Andrew Doyle (Wicklow, Fine Gael)
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I welcome Mr. Pat Glennon, chairman of the Irish Timber Council and managing director of Glennon Brothers; Mr. Jim McNamara, managing director of Laois Sawmills, Mr. Patrick Murray, director of Murray Timber Company; and Mr. Daryl Fahy, general manager of ECC Teo.

I bring to the witnesses’ attention the matter of privilege. Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and they 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 or entity by name or in such a way as to make him, her or it identifiable. Members have already been alerted to their responsibilities with regard to privilege.

Senator Mac Conghaíl is substituting for Senator Mary Ann O'Brien for today's meeting. I invite Mr. Glennon to make his opening statement.

Mr. Pat Glennon:

Before I begin, I ask my colleagues to introduce themselves.

Mr. Jim McNamara:

I am Jim McNamara. My sawmill is based in Portlaoise and has been in operation since 1988. We employ 40 people.

Mr. Patrick Murray:

I am Patrick Murray from Murray Timber Group, a company that dates back to the late 1970s. We have two sites in rural villages in Ireland, one in Ballygar in County Galway and the other in Ballon in County Carlow. We directly provide 150 rural jobs and provide indirect employment for a further 150 people.

Mr. Daryl Fahy:

I am Daryl Fahy and I represent ECC Timber Products. We are located near Corr na Mona on the border between west County Galway and County Mayo. We employ more than 300 people directly and indirectly. We are established since 1992.

Mr. Pat Glennon:

I am Pat Glennon from Glennon Brothers. We employ 360 people directly and a further 170 indirectly. We operate two sawmills in Ireland, in Fermoy and Longford, and two sawmills in Scotland.

I thank the committee for inviting the Irish Timber Council to discuss the implications of the proposed sale of Coillte's harvesting rights. The Irish Timber Council was founded in 1918 primarily to represent the sawmill industry in Ireland. Today, we represent 2,500 people working in ten sawmills throughout the country. I would like to outline our key concerns for the sawmill industry and the threats that it faces as a result of the proposed sale of Coillte's harvesting rights. The Irish Timber Council is completely opposed to the sale. We will also discuss a number of guarantees we are calling on the Government to put in place in order to protect the security of sawmill operators should the sale proceed. However, these safeguards should only be seen as a last resort.

The forestry and forest products sector generates €2.2 billion annually, or 1.3% of the country's GDP. The forestry sector is a vital employer, with 12,000 people working in the sector. Timber is one of our most valuable indigenous natural resources and in 2011 alone we exported forest products worth €308 million. Forestry is also part of our heritage, as is obvious from the 18 million visits made annually to the Coillte estate. Ireland has a strong history associated with timber and we need to guarantee future supplies.

The Irish sawmill sector converts logs into products predominately aimed at the construction sector but also for the pallet and packaging market and fencing sectors. Our residues - bark, sawdust and wood chip - supply the horticulture, energy and board mill sectors. The sawmill sector provides much needed employment for 2,500 people, practically all in rural areas where job prospects are otherwise extremely limited. In 2011, sawmills in the Republic of Ireland exported sawn timber to the value of €83 million. In recent years the sector has invested over €200 million in creating a modern, efficient and customer focused industry. It is the main supplier to the board mills and the energy sector.

We commissioned a report with EPS consulting to examine the impact of the proposed sale of Coillte's harvesting rights on the sawmill sector. We have supplied a copy of this report to the committee. The report underlines our members' concerns and sets out reasons for not proceeding with the sale. The Irish Timber Council is opposed to the sale for several reasons. The net realisable value from the sale of harvest rights will be so small as to be completely disproportionate to the negative impact on the sawmill sector. The ten sawmills that comprise the Irish Timber Council have purchased 100% of the logs produced by Coillte since the formation of that company and, indeed, the Forest and Wildlife Service before that. As this accounts for 80% of our raw material supply, we are almost entirely dependent on Coillte's harvested output. There is no viable alternative supply source. Naturally, therefore, the proposed sale of Coillte's harvesting rights is a significant concern for the council.

Ireland has a disease free status, which effectively means we cannot import logs unless the bark has been removed. Although we can import logs with bark from a small area in north-west Scotland on the basis that the beetle has not been found in that area, the position is unsustainable in the long term. In any case, the industry in Scotland is consuming the logs from the area in question.

Irish sawmills are paying a premium for Coillte logs, which are currently 29% more expensive than logs in the United Kingdom. As such, the Government is receiving full rent for its existing crop. Any purchaser of the harvesting rights will have to increase prices further to maximise the return on his or her investment. This will undoubtedly result in sawmills closing and jobs being lost. Log prices are critical as the raw material costs account for between 65% and 70% of the end market value. If, of example, we produce 1 cu. m of sawed timber for €100, the raw material cost will be €70.

A disruption in supply to the sawmills will result in a shortfall of residue product used by the boards mills. The negative impacts and threats on the sawmill sector will far outweigh the realisable value from the proposed sale of the harvesting rights. The new purchaser could export some or all of the anticipated production, thereby depriving our sector of its critical raw material. We harvest, or Coillte invoices to our sector, 1.5 million cu. m of timber per annum. To put this figure in perspective, China imported 8 million cu. m of timber last year alone. Allowing a new purchaser to buy significant volumes of unprocessed logs would force the closure of some sawmills, resulting in job losses in rural communities and depriving the Exchequer of much needed revenue. People may believe that the argument regarding China is a red herring. Last year, China bought between 500,000 and 600,000 cu. m of timber from France, which was delivered to Shanghai at $140 per cubic metre. It would add only 36 hours to the journey of a ship bound for China from France if it were to dock in Ireland to collect timber. As such, the additional transport cost would be minimal. The major cost incurred is the loading and unloading of logs, whereas the cost of an additional 36 hours in journey time would be a pittance. If this were to happen and Ireland were to lose 500,000 cu. m of its harvest, it would result in one large and two medium sawmills closing immediately. This prospect presents a significant threat.

The purchaser could also withhold supply, thereby increasing prices to an unsustainable level. If it were to bring to market only 1 million cu. m of timber instead of 1.5 million cu. m, the effect would be the same. It will hike the prices on the 1 million cu. m that are being purchased, while the remaining 500,000 cu. m would be in forestry that is continuing to grow. One can assume that any new purchaser would want to make a significant rate of return on the investment. As a result, securing a higher price for the saw log would have to be a commercial imperative.

Who are the buyers for this asset? The two or three entities we envisage having an interest would be pension funds or large forest products companies, of which there are two or three in Sweden and Finland alone. Given that the latter have a turnover in excess of €1 billion, they could pay for the harvesting rights out of their petty cash. The four sawmills represented here are competing with sawmills in the UK market. The collapse of the construction sector resulted in the number of new homes being built each year falling from 90,000 to 8,000. However, all the Irish mills are exporting strongly into the United Kingdom. If strategic players conclude that the proper strategic decision for them is to buy Irish forestry assets, it will be game over, so to speak, for Irish sawmills because they will be unable to control the raw materials or price and the industry will be strangled.

Furthermore, the purchaser of Coillte harvesting rights would not have any commercial imperative to supply saw logs at regular intervals to meet the demands of the Irish sawmill sector. If the Government proceeds with the unwise decision to sell harvesting rights to Irish forestry, guarantees must be put in place to protect the security of the sawmill operators. These guarantees are as follows. Sawmill operators must be guaranteed that 1.5 million cu. m of timber will come to the market annually. The rights must not be sold in their entirety to any single player as this would create a private monopoly and they should, therefore, be split up and offered in groups. There must be a market related log pricing structure in order that we can protect both buyer and seller. In addition, the purchaser must be tied into a commitment to engage in replanting.

Our key message to the Government is that it must not sell the harvesting rights as any benefit to the Exchequer arising from the sale would be small and disproportionate compared to the negative impact on the sawmilling sector. A private monopoly must not be created as this would be to the detriment of the industry.

Ireland's favourable soil type and climate mean our forests grow trees twice as fast as any central European country. The Government should capitalise on this natural advantage by focusing on encouraging Irish sawmills to add value, increase employment and export more processed product. In line with this, we call on the Government to publish its long-awaited forest sector review without further delay and announce the measures it intends to take to secure the future of the forestry sector in general and sawmill sector in particular. We believe a decision on the sale is imminent and we strongly appeal to the Government to realise the impact the proposed sale could have on rural communities nationwide.

I have tried to address the key issues outlined in our recently published report and hope I have made a meaningful contribution to the work of the joint committee. I thank Deputies and Senators again for their invitation to address the joint committee. We will be pleased to take questions from members.

Andrew Doyle (Wicklow, Fine Gael)
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We will take a group of questions and our guests may arrange among themselves how they answer them.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I welcome the delegation which has made a powerful presentation. The unusual feature of the proposal to sell Coillte's harvesting rights is that I have not heard anyone, other than members of the Government, speak in favour of it. I hope the indications given this week that the Government is rethinking its proposal are correct. The Irish Timber Council has outlined succinctly, from the perspective of the sawmills, the reason this proposal is wrong. It would be useful for the joint committee if our guests were to outline how the industry managed to overcome the downturn without any significant loss of jobs in the sawmill sector. I understand that at one stage 70% of the output of the major mills went into the domestic market and that this figures has now reversed and with 70% of output being exported. This means the sector has shifted from a position in which a small proportion of finished saw logs were being exported to one in which the vast majority of output is being exported. Will the delegation briefly outline how the industry managed to achieve this turnaround during a rapid collapse in the housing market? This development illustrates the resilience of the industry in Ireland and its capacity to survive an utter disaster, particularly as the downturn was so connected to construction.

I ask the delegation to elaborate on the effect of the proposal on employment. Where is employment in the sector located? One of the major challenges we face is to protect rural jobs. Different figures were provided on direct employees and ancillary employment for harvesters and so forth. How many of those employed in the sector live in rural areas or within 20 or 30 miles of the forests they harvest or the mills that employ them?

We are very fortunate that ECC Teo is based in Corr na Móna, just two miles from my home. The company employs more than 100 people directly, and is responsible for the employment of 200 to 300 people both directly and indirectly. Thanks be to God, the roads leading to its premises are chock-a-block with trucks every day. Those in other areas might complain about the number of vehicles involved but we smile when we see them. Most people are stunned to think that what has become an international industry is based in a place as remote as Corr na Móna. ECC's facility is probably the most remote in geographic terms but it is fair to state that the majority of the companies represented here are based in quite rural areas or adjacent to small towns which are experiencing huge problems.

In the context of downstream industries, will our guests indicate the number of people who are employed in board mills and bark processing plants? Will they also indicate whether it will be possible for those facilities to obtain alternative supplies if existing supplies dry up? One of the slides in our guests' presentation says it all, namely, "The Irish sawmilling sector is totally opposed to the potential sale of Coillte harvesting rights". Our guests could remove the term "Irish sawmilling sector" and substitute the words "Fianna Fáil" because I and my party are completely opposed to this sale. We would literally get peanuts from such a sale. The amount involved would be minuscule and the uncertainty created in the sector would be overwhelming.

I wish to refer to one further matter. One of the things which Coillte and I achieved during the past ten years relates to the multi-use of our forests. The forestry-felling, harvesting and sawmilling industries have been exemplary in their operations in this regard. In addition, Coillte has pursued a very progressive policy in the context of managing forests in order that they might be available for rural recreation. As one of our guests indicated, the number of recreational visits to our forests exceeds 18 million. I am aware of the massive investment on the part of Coillte in respect of this matter. The sawmilling and harvesting industries and Coillte always work in a way which ensures that harvesting operations do not unnecessarily discommode recreational use of our forestry. There has been fantastic co-operation among those involved. The stakeholders all recognise the contributions they each make to the national economy.

I wish to state, on a practical and philosophical level, that when one owns something, one has certain duties. If a pension company owns something, for example, its duty is to maximise its take at all costs. It does not matter who gets in the way. The bottom line is that regardless of who gets in the way, the company's fiduciary duty to its investors is to maximise profits. Nothing else can be taken into account, except at the margins. In my experience, Coillte sees itself - quite rightly - as a State body with a national duty. As well as trying to maximise profits, it must also consider the long-term interests of the industry. If Coillte's partnership with the industry no longer existed, the national good would not be served. Even if the company could export all the logs that are produced to China and obtain a greater price for them in the short term, this would be very disruptive for the economy. As a State-owned company, Coillte always takes the greater national good into account. I found the latter to be the case when it invested significantly in rural recreation and other amenities in our forests. As a State company, the duties of Coillte go way beyond the simply obtaining the maximum price for the product in the short term and not thinking about the long-term national interest. That is the fundamental flaw in the fact that we are even contemplating selling this resource.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank our guests for their presentation. I wish to place on record the fact that my party completely supports their position. For many years we have taken a consistent approach in respect of the exploitation of Coillte harvesting rights for the benefit of the Irish people and those in the industry. The debate relating to this matter has been ongoing since it was first proposed that we should sell off the harvesting rights to Coillte lands in order to try to deal with the current economic crisis. Sinn Féin and others have been consistent in their opposition to such a sale. We are of the view that it is an extremely amateurish and negative way of allowing a national capital asset to be exploited by outside investors to the detriment of the Irish people and of producers and timber merchants such as our guests.

It was stated earlier that our guests are responsible for 2,500 direct jobs. What is the knock-on effect of those jobs? I am sure said effect is quite considerable, particularly in the context of the spending power created in the areas in which people are employed and the benefit this brings to local economies.

We understand the Government may be having second thoughts about proceeding with the initial proposal relating to this matter. We would like it to state definitively that it will not be selling off the harvesting rights to Coillte forests. The arguments put forward by our guests are valid and I completely concur with and support them. I am of the view that those from the Government parties who are present at this meeting should indicate their wholehearted support for our guests' position. Obviously, however, the members to whom I refer will speak for themselves when others have completed their contributions. It is imperative that we should retain the harvesting rights and protect Coillte, the sawmilling industry and the jobs of Irish people.

Our guests also referred to the rate of growth of trees in this country as compared with the position elsewhere in Europe and highlighted the opportunities for further investment in this regard. Will they elaborate further on that matter? Obviously they are referring to the planting of other areas and so forth. In many parts of the country where there is marginal land, the people who own it and who are struggling to survive could become involved in forestry. This would benefit the individuals to whom I refer and the communities in which they live. Such a development would also have a knock-on effect in terms of the amount of product being sold to the sawmills, etc.

I again thank our guests for their presentation. As stated, they have the wholehearted support of my party, and Deputy Ó Cuív also indicated the support of his party. I will be very interested to hear what Government Deputies have to say in respect of this matter.

Thomas Pringle (Donegal South West, Independent)
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I thank the members of the Irish Timber Council for their presentation. Like other members of the committee, I am completely opposed to any sale of the harvesting rights relating to Coillte forests and to the transfer of what is a vital State asset into the hands of any private company, regardless of whether it is a pension fund or an international forest products company. As we face into dealing with the challenges posed by climate change, Coillte and the forestry for which it is responsible have a massive part to play not only in the context of the production of raw timber but also in respect of the provision of alternative, carbon-neutral sources of heating for homes throughout the country. Coillte's role in this regard is vital.

I am in complete agreement with everything contained in our guests' presentation. The only difficulty I have with it is with the inclusion of safeguards. The implication seems to be that if one or two of these safeguards are put in place, then the proposed sale might meet our guests' needs and, instead of being an eventuality about which they were concerned, could be dressed up as something they were actually seeking.

I wish to ask four questions. What is the council's relationship with Coillte, that is, how much is Coillte involved in planning businesses, raw material supply and so on? According to the presentation, more than €200 million has been invested in recent years. How much of that investment was made following consultation with Coillte on the likelihood of available supplies and did Coillte encourage the upgrading of businesses? The council's sole raw material supply is potentially under threat from a Government decision. If Coillte is retained as a semi-State company, what is the potential for growth in the sector? It is no secret that Coillte needs to be modernised and reflective of current demands.

I must ask my final question, as the topic was raised in the presentation, namely, the 29% premium on the price of raw timber in Ireland compared with England. This is probably an argument in favour of Coillte's sale, as any possible investor would retain a premium by supplying logs to the domestic market. How does this fact square with trying to keep Coillte in public ownership?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank the delegates for their powerful and self-explanatory presentation. The previous speakers do not have a monopoly on their objection to the sale of forestry rights. As the Chairman knows, this matter has exercised our parliamentary party during many meetings. We have been bringing the matter to the Minister's attention for a long period. We hope for a successful conclusion to our lobbying shortly. It is important that certainty be brought to the issue soon.

I welcome the delegation, particularly Mr. Patrick Murray, who is from my part of the country. When I had cause to visit the Murray Timber Group I was impressed with the facilities. I had not visited a saw mill for many years, although the one in question was not far from me. Amazingly, a piece of timber that arrives in the yard is not handled until it exits on the other side. This is due to the technology and number of people involved. The timber business is important for areas such as Ballon, County Carlow, and others that have been mentioned. It creates employment in rural areas where there are no alternatives. It is essential that the sector be maintained. The issue boils down to how much money can be derived from the sale. It makes no economic sense to sell the harvesting rights. It will not generate the amount planned and will provide no benefits.

The Government has requested a significant investment in SmartPly in the south east. Have the delegates an opinion on how such an investment would affect their businesses? According to the presentation, businesses are already paying Coillte a premium price of 29% compared with the English equivalent. This is a significant amount. Why is it so high? Can it be pared back?

The Opposition parties do not have a monopoly on this issue. I am supportive of the proposals made by the delegates.

Michael McNamara (Clare, Labour)
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One wonders whether this committee is reflective of the Dáil. If so, how did Coillte get on the list of State resources to be considered for privatisation? When the Government came to power, a list was drawn up of what was going to be flogged. Coillte was on the list commissioned by the Minister for Finance of the previous Government. I come from County Clare, the third most afforested county in Ireland in terms of the size of its estate and the proportion of the county that is afforested. I would have many concerns about the impact of the sale of harvesting rights. However, the status quo is not good either. Deputy Ó Cuív referred to Coillte's remit as a national forestry board, but Coillte does not perform that function as matters stand. Forestry's social and economic dividends in Clare do not reflect Coillte's supposed function. There is no requirement to provide a social dividend to communities in which there are forestries.

I appreciate the importance of harvesting, but does any witness have a long-term supply contract with Coillte, that is, one of more than ten years? If so, do those set a particular price? Companies in my hometown and throughout Ireland would operate tomorrow morning if they received a security of supply guarantee from Coillte. Not only will Coillte not provide security of supply, but it will not agree to supply at a particular price over ten years. Who would invest in any sector if there was no security of supply or price?

I share the concerns of witnesses and am opposed to the privatisation of Coillte. I would also be concerned by any proposal on the sale of forestry rights. That said, I do not support the status quo. The State forestry sector is not properly managed. There is no evidence of proper management where I live, which is on the edge of one of the country's largest plantations. It stretches from Scariff to Gort to Loughrea and back to Scariff again.

I would welcome the witnesses' answers on security of supply, ten-year price guarantees and what can be done in that regard to generate an industry around the existing forestry.

Andrew Doyle (Wicklow, Fine Gael)
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Deputy Barry and Senator O'Neill are next, followed by Deputies Boyd Barrett and Flanagan. If the witnesses are happy to take the next questions together, we will proceed in that order.

Tom Barry (Cork East, Fine Gael)
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I thank-----

Andrew Doyle (Wicklow, Fine Gael)
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I am sorry, but there is interference. Someone's device or telephone is disrupting the broadcast.

Tom Barry (Cork East, Fine Gael)
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I am not sure whether it is my iPad or mobile telephone. I cannot work without an iPad.

Andrew Doyle (Wicklow, Fine Gael)
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That is funny. I am able to manage it.

Tom Barry (Cork East, Fine Gael)
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I thank the delegates for attending. I am well aware of Mr. Glennon's business in Castlelyons. I pass it regularly. It is difficult to estimate its value to the north Cork economy, as there are many tie-ins upstream and downstream. I am sure the same applies to the other businesses of the other delegates.

There is no point in going through the delegation's arguments, as they stack up from a business point of view. Putting the businesses of delegates at risk at a time of financial uncertainty makes no sense. Stability is the Government's focus. There should be no change in that regard.

Coillte attended one of our meetings. I am concerned about its debt, including its pension deficit. In total, the debt is approximately €300 million, if my memory serves me correctly, comprising €120 million and €180 million. I will stand corrected. As such a level of debt would decimate any sale of Coillte, there is no point in selling the company just to pay another debt. There would only be a small profit. Who would replant our forests and so forth? The proposal does not add up.

It is bonkers. It just does not add up. This discussion is important because we must start to examine Coillte for the first time. The company only ever returned €2 million to the State and then suddenly in the past year or two it returned €10 million. Coillte has an inordinate amount of land, approximately 7% of the total land area. That is a pathetic return to the State from a business that is charging 30% more for its timber.

I am intrigued by the 29% premium. I run a small business. Whether a business is big or small the same criteria apply. I cannot understand why a business such as those operated by the witnesses would invest colossal money to upgrade and get a huge capacity in the timber sector. How was the expansion arrived at? Projections were supplied by Coillte or somebody who told the witnesses they would have a supply of logs but the projections were false. Why would millions of euro be spent by private business on trying to improve themselves? Obviously, the witnesses are bidding for timber, which is the reason the price has become high. Could the witnesses clarify if there is another issue?

I am against the sale of Coillte but I am very much in favour of seeing the work practices that are going on in Coillte scrutinised in great detail. The State is not getting value from Coillte. Perhaps we just left it on the back-burner for years and did not pay too much attention to it. So much more could be got out of it. I hear of log timber going to pulp. I hear of other practices that are going on and that the maintenance of the forests is not up to its previous specification. One of my employees worked in forestry many years ago when there was hands-on work and the company was particular about what it did. The same level of detail no longer seems to apply. Could the witnesses clarify those points? Like my colleagues I would be very disappointed if Coillte was sold but we should use the opportunity to study what has gone wrong and why Coillte is not returning moneys to the State.

Pat O'Neill (Fine Gael)
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I thank Mr. Glennon for the presentation and welcome the other witnesses. Much of what I wanted to say has been said. I have great concerns about the proposed sale of Coillte’s harvesting rights. There seems to be cross-party agreement on the issue. The company is not just about the timber but the added value of what is involved such as land rights. Those issues will be on the table when a decision has to be made.

Most of the issues have been addressed. The witnesses pay a 29% premium. Is that due to the fact that they are not allowed to import timber because we have disease-free status?

It is stated in the EPS Consulting report that we are not reaching the targets on afforestation and that we would need to plant 25,000 ha per annum. Unfortunately, that aim is at cross purposes with another vision in this country, namely, Food Harvest 2020, whereby we are seeking to produce more milk, beef and sheepmeat from our land - increasing production by 50%. If one puts land into afforestation, one takes it out of what is available for Food Harvest 2020. Is there not a contradiction about the future direction of the country? Is our future in afforestation or in Food Harvest 2020 and the production of more food? I would welcome a comment in that regard.

Coillte has a monopoly and while there have been some private forestry plantations in this country in the past 20 years the vast majority are in partnership either with Coillte or some other company. What percentage of the forests in this country are still held in private hands that would be able to supply companies such as those before the committee, or is that not feasible due to insufficient supply?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I welcome the members of the Irish Timber Council. I am utterly opposed to the sale of the harvesting rights of Coillte, which is not just, as has been explained, a hugely valuable economic asset but a priceless cultural asset. Frankly, if one pardons the pun, it is nothing more than treason to even consider selling off the harvesting rights of our public forests.

Could the witnesses outline how they feel their campaign is going? We had a big demonstration against the proposal at the weekend in Avondale. As soon as people know that it is being considered, they are utterly appalled. Do the witnesses take heart from the comments of the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, on foot of the campaign of the Irish Timber Council and IMPACT and the big protest at the weekend that the Government has moved from a commitment to sell our harvesting rights to saying it is unlikely or it is being considered? That would seem to suggest that the Irish Timber Council’s campaign is moving in a successful direction but I would be interested to know what the witnesses think.

There has been much criticism of Coillte as well. Some of it, as hinted at in the previous comment, suggests that it is being used to justify the move towards privatisation. Even under the previous Government, the McCarthy report referred to the possible disposal of Coillte.

To my mind there are problems with Coillte but they would be made significantly worse if the company were privatised. The issue is about reforming Coillte not selling it. Could someone comment on the problems?

I wish to inquire about the sustainability of current forest strategy. The Bacon report suggested that we need to plant approximately 20,000 ha per year to have a sustainable forest strategy while we have only planted approximately 5,000 ha. How do the witnesses think we can improve the situation?

Concerns have also been expressed about monoculture and the overdependence on citrus spruce rather than diversifying forestry towards hardwoods. Do contractors need assistance, first, to move towards a more diversified forest strategy and do sawmillers and contractors need assistance from the State to shift away from a dependence on citrus spruce?

Could the witnesses comment on the 2010 report in which Irish forest contractors painted a very bleak picture of Irish forestry? They said the industry was utterly doomed because of over-harvesting and under-planting. It was suggested to me by one of the forestry NGOs that the level of harvesting was 1.5 million tonnes, whereas the optimum amount of harvesting to maintain a sustainable forest strategy should only be approximately 1 million tonnes, and that if we keep going in that direction we are going towards deforestation which would ultimately be bad for the sawmill sector. Someone might correct me if I am wrong. I would welcome a comment on what I have said and what the witnesses think is behind the sale of 40,000 ha of Coillte land in recent years, even before full-scale privatisation was considered? In the opinion of the witnesses, why has that been happening because there seems to be a significant lack of transparency in the way Coillte operates and why it has been selling public forests in recent years?

Michael McNamara (Clare, Labour)
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I wish to make a minor point of clarification. I do not wish to take from the importance of the debate but Deputy Boyd Barrett referred to citrus spruce. He might have them in Dún Laoghaire but we have Sitka spruce in Clare.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Yes, it is Sitka spruce. I am sorry.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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It is a different climate. It is more exotic.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Deputy is correct; we have citrus spruce in Dún Laoghaire.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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I thank the witnesses for their presentation.

I understand the witnesses were initially invited here last November and I am sorry it took so long for this meeting to take place. In the meantime, however, they have got their message across as to the potential impact the sale of Coillte would have on their industry. It is very heartening to hear that everyone at this meeting today now appears to be vehemently opposed to such a sale. That proves that there is a purpose to coming in here and that one can change the minds of others, which is very heartening.

The witnesses spoke about the potential impact of the sale of Coillte on their industry. What happened in France could happen here, in that all of the raw materials would be sent out of the country with the potential closure of the saw milling sector. There are also many private forestry growers in Ireland and I understand that €1 billion has been invested in the last ten years in forestry. What would happen to those growers if Coillte was sold? I would imagine they would have nowhere to sell their product except to those who would not give them a sustainable price. I ask the witnesses to give their views on that issue.

While it looks like Coillte is not going to be sold, during a Private Member's debate on a motion tabled by Deputy Richard Boyd Barrett earlier in the year, the Government's amendment to the motion referred to the fact that the concerns of recreational bodies and the replanting and bio-diversity requirements would be catered for but there was no mention of the saw milling sector. That stood out for me. We are hearing more positive noises now but I would be wary, given what was in the Government's amendment, or rather, what was not in it. There was no assurance for the saw milling sector.

Many people asked today why there is such a premium on the price coming from Ireland and I believe I have the answer to that question. The Coillte management is holding the saw milling sector to ransom, forcing them to pay the highest prices in Europe for the raw materials because there is excess primary processing capacity in Ireland, as the saw milling sector invested in the business on the back of incorrect forecasts issued by Coillte. Issuing blatantly incorrect information was an abuse of its monopoly position and has left those in the saw milling sector with too much capacity, meaning that Coillte has the sector over a barrel and can charge what it likes. It is my opinion that this is exactly what Coillte was seeking. It also feeds into the fact that we need 25,000 acres or hectares per year to make it sustainable but we are only planting 5,000 per year. Hopefully, the sale of Coillte is off the table but to use that terrible phrase, "going forward", what do we do? I ask the witnesses to give their views on the fact that the Government has not yet published the review of the forestry sector. Perhaps we will get some promises from Government members today that the review will be published. There is a cast-iron argument as to why we should not sell Coillte. Hopefully, once that is confirmed, we can move very quickly to working on improving Coillte. It got 7% of the State's land 22 years ago but has given the Government no money apart from what it got from selling off land. It is now in debt to the tune of €170 million and has a pension deficit of €135 million. That is some achievement. If one tried as hard as one could one could not make a bigger mess of it.

Hopefully we will move on from this and concentrate on what we do with Coillte. The forestry industry in Switzerland sustains far more jobs and is far more productive than ours. We must concentrate on what we will do in the future.

I visited a processing plant in Ballygar run by the Murray Timber Group and was very impressed. One expects when visiting such a site that one is going into an agricultural setting, with very little high-tech equipment but it was like going into a space ship. My parliamentary assistant, who is an engineer and who joined me on that visit, said it was like engineering pornography, it was so sophisticated. The saw mill sector is doing what it needs to do. The forestry sector must also do what it needs to do to keep up with the levels of sophistication, investment and forward-thinking of the saw mill sector.

Andrew Doyle (Wicklow, Fine Gael)
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I thank Deputy Flanagan. I suspect he has just coined a new phrase that will probably be picked up by others. I ask the witnesses to clarify a point for me. I understand that 47% of the forest estate is now privately owned. The witnesses have said that the Coillte supply accounts for 80% of the raw materials for Irish saw mills. Is it the case that the privately owned forest has not reached maturity yet? If that is the case, what is the projected time line for that forest estate to come on stream? I ask the witnesses to respond now to what was quite a wide range of questions.

Mr. Pat Glennon:

It is the first time we have ever been accused of pornography in the saw milling industry. We could be accused of a lot of things but I do not think that is one of them.

The range of topics raised is very wide but I will try distil my response into a few key points. This industry is not looking for a hand-out. We have come through one of the toughest recessions the world has ever seen and we are still here. Any industry that is still functioning despite the fact that its market has gone from 90,000 units to 8,000 units, its energy costs have increased by 70% in two years and its transport costs have increased by 35% in two years is an industry worth holding on to. In a country with over 400,000 people unemployed, I would encourage the Government to protect and grow this industry. I wish to make it clear that we are not looking for hand outs. Ours is a vibrant, tough industry that is able to compete. However, we do not want to go into the boxing ring with one hand tied behind our back.

There are 2,500 people employed in the industry at present. Page 5 of the report we prepared and circulated to committee members outlines the employment potential in the industry in the future. Every 15,000 hectares planted will generate another 490 jobs directly and every 100 jobs in a saw mill will generate another 70 full-time jobs in other sectors of the economy. A steady supply of raw material from Irish forests could generate another 7,000 jobs by 2025. All of those jobs would be in rural areas, as Deputy Ó Cuív pointed out. On average, the typical haulier would live within a 50 km to 60 km radius of the saw mill being supplied, although that can change depending on where the logs come up for sale.

There is quite a good recreational link between Coillte and walking groups, including Mountaineering Ireland and others. Rights of way are provided. If some of the saw mills happen to be harvesting on a given site, walkers can still access that site at weekends. The rights of way are kept open, albeit on a more limited basis.

We are talking here about a green product. Wood is the building material of the future, from a green perspective. Forestry is a totally sustainable industry where trees can be grown, felled and replanted. Going forward, with all of the new carbon-reduction demands for new houses, wood is the preferred product. In terms of climate change and carbon sequestration, there is no other product on this planet that actually absorbs carbon dioxide, stores it when it is cut and continues to store it when it is used for a building.

We can use it again when we want to take down the building. It is a totally green and sustainable product and we must capitalise on our natural advantage of being able to grow the product twice as fast as our competitors in Europe.

In describing the current relationship between us and Coillte, I could say that it is not perfect and we are not perfect. There is no question that it is a very tough relationship, and the issue of the 29% premium is due to the wrong forecasts being made in the industry ten or 12 years ago. Forecasts were given that "a wall" of wood was coming down the tracks and that the industry needed to gear up to process it. The indication was that if we did not do it, those in the industry would do it themselves. The industry subsequently invested €200 million around the country but the forecasts never came to fruition as the volume was and still is not there. That is the reason we are paying 29% more for logs today than we have done heretofore. It is down to over-capacity, as there is more sawmill capacity on the island of Ireland than there are logs available. Our sawmill, for example, imports 20% of raw material from Scotland just to keep the mill going. I am trying to emphasise that the balance is critical. If 500,000 cu. m. is moved from this island and we still take 1 million cu. m, it would close one large and two medium sawmills. The balance is that tight.

Perhaps Mr. McNamara will comment on the smartply and pulp issue.

Mr. Jim McNamara:

With regard to the proposed investment in smartply, if harvesting rights are sold, will a contract be given to the two board mills for supply? We do not know and the point must be dealt with. If investment is required for smartply, it should come about.

The question of planting trees as opposed to more regular agriculture has been raised, and there is much land that is not good for agriculture but it is good for trees. There is a compelling argument to be made for planting more trees. We accept that Coillte must be reformed, and what has happened is not right. That is not the fault of sawmills but the issue should be dealt with as well. The return from Coillte has been pretty poor, and all we need to do is read the McCarthy report, which states pretty clearly that profits in Coillte came from the sale of land rather than trees.

Mr. Pat Glennon:

We believe categorically that the board mills should be separated from Coillte as there is a conflict of interest. The public must guess the correct value for the stakeholder or the State for the product and there should be a separation in that respect. It is a conflict of interest. Mr. Murray may answer the question about diversity of private planting versus public planting and what may happen in future.

Mr. Patrick Murray:

We have all invested a significant amount of taxpayer money in planting, as the Chairman alluded to himself, and there is much private timber planted. That is on the cusp of coming to the market, as the Chairman asked. It is a major concern that the sawmill sector is placed to process the taxpayer's investment, with Irish growers having taken up the partnership with the Government on the verge of getting the return on the investment. We are at a potential crossroads as the return on the investment could be scuppered by the sale of Coillte. If a private investor takes over the harvesting rights of Coillte and take a dominant position, it could make a hostile takeover of the entire industry and bring us to rack and ruin. By taking us over cheaply, it would have control of the sawmill sector, allowing it to process Irish taxpayer investment on its terms and prices. That is a massive concern for all taxpayers in the country and the current Government.

Mr. Pat Glennon:

To clarify further, there is an approximately 50-50 split between private planting and State planting. Unfortunately, private planting has approximately ten to 15 years to go before it will come to our industry. It is young but the crop is in the ground and growing. It is not yet ready for our type of industry. Mr. Fahy can give a small synopsis of what is happening on Corr na Móna, the type of people there and the downstream industries being affected.

Mr. Daryl Fahy:

The sawmill industry provides much rural employment. At our plant we have 100 people working full-time inside the gate, with an additional 200-plus employed in harvesting, extraction and haulage. That number would be replicated in the businesses run by my colleagues. We are located in Corr na Móna and one can travel to Clifden some 65 miles away without passing another factory. Luckily, there is a successful McHale farm machinery plant in Ballinrobe but, apart from that, one could travel in a 30-mile radius to Galway without passing another factory giving the kind of employment we do. Most of the workers are from the local community, and this type of rural employment is replicated across the industry. The contractors employed by us would typically come from a fairly close distance to the sawmill. These people work in forestry in rural parts of the country, and they may stay in local bed and breakfasts and support local shops. Their work feeds into the rural communities.

There are spin-off companies from a typical sawmill. We operate in an estate with two other companies. One deals in the sale of timber products and the other utilises bark and residue from our process. It is mulched for garden products, etc., and the company has up to 15 people working on the process. The number of people employed in such spin-off companies exemplifies the multiplier effect, and one can see it in the employment of engineers and maintenance personnel. It is a multiple of the 2,500 people employed by the main industry.

Five years ago construction industry activity fell off a cliff and at that stage our industry exported approximately 15% to 20% of output. We had to react overnight and, in highlighting the resilience of the industry, we managed to turn around those figures in a 12-month period. Our company currently has 80% of output going across to the UK. We achieved this in a two-pronged fashion. We had major capital investment and in our company we invested over €7 million in the past five years, without any subsidy coming from the State. The second element came from workers, and to get to get to the stage where 80% of output was going abroad, our staff had to be very versatile. They pulled out all the stops for whatever time or travel was needed to establish a market in the likes of the UK. I speak for the rest of the sawmills in that regard too.

We process fast growing sitka spruce. We compete in the UK market with Scandinavian and Nordic countries that have a more slowing grow tree. Ours is a slightly superior product. Irish construction timber is now the benchmark for quality and service in the UK. This will be damaged if we cannot maintain the production and supply of our sawmills.

Mr. Pat Glennon:

Deputy McNamara asked about our long-term supply contracts. There are no long-term supply contracts.

Michael McNamara (Clare, Labour)
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Are there short-term supply contracts?

Mr. Pat Glennon:

There are no contracts whatsoever. Why would we give somebody else a contract when we can sell what we have or even twice as much?

Michael McNamara (Clare, Labour)
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To keep an industry going and for the purpose of employment.

Mr. Pat Glennon:

On the point made by Deputy Barry, we are not here to throw stones at Coillte but to seek to protect our industry. If there are problems in the industry as a whole, they need to be analysed and addressed. We believe we are as lean and mean as we can be and are prepared to put our shoulders to the wheel to try to come up with a solution to help Ireland Inc. going forward. We must ensure we come up with the right solution for Ireland and the Irish taxpayer going forward.

Deputy Boyd Barrett raised the issue of species diversity and Senator O'Neill asked a question about Harvest 2020. In seeking land for forestry we are not competing with people in the agriculture sector seeking land on which to grow crops, cereals and vegetables. The land we seek is of much poorer quality but on which our sitka spruce does really well.

Pat O'Neill (Fine Gael)
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That was not the case ten years ago. A lot of good land in this country was planted on ten years ago.

Mr. Pat Glennon:

Yes.

Andrew Doyle (Wicklow, Fine Gael)
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On that point, when the Irish Timber Council decides to diversify it will require a higher yield class land. There is still enough good yield class land available to enable some diversity without competing. In my opinion, there is adequate land available that is suitable for food production but is being under-utilised. It could be used to a greater degree in a sustainable fashion.

Mr. Jim McNamara:

The problem in that regard is the premium and grant situation. One cannot prevent a farmer from doing what he or she wants. It does not appear right to be planting good land with trees. How does one legislate for that? It is not possible.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Another issue is that much of the land suitable for planting is now ruled out for ecological reasons. It is nearly impossible to get planning permission on new land. May I make a further comment?

Andrew Doyle (Wicklow, Fine Gael)
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I will come back to the Deputy when Mr. Glennon has finished.

Mr. Pat Glennon:

On the point made by Senator O'Neill and Deputy Boyd Barrett, we are not in competition for good agricultural land and should never be. We may need to take another look at the grant structure for planting softwoods versus hardwoods. Deputy Doyle is correct that it will not be possible to grow strange species on some of the land we are considering. Sitka spruce is the workhorse for the construction industry across Europe. It is where we will be competing and where we need products. We need to consider having a second string to our bow should something happen to that species, such as disease and so on. There are other species that can and need to be considered. We are not competing with good quality agricultural land and should never be. Deputy Ó Cuív is correct that we are often unable to plant for ecological reasons.

Mr. Patrick Murray:

Further to Mr. Glennon's response, commercially, there is a market for sitka spruce. There is no market for ancillary species. As a council we respect that we need to diversify. However, we must also be mindful of investing in the proper areas to ensure a return for the economy.

Andrew Doyle (Wicklow, Fine Gael)
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On ecology, a native woodland species that is grant aided allows for that. I will return now to Deputies in the order they indicated. I call Deputy Pringle.

Thomas Pringle (Donegal South West, Independent)
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I would like to return to the issue of premium price. Is the premium price based on the fact that the council has to import some of its raw materials or is it because the premium price is being paid to Coillte?

Investment in this area comes from the body charged with developing and growing forests in this country. It has advised the council that there is a huge amount of timber coming down the line and to gear itself up for it. It says a lot about the standard of management within Coillte when, as the body charged with developing the forestry industry, it can get it so wrong.

Tom Barry (Cork East, Fine Gael)
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How was the information in regard to "the wall" of timber communicated and by whom? This is very serious. The communication of such a serious statement could be interpreted as enhancing the financial situation of a company. The sum of €200 million is a colossal amount. At the end of the day, it will be the consumer who will pay for this. I agree with the comments on land sales. Bottlehill landfill, which is close to where I live, is a €50 million white elephant. The land was sold by Coillte to the county council for €15 million. One could buy a large amount of good land for that amount. The consumer will pay for this also.

Another issue of concern is that of leeways. One example is the huge tariffs the ESB must pay to Coillte if it needs to run a wire through Coillte-owned land. This also affects the consumer. It makes no sense. A neighbour of Mr. Glennon's who works for Green Belt Limited in Castlelyons told me in conversation last week that while last year it was difficult to get 7,000 ha of land, this year they are inundated with applications for forestry from all types of land, good and poor. The common thread in this regard is the age profile of the farmer. Farmers who have good land are no longer leasing it but are getting involved in planting. We will be faced with a huge issue in terms of Harvest 2020 if we do not take account of land being used for forestry. While I am a great supporter of forestry, it is increasing for all the wrong reasons. We need to be careful and to monitor this closely. Elderly farmers who should be encouraged to retire and lease their holdings are not doing so because of the horror stories such as people refusing to continue paying after one year and are moving instead to forestry of good land.

Andrew Doyle (Wicklow, Fine Gael)
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As Senator Comiskey has not yet put his questions, I call him at this point.

Michael Comiskey (Fine Gael)
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I welcome the delegates. I have found listening to them very interesting. I, too, have had concerns for a long time about the sale of Coillte harvesting rights. I believe Coillte can do a great deal for us not only in the area of the growth and sale of timber, but on the recreational side in terms of walkways, etc., which have been allowed to deteriorate in some parts of the country. A lot of work can be done in this regard in terms of the promotion of tourism.

Mr. Glennon has already responded to the question on imports. I heard recently that timber is being imported from Scotland. I understand trees planted ten or 15 years ago will soon be ready for first thinning, which means we should have a good crop of timber in the next ten or 15 years. This will ensure the availability of timber for the council and create an income for growers.

Éamon Ó Cuív (Galway West, Fianna Fail)
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On rural recreation and the financial performance of Coillte, as a citizen of this nation, taking the wider interest into account, where a State body invests in public good as an alternative to giving money directly to the Exchequer and then asks that the Exchequer return the money back to it in order for it to do the public good job, that is a dividend. It is fair to say that Coillte has consistently invested in a manner in which a private company would not in public good in terms of rural recreation. I believe 3,000 additional jobs could be created through rural recreation in this country.

However, we must never forget that 45% of the waymarked ways in the country are through Coillte lands and that in many cases, to get to uplands, access is through Coillte forests. Not only is Coillte land significant for rural recreation; it is also, in many cases, the key to getting to the uplands. There was a Mr. McSharry who, as some of the members might remember, did not want to allow access to his land in Sligo and we resolved that issue by reaching agreement. He had no difficulty with the public walking the mountain; he just did not want them going up past his house. With Coillte's co-operation, we managed to get access through the forest up to the mountain and everybody was happy. We must look at this in the round and say there is considerable public good involved here.

Of course there are faults with Coillte. It would be strange if there were not, because I have never heard of any operation, State or private, that does not have its faults. The fundamental difference is that if we retain the ownership of Coillte we can deal with the faults and try to improve matters but if one gives it away, the owner of the crop has only one focus, namely profit. They will give the Minister all sorts of commitments at the beginning but, as we saw in other sales, such as that of the sugar company, after a time they come back stating they cannot survive.

We must be fair here too when we look at Coillte's financial performance. There seems to be criticism today that there have not been significant dividends paid to the State in direct cash and that there are deficits in the pension fund. We should remember that Coillte's borrowings are commercial and they are on the company's rather than the Government's balance sheet. We should remember that every year, in forestry premium, etc., the private sector gets a great deal of taxpayers' money for forestry. It is paid directly to farmers in premiums and so on. It is not paid to Coillte. Therefore, when one wants to measure the performance of the private sector in growing trees and of Coillte in pure financial terms, one must compare the input of taxpayers' money to one sector with that to the other. Coillte is doing this without racking up significant losses against a private sector that receives forestry premiums of over €100 million a year.

Andrew Doyle (Wicklow, Fine Gael)
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The forestry premiums are €116 million a year.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Give or take, that is what I thought. They predominately go to the private sector.

Andrew Doyle (Wicklow, Fine Gael)
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Yes.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Then one must acknowledge that there were 22 years in which we did not have to give Coillte €100 million because it has been self-sustaining.

I am concerned about Coillte's sale of land. It is a matter to which the committee should address itself. I was fascinated by what Mr. Fahy had to say. It is fair to say that he, his father, Mr. P. J. Fahy, and Connacht Gold have done a tremendous job in my area.

I will add one more statistic. There are more than 100 employed in the mill mentioned. I would suspect there are 50 to 100 other jobs, between CNM and Máirtín Seoige, contractors who live locally, etc. I would say that the direct reach of employees in our area is somewhere between 150 and 200 employees. If one puts a dot on the map where the timber mill is and draws a circle around it of radius 20 miles, the adult population in that area would not exceed 2,500. When one imagines 200 in a population of 2,500, one understands the scale of the impact that this has on the local economy. It is quite simple. Our local economy would not exist without ECC Teo. One could apply the same exercise across the country.

I will ask one direct question. Would the Irish Timber Council arrange for the committee, if it was agreeable, to visit some of these mills so that the members could see the impact of what is going on, understand the human impact by meeting those who work in them, between harvesting, transport, etc., and get some sense of how colossally important these are to the national economy? The figures are most impressive. The committee should see how vital these mills are to the economy of certain rural communities. The rural communities that have the mills are most fortunate.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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There is a matter I raised originally and I wonder if anyone has an opinion on it. I am talking about the long-overdue review of the forest sector. I understand there has been a review done by the State. I wonder do those present know anything about it or what is suggested in it. As a Member of the Dáil, I would like to see it published. I do not know whether the committee can apply any pressure to get it published. I can never understand why such reports are put together, with so much work put into them, yet we never get to see them.

Harvest 2020 was raised. We would want to work out how we can feed the animals we have before we go scaling up. That is something that needs to be dealt with as well.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I want to clarify that some of the questions I am asking about Coillte come from the perspective of utterly opposing the sale. The witnesses and others outlined some of the problems. Whatever difficulties there are, they will be made worse if we sell off the harvesting rights of Coillte. The point I am trying to get at is that some of the underperformance of Coillte is related to the fact that it has been preparing for privatisation for some time and has had a commercial focus which is not necessarily at one with the best interests of the forestry sector in Ireland as a whole, from the point of view of the sawmilling sector, public access, planting or whatever. It has a commercial mandate. That would seem to be borne out. The witnesses did not really answer the question; maybe they do not know the answer. Why did they sell off 40,000 hectares?

As I acquainted myself with this issue over the past while, I was shocked that a country that can grow trees twice as fast as any in Europe has the lowest level of forest cover anywhere in Europe. That is an extraordinary indictment of the failure of forestry policy. I stress that I do not blame this on ordinary Coillte workers, who do fantastic work. I pay tribute to the staff in Avondale Forest Park and all the rest of them. However, it indicates a failure of Government and the top management of Coillte that, instead of realising that potential, the main activity in which they seem to have engaged in the past few years is selling land. It seems that the threats to the Irish Timber Council's sector are directly related to that failure because, in a country that should have a plentiful supply of wood, the sector does not have it. The answer to that is more public investment in planting, rather than privatisation, because a private company will merely asset-strip our forests. They will not have any interest in the sector, in public access and in the wider economy. They will only want to take what they can get and, possibly, sell it on further down the road. I wonder how the council sees the committee addressing these matters in the future, because it seems there is significant unrealised potential.

Could the council briefly comment on the question of deforestation? Because of under-planting and, possibly, over-harvesting, are we in danger of deforestation and of having an unsustainable forestry strategy?

Mr. Jim McNamara:

There is one point the Deputy is missing. On the clear fell, there was talk of 5,000 hectares being planted. We believe that amount is far too low. However, one must take into account that Coillte replants any acreage it fells. The area of land under forestry is growing. It is now roughly 50:50.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is that 5,000 extra hectares?

Mr. Jim McNamara:

It is 5,000 extra. Any Coillte land where there is a clear-fell must be replanted and is being replanted.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is Mr. McNamara-----

Andrew Doyle (Wicklow, Fine Gael)
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On a point of clarification, for private plantations part and parcel of the establishment grant is a replanting obligation. That has not come to fruition yet.

Mr. Pat Glennon:

That is one of the important issues in answering two of the Deputy's questions. Mr. McNamara is referring to new planting - so we will call it greenfield planting rather than the replanting. As the Chairman has said, anybody starting off has to replant when they fell. Coillte does the replanting, in fairness. However, we are talking about new planting basically. We need between 15,000 ha to 20,000 ha per annum of commercial forestry coming in, which would make a very viable industry. In Sweden one in four people works in the forest products industry. It is a massive powerful industry. We could have something similar here with our good growth rates.

I was asked why Coillte sold off land. I can only guess it was to make the books balance. I do not honestly know.

Mr. Jim McNamara:

In fairness to Coillte, we must take into account the acquisition of Medite, which cost €80 million. Deputy Barry spoke earlier about the debt of €180 million - it borrowed €80 million to buy Medite. I do not know what it borrowed when it invested in the OSB, but there were some capital payments by Coillte.

Andrew Doyle (Wicklow, Fine Gael)
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On another point of clarification, up to the time it was excluded from drawing down assistance for planting, it was also buying and acquiring land. As it was deemed to have an unfair advantage over private organisations, it was delisted from entitlement to establishment grants. Until probably the last eight to ten years, it was buying as much every year as it was selling.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It would be useful for us to get clarification from Coillte on its selling policy. A further issue is that some of the land sold was low-productivity land in terms of forest. It owned all sorts of bits of land.

Andrew Doyle (Wicklow, Fine Gael)
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That is a good point. I can give an example. Land was made available on the edge of a village in south County Wicklow to build a few local houses in a combined effort between the community and Coillte.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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My office has requested that representatives of Coillte be invited to appear before the committee to discuss the matter. In the last week we were told they would not be available for another few weeks. They are kind of central to all of this.

Andrew Doyle (Wicklow, Fine Gael)
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Representatives of the Irish Timber Council were not invited, but were asked if they would be available to come last November because a long time ago, as a committee, we had agreed that this was an important matter. We had lined up at a timely point, which we feel is now, to bring in witnesses from all stakeholder groups, including the workers, timber growers and private owners. I cannot remember who else was involved.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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Will representatives of Coillte come?

Andrew Doyle (Wicklow, Fine Gael)
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Yes. I do not believe we can complete our work without having Coillte attend.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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Given how long this debate has gone on, it is strange that representatives of Coillte would only be coming in at the end.

Andrew Doyle (Wicklow, Fine Gael)
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Representatives of Coillte were here in November.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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Will they be coming back?

Andrew Doyle (Wicklow, Fine Gael)
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Yes. The committee has agreed a work programme. I know Deputy Flanagan is not a member of the committee, but that was our work programme. The then CEO of Coillte, the company secretary, and its chairman designate, who also happened to be outgoing chairman, were here in November or December to give us an outline of the Goodbody investigation which was ongoing at the time.

Mr. Pat Glennon:

In response to Deputy Ó Cuív - I am sure I speak for the three gentlemen to my left - we would warmly welcome the opportunity to extend an invitation to any of the members who wish to visit any of the sawmills. We would be more than happy to facilitate a visit. I know I am not speaking out of turn on that.

I have a question from our side. At what stage in the debate are we? When is a decision likely to be made on the issue?

Éamon Ó Cuív (Galway West, Fianna Fail)
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If we found that out today, we would be awfully grateful.

Andrew Doyle (Wicklow, Fine Gael)
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That is a very pertinent point. The review of the forestry sector and the consideration of the potential sale of the harvesting rights are two different but entangled pieces of work that are being done. We hope this committee offers a public forum for people to articulate the concerns. It seems to be a fairly unanimous opinion that people are opposed to giving away what was being investigated. That is not to say there are not equally concerns that something needs to be done by way of reform. In our exercise we hope the committee can receive contributions that will help to inform consideration of a reformed Coillte. Should it be a semi-State organisation? Should it be commercial or should it just have overall management of the forest estate? I cannot predict what options we might come up with. There is certainly a body of work to be done and this committee can play a central role in that.

We chose this time for this because we were told in November that the Goodbody report was to be completed and forwarded to the steering group for consideration in the first or second quarter and it would take to the end of the second quarter before there would be any recommendation. We get the sense that something might go to Cabinet. There is speculation that there has been a change of heart - maybe there was never a heart in it - or a change of direction. If that is the case we then need to consider what the alternative is. That should be our focus. We definitely need some reform and Coillte is important in that.

Mr. Pat Glennon:

The four of us attended today's meeting to express our opinions on the opposition to the sale of harvesting rights. The Chairman has now said there may well be a second string to this committee's bow in that if we do not sell those rights it needs to decide what we should do.

Andrew Doyle (Wicklow, Fine Gael)
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What the witnesses have told us has informed that second string also.

Mr. Pat Glennon:

At the time of the initial suggestion for a review of Coillte, the industry felt very upset that it was not allowed to participate in that. We found that astonishing given that we account for 90% of its revenue - its external sales. If there is a second string to this bow, we should investigate the right solution for the future. We respectfully ask that the industry be consulted and have its say at the table should that be the case.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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Was the industry not given an input into the review that I want to see published?

A Witness:

No.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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That is some review then, is it not?

Mr. Pat Glennon:

Three different reviews were carried out at the time. One can explain what they were.

Andrew Doyle (Wicklow, Fine Gael)
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The potential sale of the harvesting rights us a study in itself. I do not know when the review of the forestry sector was commissioned.

Mr. Pat Glennon:

I believe it was 18 months or two years ago.

Andrew Doyle (Wicklow, Fine Gael)
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Possibly. That one is important from the strategic point of view of the entire forestry sector. It relates to the private afforestation programme that we are talking about. Approximately 6,000 ha or 6,500 ha of private estate will be planted this year. Replanting continues mainly on Coillte lands as clear-fell occurs.

We will seek to clarify when it will be published. The Deputy has probably tabled a parliamentary question - I am sure somebody has - on when that review is due to be published. It would be helpful to our overall considerations of where to proceed next. It is very important in that regard.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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Perhaps we can ask them whether they plan to sell it or not.

Andrew Doyle (Wicklow, Fine Gael)
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The committee will probably make recommendations and hopefully we will get cross-party agreement on the matter. There should be some consultation process to allow for the development of a new, mixed, private and public forestry sector in all its guises.

We should conclude because it is midday. I wish to thank the representatives of the Irish Timber Council for attending the committee. I was present at the launch of the council's report which is both useful and worthwhile. I compliment the council on producing it. We will try to ensure that this issue is carefully considered before any final decisions are made on it.