asked the Minister for Fisheries and Forestry the present method by which his Department sell trees to timber processors; if representations have been made to him in connection with changing the present system; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Tree Sales System.
16.
There are a number of methods for the sale of timber by my Department to processors.
The bulk of the timber is sold standing, mainly by tender, partly by negotiation. Some timber is also offered for tender, either felled by forest staff at stump for extraction by purchaser or made available at roadside, having been felled and extracted by forest staff and cut to agreed specifications.
A limited quantity of timber is harvested and prepared to varying specifications by forest staff and offered for sale at set prices which are designed as far as possible to cover the Department's costs — the price for the timber itself being based on expectations derived from the other systems of sale.
The sales methods referred to apply mainly to small and large sawlog and, to a lesser extent, to pulpwood-size timber for which an over-supply situation has arisen since the closure of a number of processing mills in recent years. Arising from this over-supply position and also taking into account sylvicultural problems resulting from delay in removing overdue early thinnings, a contract for a limited period was negotiated in respect of a quantity of pulpwood for export. In addition, the bulk of the remaining chipboard factory's pulpwood requirements are being supplied under contract for a limited period.
Representations have been made by some large sawmills that they should be supplied with all, or at any rate the bulk, of their timber requirements without the necessity for tendering. It is represented by the majority of these sawmills, constituting the Department's customers, that their collective sawing capacity now exceeds the available national sawlog supply. In the face of this, even if other considerations did not apply, selective treatment for individual firms would be difficult to justify. However, a scheme has been devised in consultation with the trade whereby a limited proportion of individual firm's annual requirements of large sawlog can be allocated outside the tender system — this allocation being based on such factors as efficiency and previous consumption levels. It is hoped to develop a similar scheme for small sawlog in due course. The objective of the scheme is to encourage sawmilling efficiency and upgrading of Irish timber with a view to achieving a greater degree of import substitution and added value.
In general, however, it remains public policy to dispose of State-owned timber by competitive tendering as far as is practicable.
The Minister has told us that one of the objectives in part of the sales referred to is to cover the Department's costs. He has told us also that total saw milling capacity is greater than the total output from the State forests. Would the Minister not agree that there is reason to review the situation since, if the sawmills can handle more that we produce, it is open to the Department to act in such a way as to more than cover their costs? In other words, if the demand is greater than the supply should we not increase our prices?
We are supplying as much timber as possible to the sawmills.
I understood the Minister to say that the output of sawlogs was less than the total capacity of the sawmills. If that is the case, if demand is greater than supply, should it not be open to the supplier to increase the price of the product? Surely that is one of the normal laws of the market. Therefore, would the Minister not agree that the Department should do better than to merely cover costs? Is the Minister aware that there is a great deal of unease concerning the arrangements that have been made for the supply of timber for the manufacture of chipboard? There is the suspicion that we are not getting as great a return from the State forests as we might be getting.
I will take up the Deputy's suggestion with the Department.
Would the Minister be prepared to consider favourably a request from the timber processors who are engaged in the export market that they should not have to tender monthly for their supplies since this puts them in a very invidious position on the export market?
We had discussions recently with the sawmillers concerned and reached some agreement with them. We hope to have further meetings with them but we consider the tender method to be the best method of selling our timber. Having regard to the meeting we have had with the sawmillers I am confident that a satisfactory arrangement will be made.