Mary Wallace (Meath East, Fianna Fail)

I welcome the opportunity to make a statement to Seanad Éireann on forestry, for which I have special responsibility in the Department of Agriculture, Fisheries and Food. I intend to briefly highlight for the information of Members the importance of forestry to farmers, the economy and the environment in the reduction of greenhouse gas emissions and their impact on global warming. I will outline why it is vital that forestry be sustained in the years ahead through encouragement and incentives to farmers for new planting. I look forward to Members' contributions on this important matter.

It is useful to put forestry in context. The area of the national forest estate is some 700,000 hectares, more than 10% of the total land area. While this has expanded significantly since the mid-1980s with the introduction of grant schemes aimed at encouraging private landowners, mainly farmers, to become involved in forestry, it is relatively low compared to our EU counterparts given that 35% of the total land in the EU is under forest cover. Of the national forest estate, more than 57% is in public ownership through Coillte and the remaining 43% is in private ownership. Some 25 years ago, 85% was in public ownership and 15% was in private ownership. Approximately 16,000 plantations are privately owned, predominantly by farmers.

There is no doubt that the full economic contribution of forestry goes far beyond the forest gate. Ireland's forestry comprises a growing sector, a vibrant forest industry and a modern harvesting and transport sector. The growing sector comprises many small and medium sized enterprises that service Ireland's woods and forests, including forest nurseries, consultants, self-assessment companies and forest contractors. The processing sector includes conifer and hardwood sawmills that rely on the growing sector as a source of raw material. There are nine large to medium sized fully automated sawmills and approximately 100 small sawmills. There are also four boardmill processing industries, which utilise a combination of small roundwood, recycled wood and wood waste. Finally, there is the harvesting and transport sector that forms the essential link between the growing and processing sectors. Total employment in the forestry sector is estimated at 16,000 persons. This all generates considerable economic activity and benefits in the wider economy and more especially in the rural communities.

The current processing requirement is just under 4 million cu. m. per annum and there is a current deficit of 400,000 cu. m. per annum, which has to be met through imports. There is an established and growing industry based on raw material from Irish forests and it is important that continuity of supply of this raw material is maintained.

Farmers are now the key people engaging in planting. Forestry is a realistic land use option where there are 100% establishment grants for the planting of trees and an annual tax-free premium of up to €573 per hectare for up to 20 years. An additional premium of up to €200 per hectare for five years is available to farmers in the rural environment protection scheme, REPS, who join the forest environment protection scheme, FEPS, and plant part of their land in accordance with that scheme. I was pleased to introduce a number of significant changes to the FEP scheme last week. The main changes were a reduction in the minimum size to five hectares for farms with less than 30 hectares and, in respect of bigger farms, to dispense with the sliding scale and pay a flat rate premium of €200 per hectare, for planted areas of eight hectares or more, irrespective of farm size. Based on what the sector has conveyed to me, these changes to FEPS should provide a boost to our planting figures. I was, therefore, pleased to be able to deliver this package as it is further evidence of the Government's commitment to forestry and an acknowledgement of forestry as a positive contributory factor in the areas of the economy, rural development, climate change and renewable energy.

Forestry is a source of real income for the farmer in terms of an annual income from the premium, in the medium term from the returns from thinnings and in the long term from the end value of the crop. Last April, for example, almost €57 million was paid out in the annual forestry premium payment under the forestry programme. As I have already mentioned, this is an annual tax-free premium.

Due to the current strong market demand the price for timber in Ireland is very high. First thinnings that two years ago were sold standing for between €1.50 and €3.00 per cu. m. are now fetching €8.50, which makes it more attractive than ever to thin early. As the quantity removed at first thinning is usually between 40 and 50 cu. m. this represents an income of €340 to €425 per hectare. Where the harvesting of stake material is an option, a higher income will be realized. The national forest inventory, which we published in December after a two year survey of the Irish forest estate, estimated that 21,000 hectares of forest established in the private sector are at a stage where they could be thinned. There is an attractive financial benefit in farmers and landowners taking immediate steps towards thinning their forests thus gaining income from thinnings and adding greatly to the timber value of their forestry assets. If I have two messages to contribute to today's debate one relates to income value for farmers and the other is that 21,000 hectares are ready to be thinned and doing so is in farmers' interests.

A number of producer groups have been established throughout the country, which are, with funding from my Department, currently promoting thinning and developing local markets for those thinnings. It is also important to note that while most forests are ready for first thinning from year 15, the crop may be thinned on a five-year cycle thereafter.

Another important return that is sometimes not fully taken into account when evaluating forestry as a possible enterprise is the end value of the timber crop. Currently, the estimate for the value of timber at clearfell stage ranges from €12,000 to €15,000 per hectare, depending on a number of variables including market prices, crop quality and species. It is important to note that income from sale of thinnings and timber at clearfell is tax-free. The increase in the price of timber by some 20% to 25% in the last 18 months was encouraging because as demand rises for this renewable product so too must returns to producers, primarily farmers.

Forestry should be encouraged because it offers a substantial income to landowners annually in both the medium term and long term. There are also other non-monetary factors to be taken into account such as the way in which various enterprises complement each other, the type of land and how labour intensive and time consuming an enterprise is, especially if a farmer is also working part-time off the farm.

Not only should we encourage new planting as a source of income for farmers, we should also appreciate the other significant benefits accruing from forestry. There is increasing awareness and appreciation of forestry vis-À-vis its role in climate change. Climate change is now a top political priority as we address ways to reduce greenhouse gas emissions and their impact on global warming over the period to 2020. Forestry has a distinct role in addressing climate change in the Irish context. Our existing forests represent a very significant store of carbon dioxide, the most important greenhouse gas, and our recently completed national forest inventory has shown that it is many times larger than the total annual emissions of greenhouse gases. The store is growing rapidly, particularly in younger forests planted since 1990, which are removing over 2 million tonnes of carbon dioxide from the atmosphere on an annual basis. These forests are well below their maximum annual carbon dioxide uptake with the result that the period to 2020 will see a rapid increase in annual sequestration to in excess of 4 million tonnes. National investment in afforestation, particularly since 1985, is the main reason that forests are contributing to climate change mitigation at this level. This is borne out by the fact that in the 23 years since the introduction of the forestry grant and premium scheme 200,000 hectares of new forest, over a quarter of the entire forest area of the country, have been established.

As well as reducing the levels of greenhouse gases in the atmosphere, the new forests will lessen the cost of Irish compliance with our Kyoto Protocol targets. Over the five years between now and the end of 2012, estimates are that over 10 million tonnes of carbon dioxide will be taken up by forests within the Kyoto Protocol framework, resulting in potential savings of more than €200 million to the State, at current purchase prices of €20 per tonne of carbon dioxide. Should the current carbon accounting frameworks continue beyond 2012, the annual contribution of forests to national compliance, in today's costs, will be close to €100 million. To sustain this level of contribution to climate change continued investment in the afforestation programme will be required over the coming decade and beyond. Not only will forests remove carbon from the atmosphere, they will also make a sustained contribution to renewable energy targets and the development of the wood processing sector in Ireland.

Policies and measures targeted at increasing the use of a range of renewable energy sources, including wood biomass, are set out in the White Paper on energy and the biomass action plan for Ireland. Forestry is well placed to contribute to these goals by producing clean renewable wood fuels from Irish forests. The forest service of my Department and the National Council for Forest Research and Development, COFORD, an agency of my Department, have estimated that wood energy has the potential to contribute emissions savings in excess of 4 million tonnes of carbon dioxide per annum by 2020 if the full range of measures envisaged, from heat, combined heat and power, and power generation are realised. Wood, once it is procured from forests that are sustainably managed, where trees that are felled are replaced and forest cover is maintained, is a carbon neutral fuel source. It can be renewed indefinitely. Harvesting, on the scale needed to supply both the traditional wood product outlets for pulp and sawlog and the emerging energy market, needs to be rapidly developed over the coming years. In recognising this need we have put in place capital grants for the purchase of wood energy harvesting equipment.

Wood energy harvesting, processing, installation and maintenance will create many new jobs in rural Ireland and, by displacing energy imports, will aid security of supply, one of the key objectives of Irish energy policy. Already a number of companies are involved in the supply of wood energy for heating. To date, Sustainable Energy Ireland has grant aided 128 biomass boiler projects, about 52 MW of capacity, 73 of which use wood chips, 45 of which use wood pellets and 10 of which use a combination. In addition 3,500 pellet boilers have been installed under the greener homes scheme and a further 1,500 applications are being processed. In line with these developments new pellet production and storage facilities are coming on stream, with two in the process of being constructed.

This wood energy market creates a market for thinnings from forests during their growing cycle. As I have mentioned, many of the farm forests that were established in the late 1980s and early 1990s are now close to thinning, which improves the quality and increases the size of remaining trees, allowing larger commercial timber to grow. The developing wood energy market will create an outlet for such thinnings. However, once these markets are developed there must be continuity of supply into the future and this is another reason it is necessary to encourage new planting. There are many factors affecting the rate of planting, both within and outside our control, and we need to address what we can. I requested Mr. John Malone, former Secretary General of this Department, to undertake a study on the factors affecting the rate of afforestation in recent years, given the many incentives to plant already available to landowners. I look forward to receiving his report shortly.

I have concentrated on the significance of forestry as a source of income to farmers and its role in climate change and renewable energy. I am not overlooking the role it has to play in the environment, in the provision of recreation and to society generally. We are currently appreciating those benefits. We need to ensure forestry is still around in the years ahead to continue to provide those benefits to our children and to future generations. The time to act is now. There is ongoing coverage of the consequences of deforestation throughout the world. We need to ensure forestry remains a feature of the landscape and economy and continues to provide an income stream for farmers and a steady supply of material for the timber and energy sectors.

As Minister of State with responsibility for forestry, I am committed to the sustainable development of forestry and I hope Senators, as public representatives, will assist me in this objective through the encouragement of new planting and the development of the sector generally. I thank Senators for affording me an opportunity to outline the position of forestry in Ireland.