Mr. John Moloney:

I refer to Deputy Penrose’s question. A number of speakers asked about whether the return to the Exchequer is in the form of cash, employment or the public good. I would like to reach an understanding with the shareholder about what is possible from Coillte. It is a business that is relatively low-returning in terms of a return on asset business. One could say it is asset rich and cash poor to a level. That is one of the challenges in saying that X amount of cash is required when the business has a statutory obligation to replant every site harvested, even though some of it might be sub-optimal from a commercial forestry point of view. It may be a case of modification to a lower stocking rate.

We must have a clear understanding with the shareholder about what is required and what is possible from Coillte in terms of a dividend. I refer to "dividend" in the widest possible sense of the word - in terms of cash, public good and supporting other areas from our asset base.

In regard to employment, there are 900 people employed directly in the business and there is very little Coillte area left unplanted. This comes back to the common thread that it is a matter for individual landowners as to what use they put their lands to; that is a decision for them. Clearly, we would be supportive of people planting because we have a vested interest in processing. We take our replant obligation seriously. In terms of employment potential, I referred only to the 900 employed directly in Coillte and the 1,300 or so indirectly providing services. However, there are a further 15,000 to 20,000 jobs in the downstream sawmill and related timber-processing businesses, for which we provide a significant proportion of the raw material. The continuation of that provision into the future is very important.

I do not have a view today about what type of incentive for biomass should be pursued. It seems to me that what has been introduced in the United Kingdom in the past two years has already achieved significant traction in terms of converting to biomass usage.

Deputy McNamara is correct that there is a surplus over what is required in the panel mills. The question of whether Coillte should sign up for exclusive supply agreements is one that will have to be reflected on given the volume of timber Coillte has. In the first instance, such agreements could only be for volume because the market price will evolve over time, but it is possible to work out mechanisms in that regard. Practically, there is a surplus over what is required in the panel mills; theoretically, one could engage in long-term supply contracts, with price being adjusted on an annual basis based on where the market is. I have responded to the Deputy's point about the dividend in the broader sense. It is important that we have a shared understanding about what the dividend from Coillte means as we move forward.

The Chairman is correct that we control a significant part of the forest asset and a significant part, in a concentrated business, of the available sawlog going into the future. It is important that this is delivered to the downstream processing industry, which has also become more concentrated. In fact, five purchasers account for 84% of sales from the organisation. That is a fact of life and it has enabled those purchasers to compete internationally. Again, it goes back to the need to have a definition of the Coillte dividend and what is deliverable across all of the facets.

In response to the point made by Deputy Boyd Barrett, the reality is that underperformance in forestry is a national issue. Coillte has a block of land of some 445,000 ha which it is tasked with managing. In addition, there is a whole private sector element which has evolved and developed to the extent that individual landowners have taken a decision that for their type of land and their location, forestry is a good development. That is to be encouraged. We have not been able to partake in much of that development because we were prevented, under state aid rules, from accessing the grant aid that has driven this forest establishment. Nevertheless, the business is absolutely supportive of providing advice and support - I responded to a question about this just before the Deputy arrived - by, for example, supporting Teagasc and the forest service and helping farmers to assess how to deal with the wind blow from the recent storms. It can seem like a disaster to a new forest owner when that type of blow-down happens, but it can be managed. Coillte staff have been very much involved in that effort.

In terms of our long-term focus, there is almost an advocation that we should get into buying land. My view, however, is that Coillte cannot compete against other land users. We are an advocate of forestry as a viable land-use option for lands of a particular type. In all of this, the trade-off is cash, but we have to replant and recycle capital in the business. When a hectare is cut down, it costs money to put back 2,500 plants. That capital is being recycled in the business on an ongoing basis. It is why cash throw-off in the business is relatively modest.

In regard to species mix, Sitka spruce is the predominant commercial species in Ireland, but there have been developments, particularly on the margins of plantations, in regard to other species, which is helping to take the amorphous look off it. That is to be encouraged.

There was reference to the Irish Forestry Union Trust, IFUT. As I understand it, Coillte did hold a couple of units in that some years ago, but not at this time. IFUT was about a bringing together of a number of Irish pension funds, and Coillte put in some 10,000 ha over 25 years to be run for one harvest cycle. Coillte retained the land and provided management services and, in most instances, sold the timber on behalf of the pension funds involved. At this stage, some 10% of the forestry rights connected to those lands have come back to Coillte, with the remainder to revert in the future. I am not against our involvement in Irish pension funds; it is a legitimate way for Coillte to bring cash into the system under a process whereby it retains the land, sells small quantities of the rights from year to year, manages the land on behalf of the pension funds and facilitates them to sell the timber. Essentially, all the funds are really doing is investing to get the final clear fell, with the rights then reverting back to Coillte. This is helpful in terms of managing the business's cash and the return in the business over time, versus waiting 40 years for it. That is one of the benefits this strategy can bring, as well as supporting a stable, long-term, Irish-owned pension asset within the State. It is not a bad idea.