The Future of Coillte

September 2013

Fianna Fil Policy Paper

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FIANNA FIL POLICY PAPER ON THE FUTURE OF COILLTE

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Contents
Executive Summary Fianna Fil Vision for Coillte An Independent, Commercially Focused Coillte Increased Afforestation and Renewable Energy Cooperation Enhancing the Use of Forest Land Tourism and Community Initiatives Conclusion 3 5 7

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Executive Summary
Fianna Fil believes that Coillte should remain as a separate state owned, commercial company which acts as a custodian of public forests for the citizens of Ireland and ensures that the delicate interdependence of the Irish forestry industry is not undermined. Coillte should cooperate with Bord na Mona in developing renewable energy solutions but remaining as an independent entity, recognising the fact that both companies have significantly different core business activities. Coillte should be developed primarily as a forestry company. Where appropriate Coillte land could be used for purposes other than its core business. Development of rural recreation or other commercial interests in the areas of communications or renewable energy may guarantee the sustainable future of Coillte and as such should be welcomed. Fianna Fil policy would see Coillte increase net afforestation efforts throughout Ireland and in particular, rural areas which are considered unemployment black spots. An afforestation target of 20,000 ha per annum should be implemented between 2014 and 2020 by Coillte bringing Irelands percentage of forest cover closer to the EU average. This afforestation should be funded as far as practicable through Coilltes profits and capital investment programme in order to guarantee supply and profit in the future. New afforestation projects would have an increased density to maximise economic yields for the company. Fianna Fil wants new planting to have a balanced mix of commercial conifer and broadleaf trees with at least 50% of new planting to be native Irish trees such as Alder and Oak trees. Fianna Fil believes that agriculture lands held by NAMA should be considered for afforestation where commercial or residential development is no longer economically viable. Coillte should develop community forests and begin an Adopt a Tree campaign where an individual or a group, including families, can sponsor the planting of a tree. This would be similar to the previous Millennium forest project.

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Fianna Fil policy would see Coillte increase its focus on rural recreation and tourism efforts, increasing the number of forest walkways and cycleways. Coillte in conjunction with all significant state land owners, including the National Parks & Wildlife Service and the Office of Public Works, should conduct an audit of current state owned land with a view to increasing tree plantation on this land where appropriate

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Fianna Fil Vision for Coillte

Coillte, operating as a commercial semi state, has been a success. The company was established by Fianna Fil under the Forestry Act 1988 to carry on the business of forestry and related activities on a commercial basis. Coillte has managed to build a successful wood product industry in Ireland and increase its own forest estate in area from 376,000 ha to 445,421 ha. (445,315 ha are forested) since 1989.

The company is profitable and has gone from strength to strength despite the recent economic downturn. Coilltes turnover in 2012 reached 262.2m with profits after tax of 15.2 million. Coillte accounts for more than 80% of all timber supplied to the market in Ireland each year. The company has also diversified its activities by embracing and expanding its business to supply panel products and new renewable energy products in a growing market. These economic activities directly employ around 1,000 people in the company.

Importantly, Coillte provides a vital leisure, tourism and amenity benefit to the citizens of Ireland. The company currently manages 10 forest parks, over 150 recreation sites and 3 mountain bike facilities, along with over 50% of all off road long distance hiking routes in Ireland. Coilltes annual report has previously noted that visits to their forests are estimated to deliver over 270 million to the tourism industry nationally each year.

Fianna Fil believes in a viable, independent Coillte focusing on delivering for the Irish citizen and guaranteeing commercial success for the wider wood industry. It is important that Coillte balance the need for commercial success with that of protecting Irelands forestry heritage and we believe that the best way to achieve this is by keeping the company in state ownership. We opposed the proposed sale of Coilltes timber harvesting rights and are also opposed to the merger of Coillte with Bord na Mna.

This policy document outlines a number of creative and constructive proposals to ensure Coilltes future success as a semi-state company, recognising its central activities in the success of the wood industry in Ireland and its role as a guardian of Irish forest heritage.

Fianna Fil wants to see a return to large scale afforestation by Coillte using its own profits to expand and guarantee future supply to the wood industry. We want to see cooperation between Coillte and Bord na Mna in the area of renewable energy but as separate companies, not as one entity. We want a particular focus on planting
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native Irish trees in new forest plantation and the development of Community Forests.

Agriculture lands held by NAMA should be considered for afforestation where commercial or residential development is no longer economically viable. Overall, we want Coillte to remain as a separate state owned, commercial company which acts as a custodian of public forests for the citizens of Ireland and ensures that the delicate interdependence of the Irish forestry industry is protected for the future.

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An Independent, Commercially Focused Coillte

Coillte to be maintained as an independent commercially focused semi-state company. Coilltes commercial semi-state status will protect the delicate interdependence of the Irish forestry industry and ensure that there is an adequate continuous supply of wood products for board and milling industries.

Coillte as a semi state company has achieved many of its goals which were set out in the Forestry Act 1988. The companys initial focus on increased afforestation resulted in a dramatic increase in forestry cover in Ireland from approximately 5.6% in 1980 to over 10% today. Coillte was the driving force behind much of this afforestation. The forestry company owns approximately 450,000 hectares of land, 90% of which is forest.

Fianna Fil wants to maintain Coillte as an independent, commercially focused semistate company given its success in the past and impressive potential for the future. As a profitable semi-state company with a turnover of 262.2m and profits after tax of 15.2 million in 2012 the potential for Coillte to expand its successful business model is considerable.

The forward sale of harvesting rights of some of the timber that is currently owned and managed by Coillte to raise state funds is not an option for the viability or sustainable long term future of the public company. Selling the profitable section of Coilltes business while leaving the remaining debt, deficit funding requirement and pension liabilities of the company in public hands would result in the state having to financially support the remaining part of the company. It has been estimated that under any such plan Coillte would have to engage in some reduction in staffing numbers from its current level of 967. The Bacon Report on Coillte in January 2013 estimated that the potential long term costs of the sale of harvest rights in Coillte could be approximately 1.3 billion, undermining the case to sell those rights.

Interdependence is a central feature of the Irish timber processing sector. The current operation of Coillte ensures a secure supply for the domestic timber processing sector at foreseeable prices. Coillte as the main provider of raw materials for this industry has been central in ensuring the industry has security of supply by committing to placing a known and specific amount of timber on the market each year. Any sell off to a private operator may result in wood products being exported before being processed in Ireland. The new operator would also be under no
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obligation to specify the amount of timber it will release into the market in the coming year.

Fianna Fil firmly believes that the reasons outlined above show that keeping Coillte as an independent, commercially focused, semi-state company is the best option for securing both the companys future and that of the timber industry in Ireland.

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Increased Afforestation and Renewable Energy Cooperation

Coillte to increase afforestation efforts throughout Ireland and in particular, rural areas which are considered unemployment black spots. An afforestation target of 20,000 ha per annum should be implemented by Coillte between 2014 and 2020. New afforestation to be at an increased density to maximise economic yields of the company and guarantee supply and profit in the future. Coillte to cooperate with Bord na Mona in developing renewable energy solutions but remaining as an independent entity.

Coilltes initial success in afforestation projects in Ireland has resulted in the Irish forest estate coverage increasing to an area of over 744,000 hectares by December 2011. This equates to 10.6% of Irelands land area as opposed to just 5.6% of land area as recently as 1980. By comparison, the average level of forest cover in the European Union (EU) is 38%. The main source of growth in recent years has been driven by private forestry investment. Coillte dramatically reduced its afforestation programme after the European Court of Justice ruled that the company was a public body in the Case C-339/00, Ireland v. Commission of the European Communities and as such could not avail of grants from the EU institution to increase its forestry portfolio. The price of land also increased greatly in Ireland at the start of the 21st century. This made an expansion programme of afforestation by Coillte uneconomical in the short to medium term.

Land prices have now returned to a more suitable level to begin investing once again in an afforestation project. Fianna Fil believes that Coillte must restart a programme to expand its forest estate by using its current profits and capital expenditure to purchase suitable land for forest expansion. Fianna Fil believes an afforestation target of 20,000 ha per annum should be implemented between 2014 and 2020. This target would bring Irelands forest cover to 884,000 ha. It would also future proof secure supply to the Irish timber processing industry in the long term and enhance Coilltes ability to invest in renewable energy projects in the future.

An increase in forestry in Ireland under this plan would result in higher sustainable employment in rural areas, an increase in the stock of renewable resources in Ireland and bring about a further reduction in carbon. It would also provide more

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amenities for the Irish tourist industry. Importantly for the Irish timber industry the increase in forestry would also secure the long term supply of raw materials.

This forest expansion programme should prioritise afforestation in rural employment black spots where suitable land can be found. Employment created during the plantation of forestry can be sustained by the management and upkeep of the forests in the long term. Although the increase in initial employment numbers may be low, the long term employment opportunities of a tourist friendly, well-managed forest could create a sizeable number of jobs which would create a positive economic impact on the area.

Further employment opportunities are possible with the advance of Coilltes renewable energy section, Coillte Enterprise. Coillte has utilised its land mass to construct a number of wind farms and embrace the renewable energy market. Approximately 20% of installed wind energy generation capacity in Ireland is situated on land, formerly owned by Coillte. Coillte also is a leader in Ireland in the provision of carbon-neutral Biomass to Heat solutions to the Commercial and Industrial sectors in Ireland.

The potential of these two renewable energy resources should be grasped fully by Coillte to ensure that the company has a sustainable and profitable future and to increase employment in rural areas. Fianna Fail believes that the best way to achieve these aims is for Coillte to remain an independent semi-state entity focusing on its own forestry and renewable energy industry, promoting tourist activity in the countryside and building on its successful panel products business.

Fianna Fil is therefore opposed to the merging of Bord na Mna and Coillte. The two companies principle activity and reason for existence diverge greatly. Coilltes role in forestry management and expansion should not be diluted by the creation of a semi-state renewable energy company. Nor should its role as a custodian of public forests for the citizens of Ireland be undermined by a specific focus on energy services. Where collaboration with Bord na Mna is practical and mutually beneficial it is obvious that the two companies can and should engage in business agreements to further their potential business interests, particularly in the area of renewable energy. However, if Coillte is to fulfil its original purpose of carrying on the business of forestry and establishing and carrying on woodland industries it is important that the company keep its current status as an independent entity.

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Enhancing the Use of Forest Land

New afforestation to be at an increased density to maximise economic yields of the company. New planting to have a balanced mix of commercial conifer and broadleaf trees with at least 50% of all new trees planted coming from native Irish species such as Alder and Oak trees. Agriculture lands held by NAMA to be considered for afforestation where commercial or residential development is no longer economically viable.

In order to maximise economic output from Coilltes forestry holdings it is proposed that future afforestation plans have a high level of tree density. High densities will improve the economic return of proposed new forests and maximise the land use of any investment. Increased density yields will also result in the Irish timber industry remaining competitive on the international market and keep control on investment costs overall. The current requirement that 15% of any area to be afforested is left unplanted should be reduced to 10% to allow higher yields. As most Irish forests are small in scale it is important that tree density is high in those forests and that the estates are well managed and cost effective. Any new afforestation programme carried out by Coillte must also reflect the importance of native Irish trees in the plantation process. Coillte, as a semi-state company, should act to promote native Irish trees across the country. Currently there is a high degree of diversity in Irish forests which is to be welcome. However, a renewed focus on native Irish trees is needed to ensure positive ecological and aesthetic benefits which are reflective of Irelands indigenous tree species. These trees are more amenable to recreational activity, the creation of parklands which are in keeping with Irish forest life and often offer a longer term investment opportunity than non-native species. Fianna Fil would like to see any new afforestation programme having at least 50% of the new planted trees being of a native Irish species. In order to achieve the plantation of 20,000ha of trees per annum to 2020, Fianna Fil proposes that Coillte, in conjunction with the National Assets Management Agency (NAMA) examine all agriculture lands held by NAMA to be considered for afforestation where commercial or residential development is no longer economically viable. The afforestation of this land has the potential to raise the value of the land significantly. Under Section 10 of the NAMA Act, NAMA is required to obtain the best achievable financial return for the State having regard to the cost of acquiring and dealing with loans and any other costs incurred in preserving or enhancing the value
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of property securing them. Fianna Fil believes that the plantation of forests where commercial or residential development is no longer economically viable would result in the state obtaining the best achievable financial return on these lands. Not only would such a plan contribute to the economic renewal of the Irish state by creating and increasing employment in these areas, the afforestation of these NAMA lands would leave a positive lasting legacy in terms of amenity value, CO2 reduction and ecological benefits for the local community.

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Tourism and Community Initiatives

Coillte to develop community forests and begin an Adopt a Tree campaign where an individual or a group, including families, can pay for the planting of a tree and be given the location of that tree. This would be similar to the previous Millennium forest project. Coillte to increase its focus on rural recreation and tourism efforts, increasing the number of forest walkways, cycleways and other recreational activities. Coillte in conjunction with all state land owners and agencies, including the National Parks & Wildlife Service and the Office of Public Works, to conduct an audit of current state owned land with a view to increasing tree plantation on this land where appropriate.

Irish people have a strong affinity to their forests. They have shown that they fully support the public ownership of forests for common community benefit in the recent campaign to secure Coilltes future as a state owned company. In order to utilise this goodwill and implement an ambitious afforestation programme, Coillte should initiate an Adopt a Tree campaign where an individual or a group, including families, can sponsor the planting of a tree in new forests. Those who subscribe to adopt a tree should be given the trees location and their names should be published on a subscribers board at the entrance to the forest. Direct public subscription to the afforestation programme will allow Coillte expand the forest estate at a quicker rate than relying solely on its own profits or capital expenditure.

The expansion of these forests will also give Coillte the opportunity to increase its focus on rural recreation and tourism efforts, increasing the number of forest walkways and cycleways which will provide a boost to local tourism in the areas selected for afforestation. Coillte are to be complimented for their continued innovative use of its current forest estate. The advance of Coilltes walking, hiking and bike tracks, orienteering courses and zip line adventures are all to be welcome. These developments should be built upon to encourage tourism in rural areas. Fianna Fil believes that any new forest plantation must be examined as to how best tourism levels could be increased in the area using the new Coillte owned land. Coillte should utilise its current estate to enhance and invest in its current amenities and encourage access by the public.

Finally, Coillte, in conjunction with the National Parks & Wildlife Service and the Office of Public Works should conduct an audit of current state owned land with a
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view to increasing tree plantation and tourism potential on this land where appropriate. A review of the states current parks in this manner will provide an overview of potential areas where tourism can be increased through the cooperation on Coillte, the National Parks and Wildlife Service and the OPW.

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Conclusion
The future of Coillte is a bright one. The companys success in building a strong forestry industry in Ireland and increasing forest cover in Ireland has been impressive. The companys current diversification of its business is a welcome strategy and one which will secure its future in the long term. Now is the time for Coillte to take the next advance forward in an ambitious afforestation programme as an independent, state owned, commercially focused company.

Fianna Fil proposes that Coillte must now:

Remain as an independent, state owned and commercially focused company; Implement an afforestation target of 20,000 ha per annum between 2014 and 2020; Ensure 50% of new planting to be native Irish trees such as Alder and Oak trees; Cooperate with Bord na Mona in developing renewable energy solutions; Increased forest density to maximise economic yields for the company; Seek NAMA lands to be considered for afforestation where economically viable; Develop community forests and begin an Adopt a Tree campaign; Increase its focus on tourism efforts; Conduct an audit of current state owned land with a view to increasing tree plantation on this land where appropriate.

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amon Cuv TD & Michael Moynihan td

Dil ireann, Leinster House, Kildare Street, Dublin 2.
0612