Red tape logjam creates fear for Irish timber supply

Vast swathes of trees are waiting to be felled in the Republic, but a bureaucratic tangle risks leaving them in the ground and threatening the supply of a vital housebuilding material as well as thousands of jobs.

Industry figures fear the supply of timber will dry up in coming months, forcing sawmills to close and leaving the Republic dependent on imports for a material that it already produces itself.

The problem is tied to the State’s licensing system.

All forestry activity – cutting trees, planting them, thinning forests, building roads for transport – requires permits from the Department of Agriculture. In 2017, the Oireachtas passed a new Forestry Act allowing open appeals to the granting of all such licences.

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As a result, anyone in the State can appeal any licence. The Government maintains that EU rules require this: the industry itself says this is not the case. Sources claim that European operators, many of which compete for export business with Irish businesses, are “aghast” at the legal position here.

Daragh Little, managing director of forestry management firm, Veon, which has already had to let staff go as a result of the problem, says the Government has simply “misinterpreted” EU rules.

Appeals

"The problem is with the system," he says. "You can sit in Sligo and appeal a forestry licence in Waterford. That licence then gets caught up in the Forestry Appeals Committee. "

Appeals are frequent. Mark McCauley, director of Forestry Industries Ireland, part of employers' group Ibec, estimates that there are about 450 appeals before the committee at the moment. Decisions take a long time. Appeals decided last week dated back mainly to licences granted in October, November and December last year. Some related to permits given more than a year ago – in May 2019.

As a result, McCauley says, the process of getting a licence can take up to two years in some cases, and more than 12 months in many of them.

“You can be a year getting a licence and a year getting through the appeal,” he points out. This is despite a commitment – in the 2017 legislation – that the department would grant licences within 120 days. In the case of appeals, the industry expected that the committee would take no longer than two months to decide them.

Licences are appealed at the rate of 40-50 a month, industry sources say. That is more than twice as fast as the committee is processing appeals, they say, creating an inevitable backlog.

There are also issues in processing licence applications in the first place. About 1,500 licence applications are with the Department of Agriculture. Officials are working through about 100 a month, which means it will take close to 15 months to clear the queue even if no other applications are made – and that is before any appeals.

So a logjam is building on both fronts as foresters apply for licences and various parties then challenge a proportion of those that are granted.

In broad terms, industry figures calculate that the department is granting about a quarter of the licences needed to supply sawmills. Of these, they say, one-third are appealed.

So less than one-fifth of the timber that the industry actually needs is getting through the system.

"The licensing rate needs to be four times the current rate and the appeals rate the same," says Mike Glennon, joint managing director of sawmill group, Glennon Brothers.

One frequent forestry licence appellant is Peter Sweetman, who is well known for his legal challenges to planning decisions of all kinds. He says he appeals licences as they do not comply with the law but will not comment beyond that.

Between 80 and 90 per cent of appeals fail, indicating that foresters and the department are mostly compliant.

Either side can ask a High Court judge to review appeal committee decisions though this has not happened to date. McCauley argues that the industry has "done everything it possibly can".

Bottom line

The bottom line is that supply is running out. Coillte, which provides about 75 per cent of the wood used for timber, says it has cancelled most of its regular auctions this year. The State forestry company held one in June, but there is a question mark over whether it can do the same this month.

“This has been disruptive to Coillte, our contractors and our customers,” the company says.

Normally Coillte would have roughly half the licences needed for next year secured by now and virtually all by December. It is understood that, as it stands, it has none.

The company runs a large contract event in October at which it agrees to supply mills with half of what they will need for the following year. The current situation now threatens this, raising the possibility that Coillte will not be able to commit to supply sawmills with much of the wood they will need in 2021.

In turn, that means that millers will have to tell their customers that they cannot guarantee to supply them. According to some estimates, the State company will supply about 1.7 cubic metres of wood this year, against what should be three million.

Sawmills face a crisis in the closing three months of this year and into 2021. Glennon confirms that his company has enough wood to get through the third quarter but enters unknown territory after that. “In October, we will be in trouble,” he says.

Glennon Brothers employs about 250 workers and 120 contractors in Ireland. Those jobs are at risk if supply dries up. This is the case across the industry. All of the sector’s 12,000 workers now face an uncertain future while the problem persists.

So a business worth more than €2 billion to the economy is close to a crisis. But Glennon argues that the ramifications go far beyond this.

The big threat is to softwood, used for housebuilding and for the pallets on which goods are transported. “It will have a much wider impact on the economy,” Glennon warns. He predicts that the Republic will have to begin importing timber to build houses. This is despite the 770,000 hectares under forest in the State.

It will also leave the forestry industry struggling to recover its Irish and overseas customers. Timber is a commodity. If Irish mills cannot supply it, rivals from Germany, Scandinavia and elsewhere in Europe will step in to fill the gap. Britain, one of Ireland's biggest export markets for timber, will simply source its supplies elsewhere if customers there fear that they cannot rely on Irish suppliers. Domestic buyers may well feel they have no choice but to do the same.

"If you do get to that point, you have a disaster for the industry. If the State is buying in timber from Scotland and Scandinavia, that would be apocalyptic," McCauley says. "It's hard to conceive of it getting there."

Green agenda

On top of everything else, it presents the new Government with a problem fulfilling parts of its green agenda. Using more timber in housebuilding helps to cut greenhouse gas emissions. At the same time, the coalition wants to step up tree planting. Daragh Little says licensing delays are putting off new investors.

“I cannot advise clients that they are going to get a licence if it’s going to be appealed in 28 days,” he points out. He notes that this is also hitting efforts to restore the Republic’s native deciduous woodlands, something central to the Green Party’s commitment to increasing biodiversity.

Glennon argues there is still time to pull back from the precipice. “If the Government acts now, this can be resolved,” he says. “I do believe that the department does now understand the full extent of the problem.”

A first step, the industry believes, would be for the department to provide enough manpower and resources to process licence applications and appeals at an efficient rate in line with the expectations of the original legislation. For its part, the department has recruited more ecologists to work on licence applications and hired a private company to assist in this.

A more radical step would be to overhaul the 2017 Act, which lies at the problem’s root. McCauley acknowledges that simply removing a statutory right to appeal a Government decision would be a step too far. However, he argues that the right should be limited to those affected by that decision, rather than allowing someone at one end of the State to appeal a licence issued to plant or fell trees at the other geographic extreme.

Little maintains that, along with misinterpreting the EU rules in the first place, the Oireachtas put in place a “one-size-fits-all” system that isn’t suitable for a State with large numbers of smaller forest plantations. He points out that someone who wants to thin out a relatively small patch of woodland should not have to seek the same permit as those working with a much bigger property.

“The red tape is enormous, they have made the system impossible for themselves,” Little says of the Government’s approach. “If I have a forest of 10 acres, I have to go through the same process as if I had 60 hectares.” Amending the law to take account of these realities would help ease the situation, he suggests.

Forestry Industries Ireland, Coillte and other key players all advised the Government against adopting the current system ahead of the new laws being drafted and enacted in 2017. Since then, they have been warning the department of the very problem that is now coming home to roost.

McCauley calculates that there are six months left to turn the situation around. He also believes this is possible, once the new Minister for Agriculture and Minister of State for Biodiversity and Land Use are committed to tackling it.

“So now it’s all eyes on Barry Cowen and Pippa Hackett,” he says.

Forestry: the major industry players

Coillte: State forestry company that owns much of the Republic's woodlands and supplies about three-quarters of the wood needed by sawmills for timber.

Glennon Brothers: Sawmill group with operations in counties Cork, Longford, Wicklow and in the UK, supplying timber for construction, DIY, pallets and other uses. The company employs 500 people in Ireland and Britain and has sales of about €130 million.

Murray Timber Group: Sawmill business with operations in counties Galway and Carlow. Has the ability to process about one million cubic metres of logs every year.

GP Wood: Formed by the merger of the Grainger and Palfab sawmill businesses in Co Cork, the company employs about 150 people and a further 250 indirect employees.

Medite Smartply: Waterford- and Tipperary-based manufacturer of timber construction panels owned by Coillte.

Masonite: Carrick-on-Shannon, Co Leitrim-based subsidiary of the multinational that makes doors and other timber building products.