A joint investment company is to be established by the European Investment Bank (EIB), the Ireland Strategic Investment Fund (ISIF) and the Finnish-based private equity firm Dasos Capital to take control of thousands of hectares of Irish forestry land.

Speaking during the Cork 2.0 conference on rural development this month, the EIB’s Werner Schmidt described the project as “a forest fund that was designed to promote the development of the forest-based sector in Ireland through consolidated management of fragmented forest assets, increase of the forest cover through afforestation and finally, ultimately, also the creation of job opportunities”.

“The fund’s strategy was to develop a portfolio of around 18,000ha,” added Schmidt, who is director of projects at the EIB’s environment and sustainable territorial development department.

If successful, the project would control more than 5% of Ireland’s privately owned forests.

“The problem is that these assets are well dispersed,” Schmidt told the Irish Farmers Journal. By placing a large number of parcels currently controlled by individual landowners under the management of a larger company, the project aims to make them more productive.

A limited partnership is in the process of being registered in Ireland to manage funds from the three partners. ISIF is part of Ireland’s National Treasury, while the EIB and Dasos already have a joint investment fund called Timberland Investment II.

The Dasos Timberland Fund II currently manages €234m invested in forests in Europe and in emerging countries. In Europe, its stated objective is “to achieve returns by exploiting inefficiencies arising from increasing fragmentation of forest properties to non-active private ownership (restitution) and lack of quality forest management”.

While it “combines mature and greenfield forest assets with an objective of generating early cashflow,” the fund is also “expected to invest taking a sustainable environmental management perspective and the social impacts will be duly analysed,” documents from the EIB and Dasos state.

Both Dasos and the ISIF have declined requests for further information from the Irish Farmers Journal and it remains unclear how the project will take control of all the land it proposes to manage.

Existing practices range from contracts under which landowners sign off their timber management and harvesting rights to forestry companies, to outright land purchases.

If approached, IFA forestry chair Pat Collins called on farmers to conduct a thorough valuation of the forestry potential of their land before entering such agreements. "Go to an independent valuer who has all the imagery, someone who has no interest in buying or selling timber and only in the business of doing valuations," he told the Irish Farmers Journal.