and other areas. Some of these areas may be peripheral but everything needs to be on the table because one may suit one person but not another. Whether it be anything from paintball to BMX tracks, examples of successful forestry enterprises are critical for somebody to see that it may not represent a long-term pension plan arrangement but farm diversity.

Joe Barry also wrote about the integration between pig rearing and forestry as a natural synergy. These areas need to be articulated by all of us so the situation is not seen as forestry versus the rest. I take the point made about 3.6%; it is small given the overall benefit of forestry but it also needs to take account of the fact that it is not only forestry about which are speaking as there is also tourism and other spin-off effects. Is there a document that gives a broad sweep of the comprehensive employment potential so we can go beyond what many people associate this with, which is timber versus fuel?

I am delighted to hear that we export to England; this is very good news. Are there import and export figures to hand? I know we also import timber and it makes something of a mockery if we have an export market but at the same time we are not managing import substitution. How are we managing an increase in import substitution?

I welcome the two delegations. There is no doubt that forestry is a great resource. One of the first things Mr. Lacey said was that a tree is for life and not just for Christmas and this is particularly true in the area he represents. Premia have decreased in recent years. If there was a sustainable premium would more farmers get into the type of forestry Mr. Lacey represents? What detriment has been caused by the decrease in premia in recent years?

Mr. Lacey also stated that Coillte is one of the more recognised forestry growers, particularly in the mature end. Coillte has been involved for years whereas a private forestry industry has begun only in recent years. When more private foresters reach the stage of cutting down timber will the Irish Timber Growers Association compete with Coillte? I hope Mr. Lacey understands the question I am asking.

Mr. Brendan Lacey

Yes.

Coillte is a semi-State body which has money and the resources of Government behind it. This is a disadvantage to the private sector.

The arguments on climate change, jobs and alternative energy are not utilised enough, particularly in the private sector. Perhaps Coillte is pushing the private sector back down the ladder. It is important that the delegation is addressing this committee because "climate change" is a phrase that will be used much in the future.

I welcome the opportunity to hear the two groups here today. We had a very interesting exchange with Coillte several weeks ago, and these meetings have raised in the Oireachtas the profile of forestry. Unfortunately, in recent years it has slipped significantly. In the mid-1990s the aim was to have 25,000 hectares per year of forestry and in 1995 we reached 23,000 hectares. Imagine the economic benefit it would have been to the country if we had continued at that level, given the price of timber today. It would also have been extremely beneficial in carbon terms. Sometimes it is difficult to listen to lectures because some people know what is good for the country and others do not; at that time it was Fine Gael's dream to have forestry as a major industry which could play a much greater role in the economy.

One issue that had an effect on the ability to plant was the cost of land. Will the delegation give an indication of the price at which land could be bought to be viable in forestry? At a previous meeting I put this question to Coillte. This is an important issue. Land prices are decreasing and in some areas it is difficult to sell land. Perhaps this could be an impetus for more planting. It is not only subsidies which are a critical factor. There is a base price which cannot be crossed if an investment is to be viable.

The carbon issue is extremely serious. It is difficult to accept that agriculture is the main cause but that is the role we are playing at present.

The Minister of State at the Department of Agriculture, Fisheries and Food, Deputy Connick, has indicated that it was originally intended to plant 10,000 acres this year but that figure has since decreased to 7,000. I have been told by a number of people in the industry that the figure could be much less. We need to ensure we plant as many acres as possible.

I recently dealt with an individual who was trying to obtain grant aid for chipping timber to supply the poultry industry with litter. He was refused a grant because he was told he would be replacing indigenous industry. Unfortunately, litter is already being imported. This ludicrous example reveals the lack of joined up thinking between Departments.

I am still a member of the IFA but my colleagues in that organisation might not appreciate my opinion on biomass. It has been 15 years since I tried to have a biomass plant constructed in County Monaghan to deal with chicken litter. As litter is essentially made from timber, it is a clean product for incineration purposes. The IFA at national level supported a local branch in opposing the plant until the bitter end and a €16 million plant will now be constructed in Northern Ireland to deal with the same product with the support of a well-known party which sent people across to Monaghan to participate in the inquiry. We will send litter to Northern Ireland to be packed and exported to St. Andrews in Scotland. We will go nowhere unless we stop this type of behaviour. We are not prepared to consider science or reality. Similar plants have operated for decades in the centre of villages in the UK. We wanted to construct our plant on a State owned site on the edge of Monaghan town. It was claimed that the site was no longer available because it had been sold but, 15 years later, it is still there.

We are dealing with the negative impacts on my area but we want to proceed with growing more timber. Despite what my colleague said about Coillte, Green Belt in Virginia has been in existence for a long time as a private industry. Having been involved with one of its directors for many years, I can attest to its proud record in encouraging planting and expanding forestry in the northern region of the country.

The delegates will now have the opportunity to respond to members' questions but, in view of the fact that another delegation is waiting to address us, I ask that they be as brief as possible. If they wish to raise further issues as an afterthought, they are more then welcome to do so.

Mr. Brendan Lacey

I thank members for their questions. I will attempt to answer some of them and perhaps my colleagues can address the remainder.

Deputy McManus referred to the Coillte proposal that came before the committee and to the fact that we are awaiting decisions of the EU. To a degree, we are dependent on what the EU decides but two points should be borne in mind. The first is that forests sequester carbon and the second is that forests produce other benefits and revenue streams. In terms of deciding on a planting programme, we are not singularly dependent on carbon as the only reason. Regardless of whether the EU gives us credit, forests will sequester carbon and generate other environmental and economic benefits.

Mr. Brendan Lacey

Clearly it would be a huge advantage. The Coillte scheme could come into play if there was appropriate recognition for credits. However, we can still proceed with an increased level of planting. We will lose out on significant economic benefits if we wait for a final decision from the EU. We will still get credit if it agrees in the future but we will face a hole if we do not act now. That is why it is important to proceed.

With regard to consultation on the Coillte proposal, we were involved in early discussions. The forestry industry as a whole tends to co-operate because we have a common interest in increasing and improving forest cover here, whether by private, public or other means. However, while we welcome the opportunity to participate, we are in a limbo because we have no idea when the conditions and agreements needed to enable such a scheme will be put in place. We are dependent on EU decisions to create the framework.

Companies in the forestry industry co-operate as well as compete with each other because we share a common goal in developing forestry. We compete in selling timber but we have such a scarce resource relative to demand that we cannot supply enough product. The same argument will be made by sawmill operators and board manufacturers. The resource is scarce and we need to increase its availability. In terms of material from biomass, we have been planting for several years and the product coming on stream will be in excess of what is required at present by board mills. We should continue to develop biomass production capacity because there will be sufficient product to supply all aspects of the industry.

Mr. Donal Whelan

Deputy Sargent asked about imports and exports. The reason timber prices peaked this year was a lack of supply in the industry. Most of our construction timber and other timber products are now being exported, whereas 60% were sold into the Irish market during the boom years. The supply-demand balance is demonstrated by the fact that 300,000 cu. m of round timber - logs - were imported into Ireland to be sawn before being exported back to the UK. That happened simply because the industry here could not source enough timber from Irish forests. It is incredible because if one looks at the transport costs of timber one will find that for our industry to be able to do that says a great deal about the sawmilling industry. I will not say any more about that because Mr. Mike Glennon might speak later.

On employment, between 16,000 and 20,000 people are employed in the forestry and timber industry, which is a significant number. It is estimated that every 15,000 ha planted will generate each year, on average, 490 jobs over the 40 years of an average rotation. It has very sustainable long-term employment potential. These jobs are in rural areas and there will be spin-off jobs. It can have a significant impact.

In answer to one question, the ECONTRIB report will contain many of these statistics and it was undertaken by UCD. I will pass over to my colleagues in the IFA.

Mr. Pat Hennessy

I will try not to cover the points made by my colleagues. Ms O'Sullivan will speak on some of them.

Deputy McManus raised the issue of the multi-annual budget for forestry. Forestry is not like a crop planted in the spring and is ready at harvest time. As the committee will hear from another delegation, a forest starts in the nursery and is there for a couple of years. The planting programme must be known three or four years in advance to sustain all of the companies involved in setting up a forest. We currently have a stop-start approach to the multi-annual budget, in particular for the forest road scheme.

This year we had a severe shortage of timber for the industry. Much of that could have been mobilised from the private sector but we did not have the roads in place. On the applications for roads, about €2 million of the road budget was released this year but at least €10 million was required to cover the demand for forest roads. If that money had been available all of the timber could have been mobilised to meet the demand instead of exporting it.

Deputy Sargent referred to new ideas. The private sector is so new that I would be considered to be one of the pioneers who planted in the early 1990s and have now tended and opened up the forest. Up to then, people would not have been able to see the value of the forest until the first thinning was done and the roads were in place. One could see the amenities when the forest was opened up again after 15 or 20 years.

There is an opening for new ideas such as paintballing, which is probably overdone, and other pursuits such as tree walks. People are looking for more opportunities to go out to the country for activities. I expect the demand will increase but our forests need to be opened up. One cannot take people into a forest which is not open and in which one can only see wood.

Deputy Kehoe referred to premiums and young farmers making representations to him. We have been inundated with people calling us since the premium was cut. People, particularly young farmers, who had invested in forestry would have taken their 20 year premium agreement into a bank manager and told him or her that it was guaranteed for 20 years. In some cases the agreement was used for the development of farms, sheds or whatever. In other cases the agreements were used as part of bank settlements with farmers who had fallen behind with payments.

When the 8% was cut the first people to write to or telephone farmers were bank managers who said a deal was in place which had been broken, asked farmers how it was going to be fixed and told them if it was not fixed the whole deal would be off. The comments and questions we receive every day concern whether the premium will be touched again. We hear in particular from people who are about to plant and are concerned about whether the premiums will be guaranteed if they plant.

We need a guarantee because, as Mr. Whelan said, not alone is there a lifelong commitment, one is also committing one's forestry land to future generations. We receive regular calls from people who tell us their fathers have planted trees for one reason or another and who want to actively farm again. They ask if the land can be taken out of forestry but they cannot do so because of the Forestry (Amendment) Act.

Ms O'Sullivan may refer to Coillte. I see forestry, in particular private forestry, as a way of sustaining people in rural Ireland. It is part of a rural development package. I would not be able to stay on my farm without forestry. It is maintaining people in rural communities in Ireland. In the midlands all of the timber produced is manufactured locally in sawmills.

On the question of timber not being available for SmartPly, Medite and others, the timber coming from that area of the country will supply the market, along with Coillte's material. I cannot see the logic in transporting timber from Donegal or Longford to Waterford or Clonmel when it can be used in a co-firing plant or whatever to generate local jobs in the midlands, the north east or the north west.

Ms Geraldine O’Sullivan

On Deputy McManus's remarks on the EU agreement, it is essential for anything we have to do in regard to climate change. We need EU and international standards on how we will account for carbon if we have any chance of trading it in the future. That has been the difficulty with the offset schemes which are currently operating, many of which are not compatible with each other which causes huge technical issues. We need a standardised agreement within Europe and then, it is to be hoped, internationally.

We could do a great deal of work. If any carbon accounting or other system was to be introduced we would have a huge information deficit within the private forest sector. We do not have a great deal of information on the inventory of the private sector, in terms of how it is doing and measuring it. It will be essential to have such information for any accounting system.

There is currently a movement of forest owner groups which is at a fledgeling stage. It needs strong support and will be hugely important in rural development and creating new rural industries on farm enterprises. The mechanism should be supported and encouraged to gather this information and examine the opportunities which exist within the forestry sector, not only in bio-energy but in different value added activities.

Competition for the material is fantastic and the biggest issue until now has been the fact that there was no competition. I welcome the competition; it has been very positive for the market and it is to be hoped it will continue. There are many different things we could do. We were in Wales some time ago to examine what it is doing with small diameter timber in regard to wood production and using new technologies. The opportunities are endless and the greater the number of different things taking place the better.

Many farmers are now starting off supplying firewood and they will move more and more into the bio-energy market. I would like to see a greater effort from the State and Government in this area. This does not need to cost the Government money as it can be done in a private partnership where there is no immediate cost. We estimate that by 2015, if the available wood resources were converted to bio-energy, between 5,000 and 6,000 new jobs could be created. There is huge potential within the sector but bioenergy is difficult to manage, because both the market and the supply chain must be organised. We have shied away from this and there is no strategy and commitment to it because it is more difficult to manage. If we are to be serious about achieving our bioenergy targets and forestry is the resource that is in the ground, we must create a ten year strategy. We cannot expect people to invest in these enterprises in the current climate unless they are sure we have a plan.

We must be strong about this, however, because farmers are very interested in planting. If funding was made available in the budget, farmers would plant over 10,000 hectares. Their neighbours are benefiting and timber is being harvested locally. Such enterprises have definitely connected farmers far more with forestry than was the case in the past. They see it as part of the farm enterprise. We have encouraged, even on small, non-commercial areas, harvesting for personal energy use, which can reduce farm heating costs by up to 90%. All of these ideas also contribute towards combatting climate change.

Cuts to premiums have affected many farmers. This is like no other activity, once a farmer commits land to forestry, it is committed forever. I have heard from many angry farmers who planted but then found themselves without a payment when REPS was closed. They asked if they could take up 20% of their forestry and replant commercial crops because this land is their livelihood. They signed a contract with the Government on this and it has been reneged upon with the cut in the premium. We must sustain the premium payments for the sake of confidence and growth in the sector.

On grants for chippers and other enterprises, many people looking into small scale harvesting have had this experience. There was an issue with infrastructure for harvesters being available to harvest the timber and people were thinking of setting up their own tractor-based harvesting enterprises. When they applied for the grant, they were told the same thing, they would displace other employment, even though there was a shortage of services in the area.

There is a major issue facing those trying to get bioenergy projects off the ground; the cost of connection to the grid can vary greatly from €200,000 to €500,000. We must fast-track bioenergy projects and reduce the administrative and planning barriers.

I thank the group for the submission and the answers given to our questions. If there is anything witnesses would like to add, we will consider it along with the other contributions.

Sitting suspended at 4.05 p.m. and resumed at 4.06 p.m.

I welcome Mr. John Kavanagh, from None-So-Hardy Forestry, Mr. John O'Reilly from Green Belt Limited, Mr. Joe O'Carroll from Imperative Energy, Mr. Mike Glennon of Glennon Brothers and Mr. Donal Magner from Magner Communications. This a diverse group that represents a wide variety of interests and they are all welcome.

Mr. Joe O’Carroll

I thank the committee for inviting us. We will try to avoid overlapping with the remarks of the previous speakers. The companies here are representatives involved in the supply chain of the private forestry industry. We have come to give a picture of the private forestry sector and the role it has to play in sustainable forest management, particularly our role in carbon sequestration and the development of the wood energy sector.

The sectors we represent cover nurseries, where the plants are first grown, forest management in the green belt and the use of timber in the sawmill sector and the wood energy sector. The private sector has a proven track record of pioneering economic development in the forestry industry and we are keen to continue doing that. We have used the growth of the private forestry industry over the last 20 years as a springboard and all of the companies here are now active overseas.

The other four speakers with me will quickly introduce their companies and we will then try to move through the discussion as quickly as possible.

Mr. John Kavanagh

None-So-Hardy Nurseries is the principal supplier of trees to the afforestation programme; we currently supply 80% of the trees planted under the programme. We grow up to 20 million trees annually on over 530 acres situated in Wicklow and Wexford. Over the past 25 years we have created a successful nursery culture and currently employ 80 people.

Since the implementation of the western package in 1981, the private afforestation programme has been a great success. Its planting increased from 5% of total planting to 100% in this period. During the mid-1990s, total afforestation reached 20,000 hectares per annum. This figure has now fallen to around 7,000 hectares as a result of the lack of a consistent policy. Nurseries exist to fulfil the programme for Government and the main difficulties we have faced are the lack of consistency, cuts in funding and short-term "yo-yo" decision making. The nurseries grow for the afforestation programme on a long-term cycle. As a result we must plan our production levels well in advance. For example, we are sowing 15 tonnes of acorns this week that will produce 1.5 million oak trees ready for sale in 2012 and 2013. A successful nursery depends 100% on the consistently funded programme. Despite the fact the State has supported an afforestation programme for the past three decades, the value and success of this investment is not recognised. We see ourselves as part of the success of the afforestation programme This is an achievement that will disappear and be impossible to replicate if the programme is cut to an unsustainable level.

Mr. Joe O’Carroll

I ask Mr. John O'Reilly to say a few words about Green Belt Limited.

Mr. John O’Reilly

I thank Deputy Seymour Crawford for the plug earlier. I wish to introduce the committee to Green Belt Limited and hope to give it an idea of the longevity of the private sector, its scale and the size of the resource we manage. Green Belt Limited was established in 1982 and has evolved into Ireland's largest private forestry company, planting 35% to 40% of the annual afforestation programme. This year we will plant approximately 35% of the 7,500 hectares being planted nationally. We currently employ in excess of 620 people. That number consists of a core 30 people situated in Virginia but the remainder are all subcontractors who would be employed in the forest industry all the way through from planting, machine and fencing, fertilising, cleaning, spraying and the earlier stages of harvesting. Given that our forests have been growing since 1982, quite a substantial amount of forest thinning is taking place. Our workers would be employed for practically the full calendar year. We plant on average 3,000 hectares, that is, 7,500 acres of new forests each year and currently manage in excess of 250,000 acres of privately-owned woodland throughout the country. We value this at an average of €3,000 per acre.

Assets under management are valued at €800 million. Our turnover is approximately €10 million per annum. Some €4 million of private investment goes into forestry per annum through Green Belt Limited. Private investors come to Green Belt Limited with an interest in investing in forestry as a long term investment vehicle. They ask if we can source 100 acres, 50 acres or 60 acres of land that is suitable for forestry, if we can get planting permission on it, run it through the approval system and get the approval of the Forest Service and plant and manage it for them. That is precisely what we do each year to the level of approximately €4 million of inward investment into the forest industry.

At a point in time when the price of land was high we were not able to source a sufficient amount of land in Ireland to facilitate that investment. We have taken Irish-based funds across to Panama where we are establishing and managing teak plantations on behalf of those investors. During the past two years we have invested up to €2 million of Irish funds in forest ownership in Scotland so that we have diversified abroad also. Of course, we would prefer to invest at home but the markets have driven us slightly away to look for other areas. I pass on to the next level, the sawmilling level.

Mr. Mike Glennon

I am from Glennon Brothers. We are timber processors. That means we convert logs into products, primarily for the construction industry, the fencing industry and the packaging industry. We were established in Longford in 1913. We have invested more than €45 million in the Irish sawmilling industry, principally creating a world class manufacturing facility at our plant in Fermoy. We have plants in Longford, Fermoy and two in Scotland at Troon and Edinburgh. We have two timber frame companies, one in Arklow, Dempsey Timber Engineering, and one in Troon. This year we target a group turnover of €80 million.

A few years ago our Irish business was principally supplying two thirds of its output on the home market and exporting one third of it. With the collapse of the construction industry, which would be our primary market, from 90,000 units to 10,000 units, we have had to completely revamp, remodel and refocus our business so that now we are exporting two thirds of our output predominantly to the UK. This year our exports will double on last year up to €20 million. Last year we made history in being the first company in Ireland or Scotland to ship wood to France. This is the reversal of the tide because for many years imported timber always flooded into Ireland. This is the first time we have reversed the tide and we are the only sawmill in either Ireland or the UK that has done so.

To put some perspective on it, this year we will have shipped nine ships, which is the equivalent of 450 articulated trucks, of wood. Also this year, Glennon Brothers won the industry category for the Ernst and Young award. The shiny photograph in the slide is of our plant in Fermoy. It shows the scale and investment that has gone into the sector in creating a world class manufacturing facility. The next slide shows the first ship of homegrown timber, which was a proud moment for the sector, heading to France.

The sector has invested more than €200 million in recent years to create a modern, efficient and customer focused industry. The sector is made up of five large and four medium-size companies, representing more than 90% of the industry. We employ more than 2,500 people - probably 1,600 directly and the remainder on an indirect basis. Last year, sawn timber exports from the Republic were valued at €51 million, this year the amount will be much greater. Looking at 2009, our sales volumes were up 45% from 2008 when we crossed the 500,000 cu.m. mark. In the Republic we process 1.7 million cu. m. of logs, the majority of which comes from Coillte, some from the private sector and some of which we imported. We are the main residue supplier to the board mills and energy sector. All major Irish sawmills are FSC certified.

Mr. Joe Carroll

Imperative Energy, the company I run, specialises in converting biomass to energy. The company which was founded in September 2007 has its headquarters in Maynooth, County Kildare. In May 2009 we opened an office in Cheshire in the UK and about 80% of our turnover is in the UK. We saw a market opportunity here and the rationale for us setting up this business was to exclusively convert biomass from the private forest estate into energy in response to the market demand which was growing, the main drivers being increased fossil fuel prices, increased targets for renewable energy and an increased focus on carbon emissions.

When we started the business in 2007 we still had a construction boom. Like Glennon Brothers we had to do a strategic rethink when the world started to implode and underwent a round of fundraising, very much swimming against the tide, in December 2008 which we thought was the worst possible time to do so-----

They got worse.

Mr. Joe O’Carroll

-----but the position has worsened somewhat. However, we have managed to secure a €30 million equity investment in August 2009. The plan for that money was to exclusively develop projects in Ireland, using the biomass resource that we could secure from the private sector and foreign direct investment which we secured from a UK private equity firm, to build biomass projects here. We now have 24 active installations across the UK and Ireland. We have two main product offerings. We either supply and install biomass systems for clients who want to own and operate them themselves or we run an energy contract, through our energy supply company, ESCo, where we retain ownership of the equipment and undertake to design, build, finance and operate the entire system. We look after all the fuel supply and give the client what it wants which is a low cost, low carbon energy and we take all the finance and technology risks away from the client.

On current projects, members will see on the slide the house with the green flag close to Manchester - that is our UK office which has been in existence for the past 18 months. Some 20 projects are active in the UK from Aberdeen to the Channel Islands. Unfortunately there are a lot more of those lollipops on the UK map as opposed to Ireland, which is in response to the different supporting environment on which we can elaborate at a later stage. The next slide shows a building, Government Buildings, with which members will be familiar but many may not be aware we are currently installing a 2 MW medium temperature hot water boiler which will become the lead heating system not just for the Dáil but also the surrounding Government buildings, Departments of Agriculture, Fisheries and Food, Finance, Enterprise, Trade and Innovation and the museums around Government Buildings. There is an existing district heating scheme in place. Our client is the Office of Public Works. That system is being installed. The boiler is in place, the flue is being erected next week and will be commissioned shortly after Christmas so all the occupants will benefit from low cost, low carbon energy in the new year.

The next slide shows another project in which we are engaged, a hospital project in Kent where our client is Laing O'Rourke. It is almost like a five-star hotel. It is the UK's first hospital without wards. It is comprised of individualen suite rooms. The planning obligation that all new buildings in the UK must have certain on-site generation of renewable energy has created the market opportunity for us. Another driver is the low carbon obligation for any new housing development. The next slide shows the refurbishment of six apartment blocks in Newcastle, a total of 450 apartments. The biomass boiler that we have installed, operate and maintain is the primary heating system for those 450 apartments. I will hand over to Mr. Donal Magner to say a few words.

Mr. Donal Magner

I worked in the State and private sectors for approximately 20 years, mainly as a forester, before forming Magner Communications in 1993. I did so to promote forestry and the forest products industry. I work with a range of organisations but today am acting independently and am not representing any of them. For example, I work with the Wood Marketing Federation of Ireland, which promotes wood to a wider audience, mainly architects, engineers and third level students in the use of wood. I also am past chairman of the forestry group in IBEC, in which capacity I have met some members previously. Much of my work now is editorial. For example, I am editor of the yearbook and work with Mr. Donal Whelan of the Irish Timber Growers Association on that. In addition, I produce a weekly column as forestry correspondent for theIrish Farmers’ Journal. Consequently, I am in a pretty good position to observe the sector as it has grown over the years.

There has been a transformation of forestry in Ireland and dramatic changes have taken place originally within the State sector and now within the private sector. For example, I have just finished writing a book, which will appear in shops next Monday, that looks at every forest that has been established since the foundation of the State, North and South. It includes approximately 340 forests, which demonstrates what the State has done in the past. There now is a new wave towards private forestry and the previous delegation already has spoken about that. One major change in this regard has taken place since the State removed itself from the afforestation programme in the mid-1990s. There then was a major debate as to whether the private sector would be able to grapple with and carry this out and it has done so enormously well. In the first six years or so after the State left, an average of 15,000 hectares per annum was planted.

This also has changed the landscape because the land availability for forestry has changed since the State was involved and when forestry was known as the land use of last resort. For example, we introduced one of the Deputies who is present to IBEC about ten years ago, when approximately 90% of what the private sector planted was comprised of non-native species, mainly conifers. Last year, 40% of what the private sector planted consisted of native species, which constitutes a huge jump in a matter of no more than a decade. This is one of the transformations to which I have referred. Moreover, when people considered Ireland's total production, which no more than 20 years ago was 1 million cu. m, people asked what will happen when it reached 3 million cu. m. Nevertheless, during one of the worst recessions ever experienced, the sawmill sector actually has increased the price of timber and has managed to buck the trends and export within a highly competitive market in which it must compete with the Scandinavians and the Baltic countries. This is a success story.

People sometimes under estimate the commitment of farmers to forestry in Ireland. For example, a few years ago, I investigated the scene in New Zealand whereby when prices dropped, many farmers simply cut away the timber and ran sheep on the land. In Ireland, farmers who commit to forestry do so in perpetuity. There is no way in which one can clear it again. While in many ways this is good for carbon sequestration, it is a commitment whereby one is locked into forestry and people have underestimated this achievement by farmers. I have been privileged to observe this as a writer and a commentator over the years and that is the reason I have attended this meeting with this group today.

Mr. Joe O’Carroll

I will provide members with a flavour of the type of companies that are active in the private sector. There are many more companies like Imperative Energy, many more sawmillers and private forest management companies and nurseries and this delegation is a representative sample of activity within the private sector. I will make up time with a quick potted history, as members will be familiar with most of it. The history of forestry in Ireland is very much dominated by State involvement right up to the 1980s, during which time forestry pretty much was a land use of last resort. Consequently, it tended to be planted on bogs, hills and areas that were not considered useful for mainstream agriculture. The annual State afforestation fell away from an average of 10,000 hectares per annum between 1969 and 1984, to approximately 5,500 hectares per annum between 1985 and 1989. Since then, farmer afforestation, which has been encouraged since 1989, has predominated and as members are aware Coillte was established in 1989. The graph now being shown to members shows afforestation activity from 1990 to 2009, based on hectares. The blue bars represent the State while the green bars represent the private sector. Members will note that even after Coillte's afforestation activity fell away completely, for three years between 2000 and 2002, the private sector alone planted on average in excess of 15,000 hectares per annum. Consequently, it is quite clear that the private sector has the machinery to sustain a 15,000 hectare per annum planting programme.

Coillte moved out of afforestation in 1996 approximately and as its own annual report noted, this was especially due to alternative land use grant schemes such as REPS, the designation of large areas as natural heritage sites and increased planting restrictions. Obviously however, such measures did not merely have an impact on Coillte as they also affected private forestry activity. For example, County Donegal had an average planting of approximately 2,000 hectares per annum, which fell away to 200 hectares per annum because of the restrictions that affected Coillte and the private sector. Notwithstanding this, the private sector obviously responded to the challenge and then managed to hit 15,000 hectares per annum for a three-year period.

In addition to the aforementioned restrictions, the national forest strategy, Growing for the Future, placed a 20% broadleaf target on all new afforestation schemes that subsequently has been increased to 30%. The private sector is significantly surpassing that target in that native species now account for approximately 40% of total planting, with obvious non-wood benefits for landscape and biodiversity. Over the past 15 years, more broad-leaved trees have been planted by farmers than were planted over the entire century of State planting, which constitutes quite an achievement by the private forestry sector. As has been touched on, in the past 20 years, the private sector, mostly farmers, have planted just shy of 250,000 hectares. Obviously much of that was supported as the afforestation grants were in place to support the actual planting but it is a permanent commitment of that land. Consequently, if one attempts to place a value on the aforementioned 250,000 hectares of land, a €2 billion valuation probably would be conservative. This represents the commitment the farming sector has made to forestry in Ireland. It should not be under estimated because it is a permanent land use change and is locked in there in perpetuity, which obviously has certain carbon benefits.

Without wishing to bamboozle members with statistics, I propose to set out a number of comparative metrics between 2010 and 2020. The forest area hopefully is set to increase by a further 70,000 hectares, so the increase in the percentage of land covered by forest will rise from 10% to approximately 11%. At present, employment is approximately 16,000 and we expect this to increase to 19,000, based on a sustained planting programme. The increase in log production obviously follows the same planting trend. The output value of the sector will surpass €2.3 billion and obviously the amount of carbon sequestered will also rise significantly over that period. To give an indication of current demand, I will take Green Belt Limited as an example of one company active in this area. It has seen the applications it has made on behalf of its clients rise by 20% in 2009 from the previous year, and this year to date there has been a further 20% increase. As total applications submitted to the forest service for this planting programme exceeds 20,000 hectares, it is quite clear that the demand exists and that the private sector has the capacity to deliver it. As the IFA representatives mentioned previously, there now are more than 16,000 private woodland owners, most of whom are farmers.

A key part of the joint committee's brief is to consider carbon sequestration as part of a climate change issue. The Kyoto-compliant forests in Ireland will contribute 2.8 million tonnes of carbon dioxide per annum over the first commitment period running between 2008 and 2012. This will rise to more than 4 million tonnes by 2020, which constitutes a highly significant saving to taxpayers because without this contribution, it is clear the State would be obliged to buy additional carbon credits from overseas. If one considers the carbon sequestration rate by ownership, back in 1991, the contribution of carbon sequestration from of those Kyoto-compliant forests was drawn approximately equally between the State and the private sector. At present, it is running at approximately 81% to 91% in favour of the latter and by 2020, approximately 90% of carbon sequestration will be from privately owned woodlands, which obviously is a significant contribution.

A number of sawmilling sector issues arise - I now intend to turn to these issues and will then suggest how they might be addressed. As alluded to previously, Irish standing timber prices are approximately 100% higher than in the United Kingdom. Obviously, this presents certain challenges for the sawmilling sector. Mr. Glennon alluded to the current overcapacity in the sawmilling sector. There obviously are highly significant issues to be faced by people operating in that sector. I will refer to something closer to my heart, which is the role that biomass has to play in renewable energy targets. Obviously, the Food Harvest 2020 report alluded to this to a considerable extent. Ireland has a significant biomass opportunity. It is one of the core competitive advantages we have. We are back to trying to stick to the knitting as we seek to stimulate economic activity. It is clear the bio-energy sector has massive employment potential here. Biomass yields in Ireland are higher than those in many other jurisdictions in Europe. We have a strong agricultural heritage. Agriculture is one area we know about. We know how to manage land and take product to market. That applies to even those of us who have not been on a farm for a while. It is in our DNA and it is a knowledge that has readily followed through from agriculture to forestry. The real challenge is how to cost-effectively seize this opportunity without going to the national Exchequer for grant aid given that there are not as much funds available as there used to be.

We have been lobbying for two policy initiatives that could be implemented at no cost to the State, which would allow us to spend much more of our €30 million equity on Irish projects rather than having to use the money we fought hard to raise in the UK but now find we have to spend in the UK. We would much prefer to allocate it to projects here. Part of the issue relates to market access. We cannot get an exact figure for the expenditure of public bodies on imported fossil fuels to heat public buildings because nobody has the exact figure but, conservatively, the figure is €150 million a year. We do not want grant aid for our biomass systems, we just want an opportunity to compete for that market. We are not looking for this to be teed up but this is a market worth €150 million a year and we would like a procurement process that would allow us to compete for that. We would like public bodies to tender for renewable heat or low carbon heat on a long-term contractual basis, then we could compete with other people in the biomass sector, with those involved in the geothermal and solar energy sector and, arguably, even with people who want to supply oil systems if they are willing to offset the carbon impact. That would be a smarter way of procuring energy in the public sector and this would then cascade into the private sector.

The second issue is related to the lack of district heating networks here, which obviously creates local heat markets. It is strange that we continue to spend, through a semi-State company, a State-owned company, a great deal of money building gas distribution networks. We would like all those heat networks, which is essentially what they are, future proofed. We would like them to put in hot water systems now. We could still run them on gas while gas is cheap, but at least we would have a future proof network which could then take biomass, geothermal systems and solar systems and so on. In that way we could start to build up a portfolio of renewable projects. The benefits from those policy instruments are obvious to everybody.

I thank the members for their patience. We want to emphasise the interdependency between all links in the supply chain in the forestry industry. We appeal to the committee to do everything in its power to ensure the continuity of the 15,000 hectares per annum programme, which we believe is critical. It is a common theme across all the companies represented here.

It is worth emphasising that the private sector is significantly exceeding the species diversification and native broadleaf targets. We would encourage the Department to revisit the issue of co-funding under the next rural development plan, which would be a way of securing some EU funds for the afforestation programme. That would be on the back of the targets for the species diversification and for the number of native broadleaf trees. An application for co-funding is one to which attention would be paid.

It is clear that the private sector has a proven capacity to deliver a 15,000 hectares per annum planting programme but it must also be innovative enough to find markets for that material as it comes on stream, whether through the sawmilling sector or wood energy companies like ourselves. I re-emphasise the over-capacity in the sawmilling sector, which is a key issue. Unfortunately, the volume in this sector is not coming to market quick enough to deal with that over-capacity issue. This is something that needs to be addressed.

The contribution of the carbon benefit from forests has been discussed at this and previous meetings. It is clear from our point of view that this benefit needs to be realised, valued and clearly credited back to the afforestation programme. Various models are being discussed by other people. John O'Reilly from Green Belt and I had a meeting with the Department of Finance. We thought it took place two years ago but, on checking, it was four years ago when we meet with some of the Minister's advisers to discuss monetising the carbon benefit from forests and we managed to trade some carbon credits from forests through voluntary transactions. We did that four years ago so there is nothing new in the concept. The State needs to consider if it is a zero sum game as to whether the carbon offsets - the €2.8 million - are accounted for, as currently happens, and the money saved in not buying credits is used to continue to fund the afforestation programme through the existing schemes. We suggest that whatever would be the most cost effective way of dealing with that issue should be pursued.

We would like the world energy sector to be developed but not through grant aid or any artificial supports around funding capital equipment; we just want market access and then we would happy to stand toe to toe and compete. The competitiveness that we have developed and our ability to go to the UK and box way above our weight against fairly large competitors in the UK has come about by us being lean and mean and competing in this sector here. We are increasingly exposed to global markets, as is the sawmilling sector, and John O'Reilly mentioned his company is active in Panama and Scotland and is seeking to be active in other jurisdictions.

Coillte's dominant position in the forest sector needs to be addressed, but that is probably a discussion for another forum. I thank the members for their patience and we are quite happy to deal with any questions or comments they may have.

I thank the delegates for their submissions, which were interesting and informative. Deputies McManus and Kehoe, Senator Coffey and Deputies Aylward and Crawford have indicated that they wish to ask questions.

I thank the delegates for their contributions. Unfortunately, I will have to leave shortly but I will read their replies. I compliment them on the presentation. To talk about biodiversity, they have put forward a very diverse presentation. There was a great deal in it but we do not have a written submission. It would be useful, even for the delegates, to prepare a paper. They have a writer who should be able to do it. It seems that many of the ideas they have presented are fresh and innovative at a time when we desperately need those kinds of ideas. I strongly recommend that they develop them further. We would read anything they produced.

There are a few points on which I seek clarification. Mr. O'Carroll mentioned the programme of 15,000 hectares. At present the Government's target is 10,000 hectares and it has not been met. We we are talking about approximately 7,000 hectares. The Minister has indicated that he does not know if he can have that target for next year because it will depend on the budget. Mr. O'Carroll might explain briefly why that target has not been met. What are the obstacles? He has sold a positive message.

In terms of exports, the fact that Mr. O'Carroll's company has been able to develop an export market is music to our ears but in terms of the big market in the UK, I am curious to know the difference in terms of supports. While Mr. O'Carroll's company is exporting timber exports, he is also exporting jobs the more he develops his company in Britain, and that is a matter of some concern. It is good for him but I am not sure if it is the way we should go. He might talk a little more about that.

The idea of the State as a customer having an influence in terms of bio-energy is something about which we have been very concerned. There are commitments in the Government programme, a large number of buildings across the country owned by the State that should all have converted, yet there seems to be a certain sluggishness in doing that. We have to work on that and we need to pursue that with the relevant Departments.

I have two more questions, one of which is about the role of Coillte. Do the delegates envisage a role for the sector in the future that is in different from that which pertains at present? Is there a strategic approach whereby Coillte could adopt a new role that would be helpful? Mr. O'Carroll said that the over-capacity sawmilling sector must be addressed. Would he leave it to the market to address that or how does he envisage it might be addressed?

The delegates have given an excellent presentation and a great deal of work went into it. These are recessionary times and this is a sector that could help us in some measure to get out of it. Mr. Donal Magner might be able to comment on the role the private sector could play in the forestry industry in the future. The economy must recover. What role can the private sector play in the forestry industry, ranging from the seed end of it to the sawmill, in our economic recovery in terms of jobs, exports and so forth? It is a home-grown industry.

Mr. Kavanagh spoke about the cuts in funding from year to year. If there is a more stable trend in funding, rather than it rising and falling over the years, would there be greater demand for trees from his nursery on the part of the private operator running a plant? If the funding was more definite from year to year, would there be greater demand for his product? What percentage of its product would Glennon Brothers have supplied to the building industry in recent years? The building industry would have been of enormous benefit to the company but there has been a huge drop in construction. What percentage of Glennon Brothers' product goes for export now compared to what would have stayed in Ireland in the past? Was there a scarcity of Irish home-grown timber when the construction industry was at its height and what percentage of timber would have been imported into Ireland? Now that the construction industry is on its knees in Ireland, what percentage of product will Glennon Brothers export?

A criticism of the forestry industry in Ireland was the reliance on the conifer species. What other species mix is being planted in nurseries in the private sector? There are commitments relating to forestry within the programme for Government. Where can the private sector meet those commitments?

Deputy Kehoe has covered some of the questions I intended to ask, so I will be brief. I acknowledge the contribution from all the delegates. They have given us an important educational brief from the seed to the sawmill. It is important that committee members are fully informed. The delegates have gone a long way towards ensuring that they are. I hope that ultimately the committee can report on how the forestry sector can fully exploit our natural resource and environment to address not only the climate change issue and carbon sinks but to stimulate our economy in these recessionary times. All counties have the natural ability to create jobs and stimulate the local economy and Mr. O'Carroll has made a strong argument for that today, for which I commend him.

With regard to examining areas for exploiting our full potential - I acknowledge that Glennon Brothers are exporting to France, the UK and other places - have we looked beyond Europe as regards exports? It is said that huge countries such as China and India are where much of the development will take place in the future. Can we play our part by supplying those economies with our raw material? Has that possibility been examined to any extent?

The other area is bio-energy. Mr. O'Carroll said there are different supports in the UK from what is available here. Will he expand on that? What barriers are there in Ireland, aside from market access? If there is value for money in the product one can deliver, one would have thought that progressive institutions and State bodies would line up to invite one in to examine how they and their constituents could benefit. How does the up-front investment in biomass boilers compare with investment in traditional fossil fuel boilers and what is the comparison in running costs? Where are the incentives for organisations to invest in Mr. O'Carroll's type of project? If he can prove that substantially, and no doubt he will, where are the incentives not only for new projects but to retrofit existing buildings and districts? Mr. O'Carroll has a good vision but we need to sell it, show there is value for money in it and that it is practical. It is well known that we face an uncertain future with fossil fuels and that their cost will increase over time. Are local authorities engaging with Mr. O'Carroll at present at any level even for their office space, let alone the districts under their jurisdiction? It will be interesting for the committee to consider Mr. O'Carroll's response.

I am delighted with the presentation. Five very intelligent people have given us an outline ranging from growing the tree in the nursery to the finished product. The achievements made have been well presented to the committee. I am impressed. It is all about the potential for job creation and export growth. Given our current economic position, it is great to see such entrepreneurship.

Many of the questions I intended to ask have been asked. With regard to the nurseries over the next ten years and the issue of planting native species as opposed to the conifers that were traditionally grown, what percentages are being sought for the future? Currently, the native species account for 40% of planting. Do the delegates seek that it be increased to 50% or 60% over the next ten years or will they stay with the traditional conifers?

Is there a problem getting planning permission at local level for planting? Does that delay planting? The target is 15,000 hectares per year. Is there a problem in that regard? The figure is 7,000 hectares at present and the delegates seek to double that, at least.

There are roads as well.

We were given a presentation on roads. I am a member of the agriculture committee and in recent days it was given a presentation from the Department's officials on the grants for roads. It was very worthwhile as it is a problem. The money that is being made available for roads for the next ten years is probably not enough but it is helpful for thinning and so forth in the future.

My other question is about biomass versus the finished product, and companies such as Medite and SmartPly. There is something of a conflict in what we are being told. The agriculture committee was given presentations about the future use of the timber that is available. If it is to be put into biomass, it is a question of cutting it, transporting it and burning it to produce heating. On the other hand companies producing finished product such as Medite and SmartPly generate more jobs and more potential for export and so forth. What is the opinion of the delegates about that?

I compliment the delegates on the target of increasing forestry from 7,000 hectares to 15,000 hectares and their targets for jobs over the coming years. It is fantastic. Long may it last. Has the Department and the Government put afforestation in a strong position in the Food Harvest 2020 programme?

I congratulate the five delegates on their presentation. As Mr. John O'Reilly said, I have an interest in the progress of Green Belt as it is in my constituency. The late Mr. Tim O'Brien was a great personal friend, so I know the great work it has done through the years. I do not know as much about Mr. Kavanagh's business but Glennon Brothers certainly made the headlines in the past 12 months with regard to its exports to the UK and France. I congratulate the company on the award it received; it was entitled to it. We read Mr. Donal Magner's information from time to time. It is not always easy to read everything we receive but he is very interesting and we appreciate it.

Mr. Joe O'Carroll has virtually chaired this session. Has he made himself available to the Minister for Finance? If he was able to raise €30 million in last year's climate, he deserves to be considered instead of some of the people currently in place. That is a serious note because what has happened in our country is absolutely dreadful. It is fantastic that private industry can show initiative and do what these groups have done.

The map showed what they were doing in Ireland and in the United Kingdom. Unfortunately, the number of flags were in the wrong country as far as I was concerned. Can the witnesses give any indication of the different structures and support mechanisms that allow them to work there? As I said earlier, I have a tremendous interest in the issue of climate change. For example, we have not found a way of changing chicken litter and pig slurry into energy in the Cavan-Monaghan region. In Germany, however, there are 2,200 such energy plants. There should therefore be some sort of regulatory structures to change to that system here. We must examine new ways of doing such things to ensure that the climate change issue is dealt with.

An extraordinary level of young farmers want to attend college to study both agriculture and forestry. Having spoken to the senior executives in the forestry college at Ballyhaise, County Cavan, I know they are oversupplied with students for such courses. The guarantee of future grants is important for young farmers getting involved in forestry. One can see unused land in large areas of the country. Some years ago, when I drove through Longford-Westmeath and Leitrim I was alarmed to see the amount of land that had not been cut for hay, silage or grazing. There is obviously an opportunity in that regard.

I asked a question earlier but did not receive an answer to it. What is the basic price that can be afforded to justify putting land into forestry? Mr. John O'Reilly referred to the situation in Scotland and South America, which is important because we need a barometer of what people can afford. I have received phone calls from people involved in the forestry business in Leitrim. They wanted to buy land there but were worried about what might happen in the five-year plan. They wanted to increase planting, so it might have reached 10,000 hectares. However, without some knowledge of future guarantees and what is viable, it is impossible for them to do that.

Perhaps the delegation would like to respond to some of the questions that have been posed. I ask the witnesses to keep their replies fairly brief as we would like to be out of here by 5 p.m. or as soon as possible thereafter. We will have been here for two and a half hours by then.

Mr. Joe O’Carroll

I thank members of the committee for their interest and questions. I will deal with a number of these questions and will then ask the other gentlemen to deal with their specific areas of interest. As regards why we are developing so many wood energy projects in the UK as opposed to Ireland, the supporting environment over there is a bit more mature. There is no focus on giving capital grants, and any support there is based on a tariff for delivered energy. Therefore companies like ours only get rewarded for the carbon benefits if we deliver them, not if we go out and buy a piece of equipment that may fall over a week after purchase. So it is focused on protecting taxpayers' money. If the UK taxpayer is going to give something to green energy it is against an actual delivered benefit, rather than the purchase of a piece of kit. That has not helped the market here. It led to a gold rush, which did some damage to the industry as it was getting established in recent years.

In addition, the UK is a much bigger market. There are many planning obligations facing any new development, whether it is commercial, residential or industrial, in the UK. It has to have achieved a certain level under the sustainable building code, which means that it has to have a certain amount of on-site renewable energy generation. No new building will go up in the UK without some form of renewable energy being integrated into it. That has created the market opportunity for us.

As regards capital expenditure on a biomass system relative to operating costs, depending on the size of the system the capex can be significantly higher than an oil or gas equivalent. It could be eight or ten times the capital cost. Because the fuel is locally sourced, however, the operating costs tend to be significantly cheaper. Therefore over a ten-year contract, which is typically what we would enter into, we can pay down that extra capital cost by virtue of the difference in fuel costs we are using.

As regards our engagement with local authorities, we are very involved with Kildare County Council. We are based in Maynooth and I am a lily white through and through. I am actively involved with the local authority in Kildare which has developed a draft energy plan. We are not only looking at solid biomass opportunities but also some anaerobic digestion and other bioenergy technologies to which Deputy Crawford alluded. We are keenly aware of them.

On biomass versus panel-board, I spent five years working in Medite in Clonmel as a purchasing manager so I know all about buying fibre. One of the reasons the panel-board mills are so efficient in terms of their conversion of material is that they are the biggest sites for bioenergy on the island. Medite, for example, has about 50 MW to 60 MW of installed capacity. For many years it was the biggest renewable energy project on the island. We did not know that; it was just what we did. It made sense to burn absolutely any type of biomass we could get our hands on, whether it was bought-in sawmill residues, offcuts, sand or dust from the product. It is an ongoing debate as to whether we should focus on the panel-board sector or biomass. Clearly, however, our business is developing biomass projects so we focus on that. However, there has not been any objective analysis of the total impact of developing the biomass sector relative to the panel-board sector. The flip-side of that would be to continue to use the panel-board sector at the expense of developing more biomass projects. It is clear which horse we have backed, but I am not aware of any independent and objective examination of that matter.

I will ask Mr. John O'Reilly to deal with the land price issue, why the targets have not been met, and the planning issue for afforestation.

Mr. John O’Reilly

I will deal with the questions as they arose, starting with Deputy McManus's question on why we have not hit the targets. The best way I can describe the afforestation programme is that it is a matter of confidence. It is just like a child whose confidence is easily knocked but is very slowly rebuilt. That is the best way I can describe it. The main thing that knocks confidence in the afforestation programme is funding instability and lack of confidence regarding the future premium. Once a farmer knows where he stands and sees some stability, he will commit to the afforestation project.

It takes quite a period of time to get an afforestation approval, so one's interest in forestry slowly cranks up. It takes four to five months to convert an interest into permission to plant. That interest has to gel in with the planting season. A couple of things need to gel together, so there is a period of building. One needs to build up demand for a period until one can create 10,000, 12,000 or 15,000 hectares of afforestation. The key figure we showed in our slides to date is that 20,000 hectares of applications have been submitted to the forestry service to date.

The busy months for forestry are when the land is wet, the weather is miserable and the land is getting poached. That is when the interest in forestry starts to spike. The amount of interest in applications that have hit the system through the months of September, October, November and December will increase. I would see that figure hitting about 25,000 hectares of demand for afforestation. If we can supply a stable product to them, they will plant. Normal conversion rates of 55% - maybe up to 60% in a good year - will crank out 15,000 hectares annually. Why did we only hit a little bit less than 7,000 hectares last year? First, the demand had not built up because the confidence was not there. The demand is building now and is there. Second, the funding simply was not there. There was not enough funding last year to plant any more than 7,000 ha. They were the main reasons.

Deputy Kehoe asked if the cuts were affecting the programme. The cuts are affecting the programme because there is a lack of clarity, a lack of certainty and a loss of confidence. Basically, that is how it translates on the ground. It is very easy to make a decision to sit on the pot. Someone with planting approval may wait until next year. That is a very easy decision to make. The best way to avoid someone making that decision is certainty. That is why the proposal in regard to multi-annual budgeting comes up. Multi-annual budgeting gives a degree of certainty.

Deputy Aylward asked about planning permission. The application for planting approval is not subject to planning permission but gaining access from forest roads to county roads will potentially become subject to planning permission. I do not believe the legislation has been enacted. That will cause problems getting timber out of woods because local councils will look for very beefy fees to get that material to the roadside. We are being disrupted by councils imposing weight restrictions, looking for bonds, etc. for taking material out of private estates and Coillte land to roads. Those issues may not be specifically planning related but they are issues at local council level.

The price of land depends on who buys it. Can a farmer, somebody who technically qualifies as a farmer, a non-farmer, an institution or pension fund buy it? The difference is the farmer will get a premium at a certain level and the institution will get a premium at a lower level so, accordingly, that influences the price of the land. However, the people who contacted the Deputy, expressed an interest in planting land and asked about the programme will pay €2,800 to €3,000 per acre for land which is suitable for afforestation. That is the price range at which we are buying. We would buy land in the Deputy's good county, Roscommon, east Mayo, west Limerick, north Kerry and north Cork and those traditional wet grass rush-type sites.

Mr. Joe O’Carroll

I will ask Mr. John Kavanagh to deal with the species mix issue.

Mr. John Kavanagh

There were a couple of questions on species mix. In the early 1990s, we produced 20% broadleafs to 80% conifers. As the 1990s went on, this changed to 33% broadleafs to 66% conifers. It is now 40% broadleafs to 60% conifers. That has been in response to various planting schemes put in place by the forest service.

In the early 1990s, we were chasing demand because the nurseries had to get production up to speed. We were more used to producing conifers than hardwoods. Then all of a sudden, the planting focus changed more to hardwoods. That was a huge cost to nurseries because they had conifers coming on stream. However, we took on board hardwood production and had to get it up to speed. Unfortunately in 2002-03, funding was cut again. We now find ourselves following demand but we are still producing the species mix 40% broadleafs to 60% conifers.

It would be more helpful if nurseries were consulted earlier because they must get up to speed. There is a three to four year lead-in time before there is evidence of trees being planted. The focus is on bio-diversity and species which would probably be more efficient in terms of carbon sequestration are some of the conifer species. Due to carbon sequestration, it was more likely to swing back towards those species. Again, the nurseries would have to be brought into the picture in those decision-making processes.

How many years ahead does one have to be prepared-----

Mr. John Kavanagh

As I said, we are sowing oak this week for the 2012-13 season. Conifers take longer. It takes an extra year for us to-----

It is two to three years.

Mr. John Kavanagh

Yes.

Mr. John O’Reilly

The species mix from the nursery to the ground would strongly lean towards the two core native species, oak and ash.

There is much marginalised land around, although not in Kilkenny. I will not mention any county. If a farmer is interested, would Green Belt look at the land and define what species would be best, especially on wetter land?

Mr. John O’Reilly

Correct. The initial expression of interest comes from the farmer to a contracting company like Green Belt. We send our foresters, who are all qualified and experienced, out. They assess the site and advise the farmer on what is best suited to grow. The farmer puts his or her input into it and asks if his or her site is suitable for growing a certain species. It is either suitable or it is not and the species mix is then put together and presented to the Forest Service, approved and planted.

Mr. Joe O’Carroll

Mr. Mike Glennon will deal with the sawmilling questions.

Mr. Mike Glennon

I will deal with some of the questions on the sawmilling side which really revolve around four areas. The first area is overcapacity. We saw from one of the slides that logs in Ireland are 100% dearer than in Scotland. To understand the impact of that on a sector, the log cost represents 60% of the cost of the final product. In essence, the sawmilling industry in Ireland is currently losing money as a result of the log costs. That is a huge and important issue and we need to get our heads around it before we understand it.

I do not want to confuse the message, which is very clear. The industry has the capacity, it has proved it can export, it is customer-focused and it can get quality products but there is an infrastructural issue around the sector which is overcapacity. To solve overcapacity, we need to understand how it happened. It happened as a result of Government forecasts of log supply that did not materialise. The industry invested heavily in it and as a result, there is overcapacity in the industry and there are logs coming from Scotland.

We are pretty good at studying this because we have plants in Ireland and in Scotland. It is not possible to pay twice the price for logs in Ireland and then supply them to the UK market. This needs to be dealt with. Given how it arose and the role the Government forecasts played in it, we need a joined up thinking scenario where the various stakeholders, whether the sector, Coillte, Enterprise Ireland, the Government, etc., need to share a view of the problem and come up with a solution as to how we get around it.

Deputy McManus asked if we let the market cannibalise itself or if we address it. One would say that in most cases, except we need to understand the dominant role Coillte has in the sector. In our particular business, we buy the vast majority of the logs, which is our raw material, from Coillte. We produce saw and timber and then we produce residues. Approximately, half the log goes out in residues. Coillte then buys the residues back for its Medite plant in Clonmel. We could be subject to a market squeeze. The dominance of Coillte is hugely important for us to understand in trying to sketch out what future this sector has - I mean the full forestry sector. People do not understand that.

One of the primary reasons we went to Scotland was for the good of our business. We were acutely conscious that there was a dominant raw materials supplier and a dominant residue purchaser. It is not a good spot in which to be from a processor perspective. I am not blaming anybody but am just painting the landscape. We will not find a solution until we find the landscape.

Would that not change with all the private planting as against that by Coillte?

Mr. Mike Glennon

It has not as yet changed. While the amount of material from the private sector is growing, the majority of material being supplied to the sawmilling industry is from Coillte. There is a serious issue in the sector which needs to be addressed.

On the question of exports, the primary market for sawmill output is housing starts. The drop from 90,000 housing starts to 10,000 reflects the carnage in the sector. We supplied two thirds of our output to the home market and exported one third. We have had to completely reverse that. Now we export at least two thirds of our output and that is as a result of the down turn in the market.

Mr. Joe O’Carroll

There is a final question relating to the coverage of afforestation in the Food Harvest 2020 document, which Mr. Magner might address.

Mr. Donal Magner

I would like to merge this with Senator Coffey's and Deputy Aylward's question. Food Harvest 2020, even though it has produced a report, will run in tandem with the forestry review. Food Harvest 2020 is probably weak on specifics but it raises a number of issues. It is extremely strong on forestry in regard to carbon sequestration and wood energy. Without giving specific targets, it states specifically that the trend we have seen over the past few years of lower planting should be reversed. It makes that clear. It accepts the arguments made about the ability of the sector, not only to plant the land but to process it as well.

On Senator Coffey's point, there are a couple of matters of which farmers need to be sure now compared with a few years ago. A few years ago, some farmers might have planted because of grant aid, etc., and when competing schemes came in, planting began to fluctuate. Certainly, in the past four years, since the processing sector and the wind energy sector revitalised the industry - not only with the sector itself but also with growers' groups around the country and the various companies - for the first time when I meet farmers they are not merely talking about the premium for the 20 years. Farmers who are only a few years after getting married are talking about getting a revenue from that crop by the time their first kids go to university and that is achievable simply because of the considerable growth rates here. Farmers are looking at forestry now on a commercial basis, just as much as anything else. It is surprising that farmers are also planting such a high number of broadleaf trees, most of which, with the possible exception of ash, will be for the generation after their children. That is the first point.

One of the key points is how quickly farmers react to the marketplace. I was astounded to see that farmers - for example, Mr. John O'Reilly mentioned it - who, traditionally, might have been opposed to forestry suddenly could achieve a forestry programme of 20,000 ha. The Government programme is for 10,000 ha and if we get there, that will be a major achievement. However, all the research papers from COFORD in the Department of Agriculture, Fisheries and Food show that for this country to enjoy economies of scale and really optimise the carbon benefits, we need to aim at 15,000 ha. We spoke at the start about interdependency. Wood energy is not like growing other short-rotation energy crops in that the benefits continue from that early stage which farmers are now delivering of small pulp-wood material, both for pulp and wood energy, right throughout the rotation, and the rotation for commercial conifer forests is quite short in Ireland. We also need to give farmers commitments on how they will manage the longer-term broadleaf resource or native woodland resource, which is close to 40%.

In that case, on one of the last points made, we need to look at co-funding in Europe because when Coillte left the market many questioned the viability of forestry on a commercial basis because there were strict targets being set at that stage of 25% broadleafs, and farmers have surpassed that now. They need to be given the assurances. This is an area on which we could certainly talk to Brussels. It is not a significant area but it is a vitally important area to achieve the bio-diversity targets.

Returning to Senator Coffey's point, the sector has shown that to get a viable forestry programme one needs, as Mr. Kavanagh stated, this nursery sector to feed into it. One needs the contractors and a vast numbers of workers and consultants out on the ground to advise farmers and do the work. We are getting to the stage where farmers themselves are looking at this like the would another crop. The 10,000 hectares is instantly achievable, and so is 15,000 hectares. This is a viable area. The jobs, as we stated earlier, go back into rural areas, which is important.

I thank the delegation once more for the excellent presentation, and those of the Irish Timber Growers Association and of the IFA group as well. The submissions they have made will be of help to the committee in progressing its report on forestry. I thank the delegation members for their time and for the effort of travelling here. We apologise again for any delays that occurred and wish them well.

The joint committee adjourned at 5.15 p.m. until 9.45 a.m. on Wednesday, 1 December 2010.