Oireachtas Joint and Select Committees

Wednesday, 15 January 2014

Joint Oireachtas Committee on Agriculture, Food and the Marine

Forestry Bill 2013: Irish Timber Council and IFFPA

12:00 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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As we are in public session, I welcome the witnesses from the Irish Timber Council and the Irish Forest and Forestry Products Association. I understand the Irish Forest and Forestry Products Association, IFFPA, representatives will speak first. I welcome Mr. Mark McAuley, director, and Mr. Daragh Little, chairman and managing director of Forest Enterprises Limited. I thank both of them for coming before the committee. We will come to the representatives of the Irish Timber Council later. As both of the groups are present, I can go through the privilege notice.

I draw your attention to the fact that witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if you are directed by the committee to cease giving evidence in respect of a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against a person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him, her or it identifiable.

I call on Mr. Little to make his presentation.

Mr. Daragh Little:

I thank the committee for inviting us before it today. First, I will outline what is the Irish Forest and Forestry Products Association, IFFPA. This is an organisation within IBEC that represents the entire industry supply chain from the nursery through to the timber processing sector. There are 27 members in the sector. We are the only organisation that produces a review of the forestry sector every year, and a copy of that has been sent to everybody. It essentially provides the statistics of the sector in the previous year. It informs us as to what we want to do in the next year.
I will outline some facts about Irish forestry for members who may not be familiar with the sector. Forestry takes up 10.5% of Ireland's area, as documented by imaging published last week by the forest service. There are over 20,000 forest owners in Ireland, with the vast majority of them farmers. The sector contributes 1.3% of GDP, or €2.2 billion on an annual basis, and last year there were €555 million in exports. There are 12,000 jobs in the sector, taking in everything from the nursery to processing sectors, along with supporting elements. The trees in Ireland grow at the fastest rate in Europe, so there is a competitive advantage in that respect.
Right now, we are at a critical stage in the sector as over the past 25 years there has been much planting, going from 6% in the late 1980s to 10.5% now. The vast majority of the planting has occurred in the private sector by farmers and investors. We are now coming to the stage where the industry is poised to start producing timber. Last year we produced just under 400,000 tonnes in the private sector, with Coillte producing the remaining 2.5 million tonnes approximately. Over the next decade, the private sector will increase ten-fold in timber production, so the Forestry Bill is critical to the development of the sector. It is very important to us that the Bill can facilitate timber production and afforestation, which has sadly not achieved targets in the past number of years for various reasons.
I will turn to aspects of the Forestry Bill. IFFPA has considered a number of areas and we have some issues relating to the development of the industry, costs and the regulatory burden that we have seen coming into the Bill. On the development of the sector, the Bill is far too focused on enforcement, with excessive measures having the potential to hamper growth in the sector. The requirement to replant, for example, is already hampering afforestation, and many farmers will not plant on land if they know it must stay as forestry and there are no options. The vast majority of these farmers will always keep forestry but if they are stuck with the option, they may not pursue that avenue. That is an impediment to afforestation.
The enforcement provisions within the Bill are draconian and overbearing. A colleague once told me that we are only dealing with trees and not gold bullion, and it is not critical to have many control measures in the sector. There are powers to be confirmed on officers of the State which will be hard on the sector; for example, there are powers within the Bill to allow an officer of the State to enter into lands and business premises without warrants. That overbearing action will increase risk and the costs in the sector. With regard to development of the sector, we recommend that the Bill's enforcement provisions be redrafted with a more proportionate response. As it stands, the Bill will discourage investment in the supply chain.
I can give an example in the proposed section 32 of the Bill.

Section 32 of the Bill provides that where a grant has been paid to any person under the legislation and that person is in breach of one or more conditions, "the Minister may recover such grant as if it were a simple contract debt and, notwithstanding the Statute of Limitations, may institute proceedings for such recovery within 20 years of the date of the breach". That is utterly ridiculous. One could possibly go along for 20 years like that. That measure, in itself, creates risk not just for the forest owner, but also for the forest manager. That risk must be built into the management processes of those businesses and therefore increases costs, because they must comply. We think the replanting obligation should be removed, because it hampers afforestation in the sector. As I said earlier, many farmers will not plant because of it.
Moving to the regulatory burden, I will focus on the felling licence system. We do not believe that what is proposed goes far enough in facilitating the sector. The amount of timber production from the private sector will increase nearly tenfold in the next decade. The Forest Service already cannot handle the felling licences it has, and that is for a far less amount of cubic metres per hectare per year. The system being proposed is over-burdensome and will not contribute to allowing the sector to grow as it must grow. The Bill envisages a requirement for management plans. While we would welcome management plans in principle, we do not believe they should be required for every plantation in the country. Where management plans are required, they should be integrated into the felling licence system. When one submits one's management plan, one should get one's felling licence. It should not be a separate system. The Bill does not integrate those two elements.
The power of the Minister to put burdens on people's folios where there is a replanting obligation on those folios is hugely cumbersome and expensive both for the landowner and for the State to administer it. That element has the potential to get completely out of control.
I will deal with the increased costs. The Bill states that there will be little or no increase in costs to the State or to business. We could not disagree with this more. The increased regulations required in the Bill will increase costs de facto. The State does not have the resources to administer the Bill as it is envisaged. It will have to increase its manpower dramatically. In addition, the requirements on forest owners to supply information, do management plans and the other requirements of the Bill will increase costs for them. It will also increase risk for them and, as a result, they will make different decisions. The Bill should be about facilitating the sector to grow, not putting barriers and red tape in front of forest owners and the forest industry.
There is another section of the Bill on fees, which is basically part of the increased costs. The Bill envisages fees. Again, this goes against what the preamble to the Bill talks about in respect of no increased costs to the sector. The Bill envisages that the Minister should be able to apply fees to felling licences, grant applications and other services for which the forest service wishes to charge. We believe that provision should be removed because even if it is left in the Bill without applying any fees, it increases risk for investors. They will wonder what fees will be imposed in the future and, if a fee is introduced now, how much more will that cost in the future. We need only look at prescription charges in the past. That, in itself, is an impediment to newcomers into the sector, in particular, and is extremely unfair on those who invested in forestry in the past in the expectation that they would not have to pay fees.
I have been in the business for approximately 20 years, and it is a brilliant business. It is a sector I love. I dream about it almost every night, to be honest. What I see now is a critical stage in its development and the Bill must be right to help it grow and create jobs for Ireland, especially in rural areas where job creation in other sectors just does not exist. The plea we make on this Bill is that it must focus on what the sector needs to grow and create jobs and wealth for Ireland.

12:10 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Thank you, Mr. Little. I call Mr. Pat Glennon of the Irish Timber Council.

Mr. Pat Glennon:

Representatives of the Irish Timber Council have appeared before the committee previously with regard to the sale of Coillte forest assets. We represent the lion's share of the sawmilling sector on the island of Ireland. Approximately 95% of all the sawlogs in Ireland would be processed by our members.

I thank the committee for giving me the opportunity to address the committee on matters of such fundamental importance to Ireland's sawmilling sector. We have provided the committee with three separate but distinct submissions. What they all have in common is a plea for certainty about the future of our sector. In the absence of Government decisions, the forest and forest products sectors are operating in a total policy vacuum. As a consequence people are afraid to invest, jobs are at risk and there is no sense of a collaborative approach across the sector. A cloud of uncertainty hangs over one of the country's most promising indigenous sectors, one that has huge untapped potential.

Coillte has been the subject of internal and external reviews for the best part of four years. It is no wonder that, in the absence of a clear mandate, it is in a state of limbo. The proposed sale of its harvesting rights destabilised the timber processing sector for the best part of a year, due to continuing uncertainty about the Government's decision. Once the Government's decision on harvesting rights was announced, a merger of Coillte and Bord na Móna was mooted. More uncertainty has resulted as the Government has yet to pronounce on the recommendations of the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, and the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, nor has the long-awaited report of the forest policy review group been published.

The Irish Timber Council, ITC, finds it quite extraordinary that decisions are being taken behind closed doors with little or no regard to the views of the industry's stakeholders. For example, the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, will not meet with us on the proposed merger until after the Government's decision. The Minister for Agriculture, Food and the Marine, Deputy Coveney, has to date not accepted our repeated requests for a meeting to discuss the many issues facing the sawmill sector. The forest and forest products sectors and, indeed, individual companies have important views to communicate as interested parties regarding the proposed merger of Coillte and Bord na Móna, among other matters. We are especially appreciative of being given the opportunity of appearing before the committee today.

I will not go through the detail of our submissions as I and my colleagues can discuss any of the issues during the question and answer session and, indeed, on a one-to-one basis. However, I will highlight the main points of each submission and where we in the ITC believe the committee can assist us. Our views on the proposed merger of Coillte and Bord na Móna are, in summary, as follows. We believe Coillte should progressively divest itself of all non-core activities and assets, especially its board mills, and concentrate instead on delivering an aggressive afforestation programme as a national strategic priority. We want a strong, resourceful and well-managed Coillte to remain as a stand-alone State forest company with a clear commercial mandate to supply the timber processing sector with a sustainable supply of sawlog on the open market at transparent prices. We also believe there is no commercial justification for a public entity to engage in harvesting and associated haulage activity. Sawmills should be allowed to harvest and transport what they purchase from Coillte. On the other hand, Coillte will have a crucial and central role to play in the delivery of many of the recommendations set out in the draft report of the forest policy review group. The Government as a matter of top priority must give Coillte a clear mandate and redefine its remit in the context of the decisions taken in respect of the forest policy review group.

Should the Government approve a full or partial merger, we wish to see the evidence that justifies such a radical departure.

In particular, we want sight of the evidence on which the decision is based.

We have identified significant potential problems. For example, conflicts of interest as regards the supply of wood biomass to Bord na Móna’s bio-energy plants and the impact that a restricted supply of sawlog could have on prices. I hope the Government will publish the cost benefit analysis and regulatory impact assessment that forms the basis of the memorandum for Government. We also expect the Government to confirm that the sale of harvesting rights is off the table once and for all.

The extensive stakeholder consultations that have informed the preparation of the report of the forest policy review group all share a common theme - Ireland has the capacity to grow its forest and forest products sector. We all want additional afforestation. The ITC believes the proposed target of 15,000 hectares is not enough and there is sufficient land available to sustain much higher afforestation levels.

We also need to restore a level of trust in the sector. Coillte needs to realise that the current opaque practices of price determination must stop. We need transparency in the pricing of sawlog and pulpwood supplies that are our critical raw material.

The State’s forest company must above all else support its key customers for the common good and not work against their interests. A crucial issue for us is a clear policy statement that the use and diversion of Coillte’s wood biomass for bio-energy plants must not be at the expense of the security of supply for the sawmill sector. We also believe that an assessment needs to be carried out on the feasibility of establishing an independent regulator for the sector. In addition, the report should at least acknowledge the EU’s forest strategy and explain how Ireland’s proposed strategy fits with what is considered best practice at European level.

Once the report is published, and to give it credibility, I hope that the Minister will provide a detailed implementation plan with a clear allocation of responsibilities and budgets. A strategy document without a well resourced implementation plan is practically worthless. The Irish Timber Council wants to play a full part in securing the rapid delivery of the report of the forest policy review group and expects to have representation on the proposed forest council and all of the relevant sub-committees.

In the middle of all this uncertainty sits the Forestry Bill. Members of the committee have made significant statements about the Bill during the Second Stage debate. The ITC’s submission on the Bill was well received by the officials at the Department of Agriculture, Food and the Marine with whom we had an opportunity to meet a while back. We hope that the Minister will take on board the very many amendments that we have proposed. In particular, it needs to be better aligned to the decisions that will be taken in the context of the report of the forest policy review group. It needs to reflect whatever decision Government takes about Coillte. It also needs to take into account many important protections and safeguards that are provided in similar legislation enacted in other jurisdictions. Perhaps it major weakness is the absence of a regulatory impact assessment. As Deputies and Senators will be aware, Cabinet guidelines dating from 2006 require all Ministers to carry out a detailed study of the impacts of all proposed legislation and the administrative burdens that will be imposed on business.

I shall finish my contribution on a positive note. The Government wants companies to recruit and export more. The sawmill sector is willing and able to expand its output and has the track record to prove that we have done so. The Government attaches the highest importance to maintaining jobs in rural Ireland and the sawmill sector is one of the few indigenous sector capable of sustaining local employment. The sawmill section has the track record to prove it also. The Government wants a sustainable, competitive and modern forest and forest products sector. Again, the sawmill sector has a proven record to show that it has delivered on same. Provided that the right decisions are taken over the coming weeks, the sawmill sector for one is eager to engage with all of the stakeholders on what should be a clear and ambitious growth strategy for our businesses.

Finally, let there be no doubt that the two most important issues facing the sector at present are the proposed merger of Coillte and Bord na Móna and the log supply, both of which are inextricably linked. I thank members for their attention.

12:20 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I thank Mr. Glennon. I shall now take contributions from Members. I shall commence with committee members and call Deputy Ó Cuív.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I welcome the members of the IFFPA and the Irish Timber Council and thank them for the efforts put into and nature of their submissions.

The main issue is the Bill which needs a lot of work. Before I get into that matter I must say that I totally oppose the merger of Bord na Móna and Coillte because they are like chalk and cheese and are incompatible. A merger would create a huge monster that would not deliver any great efficiencies.

As has been pointed out, Coillte's main role is forestry and in my view it should remain that way. I have no objection to Coillte lands being used for other purposes and we all agree to rural recreation, for example. We also know that such lands are used for telephone masts and so on. That is fair enough. However, the main purpose of Coillte's business is to ensure that we have well managed forested areas and to provide sawlog to the industry.

All of the industry players share the common aim of maintaining good forests, producing maximum value on the market, both at home and abroad, and to the highest standard possible in a good environmental condition. It seems to me that there is a lack of consultation and the sequence in which we must work is out of kilter. We have the Bill yet a decision has not been reached on the proposed merger of Coillte and Bord na Móna and we do not have the report from the forest policy review group. Therefore, we are working in the wrong order.

There is another issue. The Bill is all about regulation. As pointed out in the submission by the Irish Timber Council, a regulatory impact assessment or analysis was meant to form part of the Bill but we do not have it at present. There is a danger that the Bill will contain a great amount of over regulation.

A number of issues have been raised. The concerns, if I have summarised them correctly, seem to be over regulation. In other words, there will be a huge burden of regulation that will add cost to the industry - and this is where analysis comes in - that will not benefit the State or the public's interest commensurate with the amount of extra regulatory burden.

The second issue of major concern is retrospection which is important. In many cases the people who grow timber privately have borrowed money. What happens if after ten, 12 or 20 years someone says that for the past 15 years, even though the planting, hectarage and everything was approved - and this happened in practice - but we now realise that we have made a mistake in some calculation when double checking the application and seek payments to be returned? The recipients would then have to explain the situation to their bank manager. When that happens in a number of cases the bank managers will get wary of lending money and will say that the sanction for forestry grants is not worth the paper that it is written on. There is always a danger that after a long period has elapsed, and way beyond the normal Statute of Limitations, somebody could seek the money to be returned and a bank could be left short for the last five, six or seven years of the grant. This is a value issue that needs to be teased out when we debate the Bill.

I noticed a slight difference in the approach to fees adopted by the two organisations. If I recall correctly, the IFFPA has opposed fees and the timber council seems to have said "maybe fees but." I am interested to hear more clarification on the matter.

Another issue is, if I understood it correctly, that the Minister has unspecified and wide powers to amend plans at any time. He does not have to introduce regulations to do so and does not have to go through any procedure in the Houses. I would like confirmation that I have grasped the matter correctly. I am wary of such a provision. All Ministers will assure one that they would not do certain things - which I do not doubt - but they will not be Ministers forever.

The power remains so the issue is worthy of teasing out on Committee Stage. In that regard, the Minister cannot change how things are done with felling licences and the rest without a transparent system of appeals. Everyone has the opportunity to look at this. One of the issues that strikes me is that appeals in forestry do not have the possibility of oral hearings. We need to ensure a person appealing has access to transparent consideration and the chance to make the point. It seems there are a whole lot of issues. I am not sure we should go back to square 1 before we take the debate on Committee Stage and get a regulatory impact assessment. We all agree the Bill should be in existence and no one argues with the principle of it but it could put a major administrative burden on small people and inhibit people from planting more timber unless there is full scrutiny of all provisions in the Bill. Otherwise, the Bill might provide extra regulation without much gain.

12:30 pm

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank Mr. Little and Mr. Glennon for their presentations. With regard to Mr. Pat Glennon's presentation and the requests to meet the Minister for Agriculture, Food and the Marine, Deputy Coveney, and the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, I think the refusals are deplorable. There is an obligation on Ministers to meet representatives of sectors contributing to the economy of the country. This is particularly true in respect of the contribution of 1.3% of total GDP and almost €555 million in exports. It was wrong that they were not afforded the opportunity to meet the Ministers.

The witnesses made reference to officers of the State entering land or businesses to seize equipment and so forth. It is very similar to what is happening in the farming sector, where officers of the State have unlimited power to enter land. Does it require a warrant? I have major concerns about that if it gives unrestricted powers to people to enter land and do what they believe needs to be done without the legal requirement of a warrant.

The witnesses believe there is no commercial justification for public entities to engage in harvesting and associated haulage activities. I assume they are referring to Coillte. Why do the witnesses have a problem with that? Some people think of Coillte becoming the incubator to supply the industry rather than the other way around. Coillte has served us very well and we are delighted a State company will not be sold to private enterprise. Across the political spectrum, we were concerned about that.

The witnesses make reference to forestry land being replanted as it is felled. The Bill envisages the Minister prescribing species to be planted on such land. Why do the witnesses have a problem with that? One would assume the provision is not definitive in that the Minister may prescribe it.

The witnesses referred to a 20-year horizon that would carry over if the entity is sold from one company to another. That is a serious issue and it penalises the recipient for the wrongs of the previous owner. I have looked at the recommendations made by the witnesses and given them full consideration. We will have a meeting in the coming weeks on this point. I thank the witnesses for their presentations and I would appreciate replies to my questions.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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I will allow Senator Comiskey to speak first as he must leave later.

Photo of Michael ComiskeyMichael Comiskey (Fine Gael)
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I welcome the witnesses. I am very concerned about burden on the folio for private farmers planting land who, when they take the first crop away, decide to use the land for farming purposes. They should be given that right because most will stay with forestry. I do not agree with putting a burden on farmers or penalising them for stopping forestry.

I agree with Deputy Ó Cuív about the recreational aspect of Coillte lands, which is important. We can develop it without damaging the crop or affecting it. It will add more to tourism. Coillte are leaving quite a bit of land fallow and not replanting it. In the area I come from, three or four large parcels of land are being left fallow. It is a great loss. For environmental purposes, Coillte will argue it is good but the land was able to produce a good crop of timber over the past 20 or 30 years and it is a pity to see it felled and just lying there. That should not be allowed to happen.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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I thank the witnesses for their presentations. I share the concern about Ministers not being available. Perhaps the witnesses can afford some clarity about the reasons given. Mr. Glennon said that the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, will not meet them on the proposed merger. Is that an interpretation or was it said by him in a letter? Perhaps Mr Glennon can clarify. The witnesses referred to meeting the Minister of State, Deputy Tom Hayes, and perhaps this was instead of the Minister, Deputy Coveney. It is an important issue and we need to know more before we go further.

Mr. Glennon's presentation gives the impression of a loss of trust in the Departments concerned. Various observations are made, such as, "In addition, the report should at least acknowledge the EU’s forest strategy" and "A strategy document without a well resourced implementation plan is practically worthless." It seems Mr Glennon is suggesting these things might happen. Am I reading it incorrectly that he has lost faith and lost trust in the Departments concerned? Like others, I share the concern that we have policy review group activity, a Bill and a proposed merger. Where they align and in what order they come is something we should take up. There are many proposals for change occurring simultaneously. They seem to provide some confusion.

I am a small bit confused by Mr. Little's observations. He laid out how well the sector is doing and we think that is a good thing, particularly for rural Ireland.

The IFFPA goes on to suggest the Bill is too focused on enforcement and it talks about it being overbearing and draconian and that it will perhaps delay or stop investment. It strikes me as a bit contradictory, where one has an industry that is doing well - the IFFPA talked about the potential within the industry - to state that this is draconian and overbearing. Things are going well but we need some kind of regulation and perhaps the IFFPA's criticism of the regulation is over the top. There will always be investors in a successful area and while some of the investors may change, not everybody will walk away, put down their tools and say "Enough already, this is too draconian". I do not think the future of the timber industry is at risk in the way the IFFPA described because of regulation. Private businesses always complain and lobby about regulation, as they should, but I wonder if the IFFPA has gone a bit too far in its description of that.

Things are going pretty well and there is potential. I know the IFFPA is concerned to develop that, which it should be, and so are we. However, I wonder if it has gone too far in regard to that kind of language. It suggests, therefore, that it does not want regulation, which is probably not quite right in that we need regulation. I am not an expert on regulation, or on regulation of the forestry industry, but I would be interested in the IFFPA's observations.

12:40 pm

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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I welcome the witnesses. Like everybody else, I would be concerned if Ministers would not meet relevant bodies. The Glennons are based in my constituency where I think they have access to anybody they like in terms of making their case. I hope Ministers will meet people because it is important to have interaction where people are bringing forward proposals and that the people, who are stakeholders, get an opportunity to convey their viewpoint. There may well be different viewpoints but distilled wisdom can bring forward something which is better from all parties concerned. I hope that will be the way forward.
Regulation is important in the overall context but one of the problems in Ireland is that we suffer from a deficit of regulation. There is never a half way measure in Ireland in terms of regulation. We suffocate and have a surplus of regulation. Trying to achieve a balance is important. From a legal perspective, I am absolutely shocked the Statute of Limitations could be extended to 20 years. There are many cases where it should be longer than, for example, three years in personal injuries cases or six years in civil contract cases. People must prove special circumstances in very harrowing cases in order to get the Statute of Limitations extended. To write 20 years into a Bill defies logic and belief. I certainly concur that it is nonsensical. A simple contract is six years. The Statute of Limitations can be extended, for example, in cases of fraud and a court can find on that basis. This is symptomatic of an over-bureaucratic input into something which requires regulation. There must be rules and regulations.
I have always had a big issue with forestry companies and I have had a go at Coillte over the years. Very often people live on rural roads where there is forestry land and big juggernauts arrive to take out the forestry and the timber cuttings and thinnings. Much damage is done to those roads that many people have to use. Even from that perspective, I would like some regulation in that there would be a way to ensure local authorities get some recompense to repair those roads because people are living on them. Going back over the years, including the years I spent on the local authority, I have always held that point of view, which I will not change. As people know, I do not change.
It is important there is a co-ordinated policy. What I have garnered from the IFFPA is that there is a kind of an ad hocor stop-go situation in terms of the overall development of forestry. It has advocated the sort of one-stop-shop forestry development agency which emanated from the forestry policy review group. A proper forestry development authority with some teeth, some oversight, some coherence and underpinned by a proper strategy with proper funding bringing together all the relevant stakeholders has much merit. From listening to Mr. Pat Glennon and Mr. Mike Glennon over the years, I know there is a significant deficit in terms of the various requirements and so on and that is why they are concerned about the proposed Coillte and Bord na Móna merger and the impact that would have in terms of supply. That is a big problem, apart from all the ancillary issues.
How much of a deficit is there in terms of the requirements? In other words, how much is imported to meet the current situation? How much would that be accentuated by the proposed merger where much of the wood would be used to supplement the biomass requirements that would emerge as a result of any huge bioenergy division?
What success has the IFFPA achieved in terms of product innovation, market innovation and so on? That is important in terms of generating jobs. I subscribe to the idea that the IFFPA is important in rural areas, coming from a very rural area myself. I know the importance of areas like Baronstown, Ballycorkey and places like that in the context of rural jobs. What concerns me is that the programme for Government sets out an objective of 14,700 ha. Over the past number of years, as far as I can make out, only about 45% of the target has been achieved. Where are we going if we have set out a target of 14,700 ha? I read some of the IFFPA's observations before Christmas that it is insufficient. I think some have said it should be more than 20,000 ha. I hope I have not misquoted them but they can correct the record. If it is 20,000 ha and we are only planting 8,000 ha, we are not in the game at all. Is that not the huge deficit in terms of the basic raw material - the supply necessary to achieve all the various hardwoods? There has been some successes there. I know Mr. Pat Glennon has had successes in terms of product innovation. Masonite has also had successes. Where does that leave it?
From an environmental perspective, Irish forests have played a significant role in terms carbon savings and in achieving targets set out in the Kyoto Protocol. We know the importance of forestry as a carbon sink and in dealing with the greenhouse gas emissions. We have targets to meet in that regard and in terms of employment and innovation but we are still in a very scattered state. In order to achieve all those targets, the sooner we get around to having a proper forestry development authority which focused on meeting those targets and is resourced, the better.
Again, I welcome the witnesses. I know the positive role they play and I will certainly do anything I can to advance the situation. I will make certain views known in terms of meetings which should take place to ensure there is coherence. People working together in a co-ordinated way can achieve much. There is much to be achieved, in particular in rural areas, if we get this right.

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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I welcome our guests. It is opportune they are here to discuss this matter. Over the past year, the discussions we had on Coillte played a significant role in the decision. I would like to think the discussions today and those following them will play an important part in what may come out of them. Like other speakers, I have concerns about the proposed merger mentioned in the earlier observations.

The forestry industry plays a significant role in Ireland, especially rural Ireland, and 12,000 jobs are not to be sniffed at. If foreign companies were coming to Ireland and creating 12,000 jobs, that would be the main item on the news. It is important we sustain the jobs we have.

Mr. Glennon summed up the situation with his most recent observations. There are a number of big issues, the main one being the log supply. It is my understanding that a significant proportion of logs are imported from Scotland. Those logs are imported at a lower cost than that of producing logs here. That does not make sense. If we can import raw materials at a lower cost than producing them ourselves, something is obviously wrong. Do the witnesses have any further information on this? That situation is not sustainable in the longer term.

The witnesses argued that there is no commercial justification for the public entity to engage in harvesting and associated haulage activities. There has been much talk about a proposed significant investment in board plants in the country, particularly in the south east, and I ask the witnesses for their views on that. Is there a justification for this? If it does not happen, what will be the result?

It is important that certainty is created for the industry in the very near future. A degree of certainty emanated from the final decision on harvesting rights announced last year. We need to move on and put a timeframe in place for future plans. Will there be a merger and what will be the consequences of that? I have concerns about whether a merger is the right way to go. I am not convinced that the two organisations are compatible. That question must be teased out further before we move on. To some extent, I agree with Deputy Ó Cuív that we may be putting the cart before the horse in these discussions. These discussions should have taken place before the Bill was produced at the end of last year. These discussions should have informed the preparation of the Bill rather than the Bill informing our discussions. This meeting has been very interesting and the observations made have been valuable. However, we need to hear more before we move on.

12:50 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I thank the Irish Timber Council and the Irish Forestry and Forest Products Association for their attendance. I apologise for having missed the introductory presentations but I heard some of them on the monitor and will read the full submissions later. I agree with much of what the witnesses have said. We should all share the common objective of having a comprehensive, coherent forest policy to develop the enormous potential of forestry. I strongly endorse the call from the Irish Timber Council for clarity with regard to the question of the sale of the harvesting being off the table, fully and finally. We seem to have achieved that but absolute clarity is important. I also agree strongly with the argument for proper engagement with all the stakeholders. It is very unfortunate that the Minister has refused to meet the organisations here today. However, it is not just the Irish Timber Council and the IFFPA that are involved here.
As Deputy Deering has said, our approach is the wrong way around. A point made to me by one of the forestry NGOs was that it is difficult to have a forestry Bill without the review of Coillte. That review commenced but the report was never published. That relates to the point about meeting the Government to discuss Coillte and Bord na Móna. Coillte is the biggest owner of forests in the State by a long mile, and unless we know what is happening with and in Coillte, it is very difficult to develop a comprehensive and coherent policy. All of the discussions and the reviews should have come prior to a Bill being presented to the Dáil for a Second Stage debate, and I made that very point during the debate. Perhaps the fact we are having these discussions now, prior to the Committee Stage debate, is an indication that the Government's attitude to this has changed somewhat. At least we are having these discussions, and I hope all the necessary consultations take place. I also hope we get the information we need about Coillte in terms of what is being proposed vis-à-visBord na Móna. I share the concerns of the witnesses. I agree there are potential problems with the proposed merger of Coillte and Bord na Móna in the context of conflicts of interest. Given the outcry in the past week about lack of information on Irish Water and with the Government now back-tracking, I am glad to say, on the issue of freedom of information, would the witnesses endorse the call for Coillte to be subject to freedom of information requests? It seems to me that it should be. It is extraordinary that the biggest owner of forestry in the State is not subject to freedom of information requests. There are serious questions to be answered about what goes on in Coillte. We need a much greater level of transparency and accountability from that organisation.
I strongly endorse the point made regarding the need for an aggressive afforestation policy. That is what Coillte should be about. The target of 15,000 ha is not being achieved. Even that target is not enough and we need to increase rapidly the amount of forested land for economic, environmental, natural resource and tourism reasons. There is a huge, unrealised potential that must be developed. The Bill is not specific enough in that regard. Would the witnesses agree that there should be specific targets for afforestation in the Bill? I believe we should have such targets in the legislation. At present, it is very vague and ill-defined. A lot seems to be left to the discretion of the Minister. The witnesses are right to point to the very specific commitment to the stakeholders being involved in the committee that will oversee all this. We need all the stakeholders to be involved and that should be defined more specifically in the Bill, as should afforestation targets.
While I agree with much of what the witnesses have said, I am concerned at their setting of sustainability against the imperative to develop a competitive and economically viable forestry sector. I believe that is not a very good way to go because we should be trying to achieve both. The policy of sustainability would be best underpinned by precisely what the witnesses are calling for, namely, aggressive afforestation. That is sustainable forestry. It is a mistake for the organisations present to get themselves into a battle with the environmentalists in trying to pursue their objectives. We should have a united front on these issues in exactly the same way as we had a united front in the battle to stop the harvesting rights of Coillte being sold. The economic potential of forestry is predicated on forestry being sustainable.

There are serious detailed issues on what is an excessive burden on small private forest owners. The suggestion of distinct types of licences, for example, a licence for clear-felling and a different licence for thinning, is a very interesting idea. The clearing of a forest is very problematic and gives rise to replanting issues. A small farmer who is thinning out the forest is in a different category as this has a lesser impact on the environment. May I put it to the witnesses that they are being slightly confrontational with those who would be concerned about sustainability and proper regulation of the sector from an environmental point of view when what we should be looking for is a common viewpoint?

I have scanned through what has been said. Will the witnesses comment on the question of species mix and developing a greater proportion of native forest species as distinct from Sitka spruce and other evergreens? Do the witnesses think that species should be specified to increase significantly the percentage of native forest cover as part of the afforestation policy for which they are calling?

1:00 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I understand that the witnesses may wish to spread out the questions among themselves but will Mr. Little address the questions directed to him and the other witnesses will follow?

Mr. Darragh Little:

I have a long list of questions. Deputy Ferris raised the issue of the representatives of the State needing a warrant to enter forestry lands and so on. From my reading of the Bill, it would appear that the State's representatives can enter lands but a warrant will be required to enter a private dwelling. They can go into a business premises and seize documents or computer records as they see fit to get to the bottom of whatever they are after.

Deputy Ferris also questioned what "may prescribe" means in terms of the replanting of the forest after clear-felling. While it states "may prescribe", what is prescribed is very specific and the Bill sets out species composition cultivation, species mix, landscaping issues and other matters. In the neighbouring jurisdiction, the UK, there are detailed prescriptions being put into reforestation sites, so much so that the amount of productive forestry has dropped dramatically from one generation of forestry to the second generation of forestry, the amount of open spaces within the forest and so on. While I do not have a major objection to that, I question giving the State the role of prescribing what is to be planted in the forest when a forest manager can do the same job equally as well. We would have a problem of over-regulation in that area.

The 20 year provision is written into the Bill. The State may come back 20 years after planting and find a problem with the mapping. A major issue in the sector is the issue of over-claims. The forest service and the Department of Agriculture, Food and the Marine are re-examining all their old files, going back 22 years in some places, looking at the old six inch maps, and because they have new mapping technologies and a new map, they may decide there was an over-claim and request the return of money 20 years later. That will mean a transfer of risk to the forest owner. In transferring risk to forest owners, the buyers of forest, for example will perceive a risk as they do not know if the area will be changed by the forestry service at some point in the future because they have a new technology for mapping or whatever. The owner needs to know that when he plants the land, that is the end of the story and he can move on. We cannot do that under the current regulations. That particular section of the Bill seems to enshrine the ability of the State to go back and check out anything, making discrepancies in the mapping the fault of the forest owner when the fault had arisen from the State's technology. That is a significant issue and we are trying to tackle it with the Department of Agriculture, Food and the Marine but we are not getting anywhere. We need to put a limit on this. We need to know that when an application for an afforestation grant is successful, the owner having submitted the map which the State digitised, that should be the end of the story. At present, the Bill seems to enshrine the right of the State to go back and do whatever with the new technology, which is quite amazing.

The burdens on folios was raised by Senator Comiskey. The Bill envisages that the Minister will have the right to put a burden, a replanting obligation, on a folio. With the expected level of clear-felling and so on in the next decade, a significant level of effort will be required to try to make that happen in the Land Registry. The cost implications are very significant. I do not think they truly understand the potential workload they are letting themselves in for because when the replanting obligation has been fulfilled, the burden will have to be removed from the folio. It will be an enormous task. That is another major issue.

In the preamble to the Bill, it is stated that the proposed replanting order, which is a burden on the folio, is to help new forest owners see there is a replanting obligation on the folio. That issue can be solved by the contractual obligations on solicitors to check out the law on forestry, and that the land must be replanted. It does not need to be written on the folio, thereby creating the administrative burden that surrounds that.

I have been practising forestry for 20 years and one issue that comes up among farmers is whether they have to replant. When one tells them they have to replant, they are no longer interested. They do not want to get involved. The fact is that most of them will not bother to take land out of forestry because it is not economic to pull the stumps out and reseed the land and so on, but the fact is that once they replant, they must stick with forestry to the end of all time. That discourages many people to plant land. We see that as one of the main barriers to planting new land and to meeting the targets of 14,700 hectares in the programme for Government. This Bill was first mooted ten years ago and the sector went to the then Government asking for the removal of that provision, but it would appear that request was ignored. The original function of the replanting obligation was to prevent deforestation at a time when we had no forests back in the 1940s. That is no longer the case. We have 10.5% forest cover. People want to plant forests and it is not really necessary to ensure they always maintain forestry on that land.

Senator O'Keeffe raised the issue of over-regulation. In my view there is a serious lack of trust between the sector and the State, which is evident in the Bill. Our perception is that the State believes it must control those involved in the sector. Let me take felling licences as an example. That the Minister has the ability to amend, revoke or suspend a licence at his discretion without giving a good reason or even offering compensation is a step too far for the Irish Forestry and Forest Products Association. The other aspect of making it a criminal offence for a leak from a ministerially appointed committee is another step too far. If the Department wants the sector to co-operate, it needs to bring us into the room. We have not been consulted or asked to co-operate for many years. We perceive the Bill as the State setting out a menu of how it wants to control the sector at a critical stage in its development. The sector is trying to attract new investors and bring in new people.

In many cases, the sale of Coillte's timber rights has raised the profile of forestry in Ireland outside of Ireland. There is a huge amount of interest. A massive number of people are asking how they can get into this sector, about which they have heard so much. When they look at this draft Bill, they see fees and costs and ask what the hell is going on in this sector. They ask whether there is something inherently wrong with the sector which means it has to be controlled by legislation that contains such measures. This is a big problem for our sector. It sends the wrong message to people who might want to plant land and invest in the future of the sector. I refer not only to those who might buy forests, but also to those who might build saw mills and processing facilities or develop recreational facilities.

I note Deputy Penrose's observation about the forestry development authority. We see that as an area too. I did not include it in our submission because there has been a great deal of movement in this regard over the past 20 years. In other areas like fishing and the ports, the role of the development authority is to sift through policy proposals and make coherent observations for the attention of the Minister. We do not have that in forestry. Since the current forestry policy was developed 18 years ago, the target of having 17% forest cover by 2030 has been eroded left, right and centre. All sorts of regulations, for example, relating to the environment and to tax, have been introduced. We need to look at the policy in much more detail. The current policy is 20 years old. In that context, I would like to add something else to the menu for the forthcoming Bill. I know there are many confusing issues. We have the policy review group with Coillte, we have the Coillte-Bord na Móna issue, we have this Bill and we have a policy that is 20 years out of date. Legislation should be there to facilitate policy. One of the problems for this sector is that there is no coherent policy at the moment.

I am moving down through the list of questions. Deputy Penrose referred to the programme for Government ambition for "an annual 14,700 hectare afforestation programme". We are not able to reach that target by any stretch of the imagination. The reasons for that include the designation of land, the policy decisions made by the State and the policy decisions made by other parts of the Government, for example, with regard to tax clearance certificates. The regulation of forestry is much more stringent than the regulation of other parts of agriculture. These things are all narrowing availability of land for forestry and undermining the confidence of people. A stop-start approach has been taken to forestry over the past ten years. Grants have been stopped and got going again. The single farm payment has been an issue in the past year. Many farmers have decided not to do anything until that comes to pass. When something comes to pass and everything goes again, it stops again a couple of years later for some other reason. The lack of a multi-annual approach to forestry has been very damaging to the confidence of the sector. As a result, the extent of the planting programme has started to decrease and people have started to wonder what is going on and why there is no coherent policy.

I think I have covered everything I wanted to cover. Before I pass over to Mr. Pat Glennon, I would like to respond to what was said about the need for an aggressive afforestation policy. This brings me back to the point that we want to plant more land. Many people in Ireland want to plant more land. A great deal of land in Ireland is under-utilised and could be brought into productive forestry for the benefit of the landowner and of the State. We would love to be able to plant more trees on such land. We would love to have forests with multiple objectives, as opposed to single objective commercial forests. We are all in favour of other objectives such as recreation, the environment and biodiversity. The 12,000 jobs in this sector at present largely depend on the commercial sector. The recreational sector has not yet been developed. We would love to have a multi-use, multifaceted forestry sector.

1:10 pm

Mr. Pat Glennon:

I will try to kill as many birds as possible with one stone. Deputy Ferris, Senator O'Keeffe and another member asked about meetings. We made four or five requests to meet the Minister, Deputy Coveney, in conjunction with the proposed sale of Coillte harvesting rights and the issue we are discussing. In each case, we received his regrets and were refused meetings with him. We wrote recently to the Minister, Deputy Rabbitte, to request a meeting about the proposed merger of Coillte and Bord na Móna. We were told we could have a meeting after the Government has made its decision. We were not offered any meeting other than that. After we requested a meeting with the Minister of State, Deputy Tom Hayes, we met his officials in the Department of Agriculture, Food and the Marine. We had quite a good meeting with them in the Department.

Deputy Ferris and a number of other members asked about harvesting and haulage issues. Perhaps Mr. Mike Glennon will explain why we feel it is so important for the industry to hold on to the harvesting and haulage infrastructure and why we are looking for that to happen.

Mr. Mike Glennon:

The business we are in has changed fundamentally since the catastrophic collapse of the construction industry. Almost two thirds of the output of this sector was being supplied in the home market. After the catastrophic collapse of that market, we all had to reinvent our businesses and strive for exports. We have all done that successfully. Those who buy our product do not do so because the fibre is unique in some way. They buy it because we provide a so-called just in time service. The members of the Irish Timber Council can look at the market, see where the gaps are, respond quickly to them and thereby achieve sales. It has nothing to do with the fibre. The efforts we put into our relationships are of assistance. Our response rate is the most important factor.

I will refer to our business because I am best informed in that area. We supply the Irish and UK markets. We supply ship-loads to France and we supply material to the Netherlands. We need a flexible supply chain to respond to those markets. We feel we are best positioned to do that - we can provide examples in this regard - because we appoint our own harvesters in the forests to ensure we achieve a certain response rate. Every time we have left that facility to Coillte's harvesting, we have had problems. Ships have gone to France without the material that Coillte was cutting for us because it arrived late. I am not sure the State is naturally well positioned to provide the necessary flexibility in rural forests throughout Ireland. The line of communications needs to be limited. We have direct access to the guy who is harvesting in the forest. That allows us to make it happen. That is why our business always tries to buy standing material rather than harvested material. We need flexibility in our supply chain to export. It is not about the quality of our fibre. We grow wood twice as fast as the Scandinavian players, for example. Their fibre would have some inherent benefits compared with our fibre. We do not necessarily win on the basis of the quality of our fibre. It is about how we approach the market. Responsiveness is a key issue for us when we are selling.

Mr. Pat Glennon:

Perhaps Mr. Murray will respond to what Senator O'Keeffe had to say about the lack of trust. He might also say something about SmartPly.

Mr. Paddy Murray:

I am here on behalf of Murray Timber Products. I disagree with the State being involved in the manufacture of commodities. It does not happen anywhere else in the world. I do not feel it should happen here. We spoke earlier about the scarcity of raw material. We know that a large proportion of the raw material that is going into these board plants could be processed in the saw mills at a far higher price. We would be giving the State a far better price. It is totally wrong that this form of activity is taking place. There is no transparency with Coillte. Someone spoke earlier about trust. There is no trust between the industry and Coillte. This problem is getting worse by the day. I will give an example. We have spoken about responding to the market. We have to go out and find markets. Everybody in the timber business has done that successfully. After we take on orders, we have to bid for the raw material every two weeks to ensure we can supply what we have said we will supply. When we take on an order, we do not know what price we will have to pay for our raw material. The shortage that is causing this difficulty is certainly added to by the fact that Coillte is involved in the board mills.

It is supplying the board mills with timber that we could otherwise buy and use for orders in the United Kingdom, France and elsewhere. We disagree with that approach.

On harvesting, I and all the other companies represented here import timber from Scotland. One can have a shipload of timber delivered from Scotland by making a couple of telephone calls. In the case of Coillte, however, we once recorded making 23 telephone calls to the company to have one lorry load of timber delivered and we still did not get the load. That should give members an idea of what we are dealing with. Coillte should not be involved in anything other than growing the forests that this country badly needs. It should not be involved in any other activity.

1:20 pm

Mr. Jim McNamara:

As Pat Glennon outlined, the IFFPA is totally opposed to the proposed merger of Coillte and Bord na Móna. The major reason for our opposition is that there is insufficient raw material available to satisfy demand. Coillte has proposed expanding its plant in Waterford, which would require an additional 300,000 tonnes of material, while Bord na Móna has ambitions to burn 1 million tonnes of biomass. From where will this combined total of 1.3 million tonnes of material suddenly appear?

As Paddy Murray stated, Coillte has taken into the two plants material that should be supplied to the sawmills for which not enough pulped material is available. This shortage is likely to continue for ten or 15 years. The private forestry sector will help but growth will be limited and the sector will certainly not be able to provide 1.3 million tonnes of material immediately. If the merger proceeds, the amount of material supplied to the sawmills will continue to decline.

Transparency is required because there is no transparency on price. We do not know what price is being paid for the pulp Coillte is supplying.

Deputies Boyd Barrett and Penrose referred to achieving only 45% of the afforestation target of planting 14,000 ha per annum. I am not sure if members realise that Coillte has not planted any new land in the past ten or 15 years. Private landowners have done very well in this regard but where is Coillte in all of this? It should be a forestry company purchasing and acquiring new land and then planting it.

Mr. Mike Glennon:

To support Mr. McNamara's argument, the difference in the price between pulp and saw log is one third. This means that if the State ends up using saw log that goes into pulp, it loses two thirds of the value of the product.

Mr. Pat Glennon:

We circulated three submissions. The back page of the submission we made to NewERA features a diagram that shows the breakdown of a typical crop of timber. Pulp wood is at the top, boxwood in the middle and saw log at the bottom. The price of pulp wood is approximately €20 per cu. m. Box wood costs approximately €55 per cu. m., while the price of saw log is €65 per cu. m. It is not the case that the sawmills are trying to commandeer a market. Our proposal would give the best return to taxpayers and stakeholders. It is far better to have logs go to the sawmills. We are not seeking handouts but to have all material placed on an open and transparent market to allow us to bid for it. There is too much inter-company trading between Coillte and the board mills. We have stated categorically that the board mills should be stand-alone companies as the potential for a conflict of interest is too great as matters stand. Timber should be placed on the open market and Coillte should be a stand-alone forest products company aggressively trying to achieve the afforestation target of planing 15,000 ha per annum. Incidentally, when Mr. Ivan Yates was Minister for Agriculture, he recommended an afforestation target of 25,000 ha per annum. When this target could not be met, we changed the goalposts and reduced it to 15,000 ha. Deputy Penrose is correct that the current rate of afforestation is approximately 7,500 ha per annum. We are a country mile behind the target.

To respond to Deputy Boyd Barrett, we are in full agreement on the aggressive afforestation targets. The hardwood versus softwood balance should be realigned and the minimum target for commercial softwood planting should be 15,000 ha per annum. While we do not advocate that hardwood planting should cease, our industry is starved of raw material.

To respond to Deputy Penrose, last year we imported between 350,000 and 400,000 cu. m. of timber and most of the mills are running at between 70% and 80% capacity. The industry is crying out for raw material, yet 35% of the new plantation last year was hardwood, for which we do not have an industry and which will not bear fruit, as it were, for approximately 100 years. The proportions should be rejigged.

I was not sure what the Deputy meant when he referred to a clash between sustainability and the commercial side. Forestry presents this country with a fabulous opportunity because it is one of few areas where we have a natural advantage over our competitors. Timber can be grown faster here than in the United Kingdom. We should maximise this advantage. One achieves sustainability by replanting and growing again.

Mr. Mike Glennon:

Let me comfort Deputy Boyd Barrett by noting that all members of the Irish Timber Council are signed up for forest steward certification. We passionately believe in sustainability. If the wording in any of our documentation causes the Deputy concern, his concern is misplaced. Sustainability is part of the story of the forest products sector. The industry has great potential. Why are we not planting more when we can grow trees twice as fast as our Scandinavian competitors can?

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The document refers to the Bill being "biased in favour of environmental and sustainability issues", which is unfortunate phraseology.

I asked a question about freedom of information.

Mr. Pat Glennon:

We fully agree with Deputy Boyd Barrett. Some of the decisions that have been taken have not been commercial. As Senator O'Keeffe stated, the industry has a complete lack of trust in Coillte, which is a monopoly supplier. We call for an independent regulator. We have to take the medicine dished out to us and we do not have a card to play in the game, as it were.

Mr. Mike Glennon:

Figures show that the price of saw material delivered into Irish sawmills is approximately 40% higher than in Scotland and England. Not only must we supply this wood to the United Kingdom market, but we must stretch it across the most expensive stretch of water in Europe. The only reason for this disparity is the shortage of raw material on this island. The Government forecasts on which the industry was built were wrong and we have been battling with that issue since.

Deputy Eamon Ó Cuív:

Is the IFFPA's position that the board mills should be supplied from the residues from timber mills and unusable forest products such as crooked trees and certain species of pine? Should the board mills be prevented from buying usable saw log or pallet material?

Mr. Pat Glennon:

Of the between 1.3 million and 1.4 million cu. m. of material for which Coillte invoiced our industry last year, 30% goes straight back to the board mills as wood chip.

Deputy Eamon Ó Cuív:

When a mill cuts a raw log, what proportion is bark and so forth?

Mr. Pat Glennon:

Approximately 50% of it will emerge as a sawn wood product. Between 30% and 35% will be wood chip, with between 10% and 12% saw dust and the remainder bark. That is the breakdown. The wood chip element would be the raw material feedstock for the board mills. The OSB plant is different as it cannot take wood chip and must take raw fibre. There is more than enough crooked, poor quality logs and top end of trees available to be used for this purpose. This is ideal raw material. Let us ensure the best logs are allocated for the most suitable purpose to maximise their value for the country and taxpayers. Let us get the best bang for our buck.

1:30 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Is the witness saying that the timber Coillte provides to the boardmills does not go on the open market?

Mr. Mike Glennon:

No, it does not. Every second Thursday, all the people sitting on this side have to bid for our raw material.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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You have to bid?

Mr. Mike Glennon:

They do not bid for us.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I understand the reason Coillte is not planting any more is that the State, as the owner of Coillte, helps the private individual to plant whereas if Coillte plants, it does not get any premium. Therefore, Coillte has informed us that even though it belongs to a shareholder, it is not economic for it to plant. What would the representatives do to rejig the balance to ensure Coillte would find it economic to plant? On the one hand the representatives say the boardmills are at a huge advantage while, on the other, Coillte says it is at a huge disadvantage when it comes to planting compared to the private individual because the taxpayer is subventing the private individual.

Mr. Mike Glennon:

There are a few answers to that question. First, Coillte, more or less, got the largest land parcel in the State for not a very large amount of money a long time ago and had a huge facility to sell off various strategic assets for quite substantial sums of money for sites, dumps and whatever the case may be. It is clear from its annual accounts that for land it acquired at a low value on vesting day it got millions of euro when selling it off. It got a massive natural start and massive advantage. The issue may be that Coillte got involved with so many non-core activities that the effort on forestry was dissipated.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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If one is a business person, one may have made millions of euro. However, if one is taking over a new factory tomorrow - let us forget about the millions of euro - the question is whether that factory will make money. Somebody may suggest that as one has already made millions of euro, one might as well use it to keep the jobs in that useless factory that is going to lose money. The business person will say that it does not matter how much he makes, but he must make money. It is clear from Coillte's balance sheet it does not have a huge amount. The question that Coillte will logically put to us is that if it plants 100 acres, will it make money on it? Its argument is that it will not make money on it because the individual who is getting a large grant from the State, that is, the taxpayer, is at a huge advantage in respect of every 100 acres that come on the market for planting.

Mr. Pat Glennon:

Why is it that in the UK where 50% of the material is private and 50% is owned by the Forestry Commission, it is still acquiring and planting land and yet Coillte which is getting 30% more for the raw material than in the UK cannot make it work?

Mr. Mike Glennon:

Coillte got 500,000 acres for nothing on day 1.

Mr. Jim McNamara:

Coillte has got to get its costs right. That is the problem. Coillte does not have its costs right. It is clear from Coillte's accounts over the years that any profits it made were on the sale of land.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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With no disrespect - I will finish on this point - it does not seem logical. If we take it that the private sector is very efficient, it will still tell us that even to plant its own land, which it has for free, it needs very substantial grants and premia to make it pay. It appears logical to me that no matter how efficient Coillte is, if the private individual cannot do it, it will not be able to do it on the same 100 acres of land and will have to buy the land, whereas the farmer has it for free. When one stands back and applies commonsense logic, I do not think that stands up as an argument.

Mr. Mike Glennon:

If one has the State investment of 500,000 ha and gets 30% more than one's nearest market for one's product, we all have to invest back into our businesses-----

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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With no disrespect, what the witness appears to be saying is that if it is that good, and presumably if Coillte is getting into the market, private individuals will want to get into the market. One would have to ask why then one pays forestry premium because it would appear to be a profitable business without the premium. There is a flaw in the logic, therefore, and I think we will have to discuss it on another day.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I call Senator O'Keeffe.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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Having heard the observations about the breakdown of trust, no trust and the lack of trust, and given the three big issues involving the policy review group, the forestry Bill and the merger of Bord na Móna and Coillte, my view is that it will be very difficult to make any progress because there is a lack of trust on the other side also. We have a serious dilemma in that unless there is a rebuilding of that trust, we could talk ourselves around about any aspect of it. No trust means nothing can happen. It is very serious.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I thank all the representatives. I wish to make a couple of observations. In regard to the proposed merger, the representatives and Coillte may have common ground on that issue. Coillte will probably resist the proposed merger with Bord na Móna depending on how it is proposed they be knit together. I agree with what Deputy Pat Deering said earlier that the hearings held last year on the proposed sale did have some bearing on the final decision. It gave the various stakeholders an opportunity to make a public presentation in this forum. That is the purpose of meetings such as today's meeting. There was general agreement that the harvesting rights should not be sold and that Coillte should not be sold. There was almost unanimous agreement that it needed to be changed.

Before the witnesses appeared we went through our work programme. The purpose of today's meeting was primarily to deal with the Forestry Bill. That is fine and it is all interlinked, but we agreed to draft a work programme which includes a total land use policy, including the future direction of the forest sector. In particular, the Irish Timber Council's presentation starts that ball rolling. The general discussion that followed made it clear that we have a resource which is the land of Ireland, be it Bord na Móna land, privately owned farm land, privately owned forestry land, estate owned forestry land, etc. It has multifunctional potential, be it food, energy, raw material for the timber industry, recreation and so on. I recall when REFIT 2 or REFIT 3 - whichever is on renewables - was being introduced, Coillte had a major issue with the PSO and having to put so much product into what it would see as an inefficient power generation facility when it would say that it would be more efficient to send it to one of its own processing plants. Furthermore, there are companies which the witnesses will be aware of which can assess electronically or digitally the potential of a wood and say that 95% of a particular tree should go for saw log, or 100% or 50% of another tree should go for box wood. It can assess the most efficient use of every tree in every wood. That technology is in place. We need the income. It is an Irish company with Irish technology that is going into South America, Russia and Australia and we need to harness that technology. I believe a Cork gentleman is at the back of it. It is fabulous technology and has the potential to put to use every tree we harvest in its most efficient way.

My vision for total land use is that we would account for all the public good, including carbon sequestration. Dr. Peter Brennan, EPS Consulting Limited, will be aware of work we did in the last Dáil on the whole issue of using plantations for offsets. That is something we will look at in the context of the bigger picture of Food Harvest 2020 targets and greenhouse gas obligations. Unless we can utilise the land to mitigate the output from agriculture, an irreconcilable collision will take place. While we did not think it would happen, today's meeting has started our work, before we had agreed to start, on land use policy into the future. We would hope we can be part of the framing of a general policy in that regard. Yesterday, we published a major report on promoting sustainable coastal and island communities, but this issue could involve much more effort. Witnesses will get the flavour of what we are trying to do which is the bigger picture and it allows the industry to flourish.

On the issue as to whether the boardmills should be sold off, there will be differences of opinion in the industry. The findings of the forestry review group on this issue will be interesting. I believe there should be a forestry development authority.

It has been done before and does not have to cost a fortune. It would be advantageous, but should feed into an overall policy. I believe we are at the start of something here.

The committee has genuine concerns in regard to the Forestry Bill. It would have been better if the new policy of heads of Bill being presented to a committee before being developed had occurred and they had been brought to the committee first. However, we will try to deal with some of the matters that have arisen. Other submissions have yet to be made and we will have another hearing on 28 January with three other groups. We are seeking to defer Committee Stage for three or four weeks, until the end of February or early March, which will give us time to give the Bill due consideration and prepare some proposals from the committee to try to ensure it achieves what it sets out to do, namely, to streamline and encourage more afforestation.

I thank all the witnesses for attending and thank the members of the committee for engaging on this matter. Deputy Boyd Barrett is not a member of the committee, but obviously has an interest in this area. This subject is huge and feeds into a total land use policy. It is something that has significant potential. While we have advantages in this regard, we face challenges. The Irish Timber Council made the point in its presentation that this industry was 80% domestic and 20% export, but was able to flip that around during a recession so that where we might have expected a glut of supply material in the market, there is now a shortage. This demonstrates the adaptability of the industry. While the industry is driven by both sectors, the relationship and remit of Coillte will be fundamental to its future. The State will remain a player in the forestry sector, but how it will best work with the industry will be key to defining the success or failure of the industry in the future.

I hope the groups found their visit here useful. It was useful to this committee. We have further hearings on the Bill on 28 January and we will also do further work on it. If any of the witnesses wish to have any further input, we will welcome any submission they wish to make.

1:40 pm

Photo of Michael McNamaraMichael McNamara (Clare, Labour)
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When will we deal with the Bill on Committee Stage?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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It was provisionally scheduled for 4 February, but we are asking to defer that until the end of the month or early March so that we have time to consider it further. The next meeting to discuss the Bill with witnesses will be on 28 January 2014.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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Will the Chair please repeat that?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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It will be on 28 January. The select committee will meet next Tuesday, but the Senator is excused from that.

The joint committee adjourned at 2.35 p.m. until Tuesday, 28 January 2013.