Concerns mount over old farm forestry contracts
Pat Collins, chairman of the Irish Farmers’ Association’s (IFA’s) Forestry Committee, has called on Coillte to hold a meeting with all involved in farm forestry partnerships in light of “serious contract concerns” raised by farmers.
Over the last week – since the issue was highlighted by the Joint Oireachtas Committee on Agriculture, Food and the Marine – Collins has received a flood of calls from worried farmers who claim that they’ve been “left in the dark” about the operation of partnerships.
The main concerns include: the price of the timber; decisions on when to sell the timber; delays in payments to farmers whose contracts have surpassed 20 years; harvesting rates; haulage costs; and insurance.
Under these contracts, farmers are entitled to a tax-free premium payable for up to 20 years; plus annuity payments beyond that period.
Coillte are currently undertaking a full review of older partnerships, in order to identify improvements that can be made into the future.
‘A lack of meaningful engagement’
Collins contends that there has been a lack of meaningful engagement with farmers.
“An estimated 12,000ha of land is tied up with Coillte, and at a conservative value of €25,000/ha, that amounts to approximately €250 million. Coillte takes 65% to 70% out of that, which amounts to about €180 million – leaving about €70 million in the pot for the growers. That equates to just under €6,000/ha.
“If you put a replanting cost of €1,500/ha to €2,000/ha, it leaves farmers with a profit of €4,000 after a 35-year rotation; I don’t think that’s very fair,” Collins said.
“There has been no transparency as to how Coillte is selling the timber and whether it is roadside, standing or clear-fell.
There is also a lack of information on the marketing costs, procedures and when payments are taking place.
He said contracts were very loosely drafted, with no word of price indexing or rights of way to plantations. He is urging Coillte to hold a public meeting with its farm partners.
Meanwhile, Bill Stanley, a strategy and business development director with Coillte, said the specific terms of each partnership agreement – since 1993 – were subject to negotiation between Coillte and the individual partner.
As such, within each scheme there is a huge variety of partnership agreements.
Stanley said that the majority of farm partnership agreements are working as envisaged, with a good balance of benefits accruing to both partners.
He also questioned the above figures cited by Collins.
“The partnership principle allowed Coillte access back into the afforestation market; while, landowners were given access to Coillte expertise and FSC certification, with partnerships set up to maximise the value of private forests.
“The partnerships meant that farmers could get involved in forestry without having to sell the land. The cashflow came from the forest as profit share. This varied from annuities to landowners to upfront payments and reduced annuities, to profit share at thinning and clearfell.
“The profit share and how it was distributed to partners was subject to a range of agreements, and payments to partners were structured at various points throughout the rotation,” said the Coillte spokesperson.
‘Coillte is committed to resolving these agreements’
Although Stanley acknowledged cases of gaps in payments, he said Coillte is committed to resolving these agreements. He stressed that the figure for premium and annuity may not be the same.
Every farmer had an absolute right to know details of payments received to date and what was due from the crop – and Coillte is committed to introducing a system that will clearly provide this information, he said.
We acknowledge that a number of our partners have raised issues in relation to their farm partnerships. In particular, we acknowledge that communications with our partners has often fallen short of the standards that we seek to achieve. We apologise for the frustration that this may have caused.
“We would be more than happy to engage with IFA on the matter,” he said.
To address the issue, Coillte has set up a dedicated phone number for its partners on: 01-9055092.
“We have written to all of our farm partners to inform them of this service should they wish to enquire about their specific partnership,” Stanley concluded.