Ireland Tries to Cut Debt through Privatisation
In February, Ireland announced plans to raise as much as €3 billion (£2.5 billion) from the sale of state-owned assets, as the country seeks to regain its economic sovereignty. As part of the privatisation plan, the government said it will consider selling state forestry company Coillte, or rather its timber-harvesting rights, for a period of up to 80 years. Amid the unabated controversy surrounding this plan, economist Peter Bacon published a report ‘Assessment of the Consequences of the Proposed Sale of Coillte’s Timber Harvesting Rights’ examining the government plan and its potential impact on the timber industry and the country’s supply of the raw material. As the Irish Examiner reported on March 28, Bacon outlines in his report that Coillte and much of the country’s timber industry are in line to become victims of Ireland’s attempt to reduce debt.
In his report, Bacon holds out the prospect of a foreign buyer exporting the timber without processing, the Irish Examiner noted. According to the author, a new private owner of the harvesting rights could also maximise short-term gains from their forestry investment by adjusting the timber supply to the price movements on the market. Either way, a shortage of timber supply to the domestic market could seriously set back the potential of the Irish forestry sector and decimate the country’s sawmilling industry.
Coillte to Remain Irish Timber Industry’s Mainstay
Ireland has 750,000 hectares of forested land, 351,000 hectares of which are managed by Coillte. The remainder is held by private owners engaged in forestry investment and timber production. Bacon’ report explains that even though the area planted has decreased, and is now below national targets, the private sector has continued to plant up to 10,000 hectares per year, while Coillte is replanting 6,000-7,000 hectares annually after harvesting its forestry. Yet, net afforestation by Coillte has fallen almost to zero in the past decade.
Despite this trend, Coillte’s role in Ireland’s timber industry cannot be underestimated, Bacon pointed out in his report. Private forestry plantations in the country have been on the rise for almost two decades, and according to estimates, timber supply from the private sector will increase over the next ten years as more and more companies opt for forestry investment in the country. Yet, most privately owned plantations are less than 15 years old, meaning that they still have not reached maturity for harvest. Consequently, Coillte is almost the only source of supply of large diameter mature timber, and will maintain its position as the mainstay of the Irish forestry industry up to and beyond 2030, the ‘Assessment of the Consequences of the Proposed Sale of Coillte’s Timber Harvesting Rights’ report states.
Bottom Line – Two Problems Arising Out of Coillte’s Sale
According to Bacon, the sale of Coillte’s timber-harvesting rights would represent an abrupt change, which could disrupt the processing sector due to a lack of certainty of future supply. He foresees two problems for the industry arising from the sale of the state company crops. Firstly, the economist remarks that a potential foreign buyer might export the timber without processing. Secondly, a new private owner would be unlikely to commit to placing a specified amount of timber on the Irish market each year like Coillte does. The report points out that the evidence suggests that private plantation owners are more likely to attempt to maximise short term gains from their forestry investment by increasing supply when prices rise and decreasing it when prices fall.
Govt Plans to Sell Off Our Forests for 3 days Worth of Expenditure. Public Will Loose Access for 90 Years
The government is planning to sell off our national forests which are currently owned by Coillte. The plan would be to sell harvesting rights on 500,000 acres out of 1.2 million that they manage. They claim it is worth €700 million although in the Peter Bacon report on Forestry, he puts the true value at €360 million or the equivalent of 3 days of government expenditure. Bacon said: “economic rationale for the proposed sale of harvesting rights no longer stands up and cannot be justified.” and that he further concluded it would actually cost the state €1,300 million to sell the harvesting rights of Coillte due to various liabilities. The report says that the forests should be developed further as a public resource.
But it does not stop just there because part of the plan to sell the harvesting rights would see the land lease to private companies for 90 years and there would be no obligation to continue public access and given experience it other countries the public would lose access to these lands for recreation. This would affect tourism, hikers, mountain-bikers, joggers, families out on weekend walks and many other forms of recreation. Leasing the land for 90 years is a good as selling it for good!
There are a number of private institutions interested in grabbing our national forests amongst them Chinese firms who in all likelihood would bring in their own people and trunks and ship the unprocessed wood back to China directly, thereby threatening many existing timber related jobs and local saw-mills in Ireland. Last year trade agreements were signed when the Chinese visited Ireland and we still do not know what promises were made since they are secret.
One of the companies also interested is a Swiss private pension firm Helvetia Wealth and none other than ex-Taoiseach Bertie Ahern was appointed it’s chairman no doubt with an eye to contacts and network of people within government, councils, civil service and state bodies that he would have. In fact it is not even possible to know from Coillte if any sales have already been made with Helvetia given that Coillte have already sold 40,000 acres of our public land to the private sector. But Ahern is not just inserted into Helvetia for he is also chairman of the industry body International Forest Fund who are also behind the land grab not just in Ireland but elsewhere. We must recall that this is the same lucky Ahern who told the tribunal that he won €25,000 at the races and lead the economic miracle in Ireland and told the ‘naysayers’ to go hang themselves. Unfortunately quite a number of people have committed suicide since the miracle economy collapsed.
Of the 40,000 acres already sold a large chunk were sold to facilitate Shell in Mayo for their operations where they will extract the Corrib Gas for free since they will pay no royalties and will be able to write over all costs against tax. Land was also sold to Wind Farm developers in areas that would be considered unsustainable for wind because the sites are not the best locations for wind and they would be underpowered.
People should be aware that much of the forestry targeted for the sell off is on land which was planted at state expense in the 1960s by the then Forestry Service. No doubt there was many a statement then about how these were for our future. Instead because of the insistence of bailing out bankers, developers, speculators & gamblers and bond holders this wealth is stolen from us all through sleight of hand.
The Woodland League has been campaigning for the past few years against the sell-off of our forests and it is time that the pressure is stepped up and more people take notice and get involved. In Sweden where parts of their forests were privatised a few years ago, they have now reversed the process and are taking them back into public ownership.
In the UK, similar moves are afoot. It is possible we can win this fight as this is a very broad issue affecting a very broad range of groups and people and affects all counties.
We also need to put a stop to the drip drip selling off of forestry that is happening. The reason appears to be is because Coillte who were given 1.2 million acres and had profits of €400 million have managed to screw up and appear to be in great financial difficulty particularly with their pension fund and they seem to have only kept going because they are selling off the nation’s silverware.
The Bacon report was commissioned by the Forestry workers union, IMPACT and is available here or the copy attached to this article. Assessment of the Consequences of the Proposed Sale of Coillte’s Timber Harvesting Rights
Connemara Community Radio carried the interview (attached here) of Andrew St. Ledger of the Woodland League on Jan 31st 2013 days after the publication of the report. Much of the above report is based on this interview.
The Woodland League ( http://woodlandleague.org/ ) who are opposed to the sell-off of Coillte harvesting rights and land are promoting an alternative strategy which consists of the 3 R’s of forestry. These stand for
1) Regeneration of native forests
2) Restoration of forest culture
3) Reform of Forest policy in Ireland.
They are running a petition to save Ireland’s forests and have 37k signatures so far.