Translating national forestry activity to local wealth and job creation

The Forest Service estimates the annual economic value of the forest sector at €2.3bn, when “both indirect and induced effects are taken into account”. Its annual review published in 2015 maintains “for every €1 of economic activity in wood processing an extra €0.66 was generated in the wider economy”.

The Irish Forestry and Forest Products Association (IFFPA) – the forestry group within IBEC – claimed in 2011 that “an annual afforestation programme of 15,000ha would create 490 direct jobs to establish, manage, harvest and process that timber annually” or 33 jobs for every 1,000ha established. Based on a programme of this magnitude, IFFPA maintained that “a steady supply of raw material from forests could create 38,000 jobs by 2025”.

While information is available on national employment and economic activity, little research has been carried out on how this translates locally and at county level.

For a county like Galway with 59,410ha of forests or 8.1% of the national forest estate (public and private), the annual value of forestry should be in the region of €186m, while direct employment as forecast by IFFPA should be close to 2,000 jobs.

On the other hand, Monaghan with only 5,600ha of forests will generate just €17.6m annually with 18 jobs compared with Cork, which should have an annual value of €262m as it has 83,620ha of forest or 11.4% of the national forest estate. Forestry employment in Cork should be 2,700 based on the IFFP forecasts.

Calculating forestry on this basis ignores a number of factors relating to the forestry and forest products sector. The sector does not recognise county boundaries or labour and log mobilisation. Timber grown in one county will provide employment until the harvesting stage when logs may be transported to another county where added value and high employment is achieved during the processing and manufacturing phases.

For example, Galway is likely to benefit from having two major sawmills in the county, while Cork also has two major sawmills as well as stake-producing plants, small sawmills and wood energy outlets. Leitrim and Tipperary will see the worth of having international-scale board mills located in their counties, while Kilkenny and Waterford will benefit from the Coillte OSB mill in Waterford Port.

Age structure of forests, productivity and species dictate the resultant pattern of work in forestry which changes at different stages of rotation. In the typical forest, there is low activity for over a dozen years between intense active periods at establishment (including ground cultivation, planting and fencing) and production (including, roading, thinning and clearfelling).

However, where forests are established in a sustained way, the cyclical activities are “smoothed out” as exists in places with long-established forest cultures. Good examples of counties with historically sustained forestry development are Wicklow and Laois where wood industries and related initiatives are located within the counties. These include nurseries, sawmills, wood energy outlets, harvesting contractors and forestry-related businesses.

We plan to survey forestry around Ireland on a county-by-county level throughout 2016 and 2017 to determine the level of activity and its effect on rural development.

We welcome comments from the industry, including Coillte, Teagasc, forest producer groups, co-ops, farmers with forests, contractors, wood processors, foresters and forestry companies.

The total value of economic activity of the forest sector, both directly and to the wider Irish economy was estimated at €2.3bn in 2012 (Table 1) as outlined in the Forest Service report Ireland’s Forests – Annual Statistics. The report divides the industry into two sub-sectors:

Growing and harvesting.

The total direct value of economic activity in the growing and harvesting sub-sector in 2012 was €386.9m, according to the report.“Value to overall gross domestic product or gross value added (GVA) was €136.6m,” the report outlined. “ In terms of the multiplier effect of this economic activity, for every €1 generated in the growing and harvesting sub-sector, a further €0.78 was generated in the wider economy in 2012,” it stated. “This resulted in the growing and harvesting sub-sector contributing an overall value of €688.7m to the wider Irish economy, an increase of €216m since 2003.”

Wood processing

The total value of economic activity in the wood processing sub-sector in 2012 was €1,389.1m, the report maintained. “It added €391.6m in terms of GVA to the economy,” it stated.

“For every €1 of economic activity in wood processing, an extra €0.66 was generated in the wider economy, an increase of €79.3m on the 2003 figure. Total extra activity in the wider economy in 2012 was €910.3m (€2,299.4 less €1,389.1m), an increase of €235m since 2003.”

The GVA of the forest sector was €1,096.5m in 2012. An approximation of the full economic value of the forest sector in 2012 is €2.3bn, when both indirect and induced effects are taken into account.

The Forest Service multiplier estimates the wider value to the economy and includes back-up services, contracting and purchase of materials from plants and fencing stakes during establishment to gravel and equipment during road-making and harvesting.