Fintan O'Toole's article on September 12th questions the effectiveness of State-owned companies, particularly Coillte, in serving the public interest. Coillte, of course, serves the public interest. It is a pity that many of the assertions used in the article to suggest otherwise are inaccurate or ill-founded.
Coillte is a private limited company owned by the State. The company acquired ownership of the State's forests in 1989 in return for shares valued at £575 million. The decision of the Oireachtas in enacting the legislation which established Coillte was that the public interest would be best served if the State's forests were managed by a new limited company on a commercial basis. Coillte's record since then vindicates that decision.
Coillte is a commercially successful company. Our profits have increased every year since 1993 and this upward trend is set to continue into the future. The value of our net assets has increased to £795 million since 1989. In addition, the value of forest growth is estimated at a further £258 million in the same period. This success has instilled confidence in forestry as an investment and led to the highest ever level of national planting. It has also stimulated the development of a modern Irish wood-processing industry. As a result, thousands of sustainable jobs have been created in parts of rural Ireland where there are otherwise few options for economic development.
Forestry is a long-term investment and not one which can be manipulated for short-term profits. This is borne out by the parallel growth in Coillte's profits and in the extent and value of our forests. We have not developed strategies to influence the State's decision on the question of privatisation. That is solely a matter for our shareholders, who are currently evaluating a report commissioned from international consultants. Coillte in fact agrees with the principal conclusion of that report, that the status quo should be retained.
Sound and sustainable commercial management requires that forest land is used to best advantage based on the best available knowledge. The selection of tree species is not a haphazard or discretionary decision. Sitka spruce is ideally suited to the mountainous and marginal land to which forestry has been confined, whereas very little of this land would sustain a broadleaf crop. As Coillte has acquired better quality land, the option to diversify tree species has improved considerably. The proportion of Sitka spruce planted each year has decreased from 80 per cent to 66 per cent in the current year, while opportunities to plant broadleaf trees have equally increased. For example, in our Farm Forestry Partnership Programme, more than 10 per cent broadleaves are regularly planted.
Commercial management of forests is never confined to simply planting and harvesting timber crops. At the global level, forests are essential to combating the effects of greenhouse gases, and the role of plantation forests is increasingly being recognised. Locally, forests are a very important habitat for wildlife and plant life and we are currently identifying areas amounting to 15 per cent of our forest land where nature conservation will be our principal objective. Coillte's Open Forest policy means that our one million acres of forest land can be appreciated by Irish people and visitors alike. Recent research shows that our forests receive eight million visits each year.
We have applied to the International Forest Stewardship Council for certification that our forests are managed sustainably in accordance with environmental, social, and economic criteria. The auditing process is well advanced and Coillte is confident that it will achieve certification by the beginning of next year. This certification will increase the competitiveness of Irish timber in the market place.
I also want to refer to Mr O'Toole's reference to Lough Muckno and his accusation that Coillte was involved in the leasing of lands at Hope Castle. This is simply untrue. At the request of Monaghan County Council we entered into negotiations for the sale of land at Concra Wood as part of a larger leisure development around Hope Castle Demesne. No land has been sold and only after the resolution of community issues relating to this development will Coillte consider proposals for the sale of the property.
Your columnist's comments about Coillte's eligibility for EU forestry incentives show that he was under the mistaken belief that these incentives are intended only for farmers. Under the relevant regulation all those engaged in afforestation, including governments, are entitled to grants. There is therefore no issue between Ireland and the EU in regard to Coillte's eligibility for grants. Loss-of-income premiums are available to farmers and other individuals and companies coming within the definition of "private law legal persons" (which includes commercial forestry companies throughout Europe, e.g. Stora in Sweden and Smurfit in Ireland). This complex legal case revolves around the definition of "private law legal persons" and it is the State's - and Coillte's - view that a private limited forestry company is such a legal being, regardless of the ownership of its shares. This case has yet to be heard by the European Court and it is untrue to say the court has refused to accept Ireland's arguments on the matter.
Coillte's borrowings from commercial banks against future premium payments, some of which had already been made to the company with the full knowledge of the EU, enabled the company to purchase land and invest in future forests. There was no doubt whatsoever as to Coillte's entitlement to premiums when these borrowings were raised. The fact that the EU has decided to change its intepretation of Coillte's eligibility and its justification for doing so will, in due course, be assessed by the European Court.
Mr O'Toole used a series of inaccuracies to found an argument against commercial State bodies operating subject to market forces. Coillte operates in a competitive, international business environment. In doing so we operate responsibly, are fully accountable and apply the best standards of sustainable forest management practices. There is no inconsistency in being a commercial company, being environmentally responsible and delivering social benefits. Coillte is proud of the contribution its forests have made and the part it has played in the development of a substantial forest products industry in Ireland. We believe success deserves recognition. But at the very least, we deserve to have criticism based on accurate information.
Martin Lowery is chief executive of Coillte
