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Forestry Sector

Dáil Éireann Debate, Tuesday - 25 September 2012

Tuesday, 25 September 2012

Questions (53, 55, 60)

Éamon Ó Cuív


53. Deputy Éamon Ó Cuív asked the Minister for Agriculture, Food and the Marine his plans to sell off the Coillte Teo forest crop; the progress made regarding same; and if he will make a statement on the matter. [40408/12]

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John Browne


55. Deputy John Browne asked the Minister for Agriculture, Food and the Marine the way he will ensure that the rural recreation aspect of the work of Coillte Teoranta will be protected in the event of the forest crop being sold to private interests; and if he will make a statement on the matter. [40411/12]

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Dara Calleary


60. Deputy Dara Calleary asked the Minister for Agriculture, Food and the Marine the steps that have been taken to ensure the continued viability of the timber industry here in the event that the forest crop is sold to private interests; and if he will make a statement on the matter. [40414/12]

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Oral answers (13 contributions) (Question to Agriculture)

I propose to take Questions Nos. 53, 55 and 60 together.

The Deputy will get my official answer, so I will deal with what I suspect will be-----

Why does the Minister not read it out like we used to do?

I would like to give the Deputy added value if I could.

When I was Minister, the official answer was my answer not the civil servants' answer. If I thought there was something in it that should not be there, then I took it out.

The Minister is in possession.

Will the Minister give us his answer? Presumably, his answer is the answer that will be in the record.

Sorry, Deputy but we do not have much time.

Maybe the Deputy might try and put me under pressure with his questions rather than heckling.

The Government has made a decision to look at the possibility of selling harvesting rights for Coillte forests. This autumn we are in a process of working with NewERA and the company to see how we might best do that in a way that would not damage the broader timber and forestry industry. This has been done in other countries, most recently in New South Wales in Australia.

We are looking at ways of meeting a commitment to the troika to realise value from State assets that do not have to be strategically in State ownership. We have made it clear in the case of Coillte that we will not be selling any Coillte lands or the company. However, we are looking at changing the ownership structure of the forests on the company's lands. This is a little bit like selling a crop ahead of time except for forestry it will involve a 50 to 80 year period. We have been through a valuation process for the commercial forestry estate. To protect the public interest we need to ensure, for example, the supply contracts that many private sawmill operators have with Coillte can be protected. We need to ensure public access to State-owned forests remains intact.

We need to do a series of other things to ensure we minimise job losses from this potential sale. That process is being worked through with the company and NewERA and we will seek any other advice we need to ensure we can do this in the most effective way next year to realise the full value of the asset and also to protect the public interest linked with it.

Has Coillte been consulted on this issue? What is its advice about the desirability of the Government policy in this regard? The Minister says the crop will strategically stay in ownership, but it will not. The most important thing in the forest is the crop which will not strategically stay in ownership. The Minister will be aware that, remarkably, our major mills are still at full production, despite the downturn in building here. This is because of the co-operation between Coillte Teoranta and the mills at the time of crisis when the housing market and the building sector collapsed. Is the Minister satisfied that if the crop was sold and there was a similar difficulty, we would have a similar happy result in the milling industry? If the Government sells the crop, who will have responsibility for replanting? What arrangements will be made and what consideration will be given to the impact of selling the crop and having harvesting activities outside of Coillte's control on rural recreational activities since some 45% of way-marked ways are through Coillte land? Will the Minister indicate what is the expected gross return for the crop? In other words, what is the total amount of money the Government expects to receive for the crop? Have discussions taken place with the troika about finding alternative ways to raise the same amount of money, as the Minister used to ask when in opposition?

That is a series of valid questions. The Deputy is correct in respect of the mills in that most commercial mills are at full production. Many of them obtain 80% or more of their timber from Coillte forests and many have long-term supply contracts in place with Coillte. We will need to protect these supply contracts to ensure that if the forest, not land, ownership structure changes, one can stitch it into any sales process. This has been done successfully in other parts of the world. If we cannot do this, naturally we will have difficulties. I am not in the business of supporting any process that would put the timber sector out of business, an industry that has survived through a rather different building recession in Ireland.

On the management of the crop, it may well be the case that Coillte will continue to manage its forests, but it will no longer own them on behalf of the State. A series of financing models for any new ownership structure may be considered, but one may find that at the end of the process, if it is concluded successfully, Coillte will be essentially on a contract to manage the 1 million hectares or so of trees and more or less continue what it does, except that its management could be obliged to have a commercial relationship with the new owner. I would be slow to move away from the current replanting obligation, whereby Coillte plants approximately 15 million trees per year. In other words, when Coillte harvests them, it must replace the crop by planting. I expect any new owner to have the same obligation.

What is the amount of money involved?

The valuations have differed. In truth, we will not know what the amount of money is until we go to the market, but the most recent valuation through NewERA is between €400 million and €600 million.

I regret I do not have time to call other Deputies, but I hope we will return to this issue.