Most home-grown timber produced in Ireland is processed by sawmills and wood-based panel (WBP) mills, with the remainder supplying wood energy and niche markets.

All outlets are interdependent and rely on each other to maximise the value of the resource.

For example, sawmills depend on WBP mills and wood energy to take their residue (wood chips, pellets, waste wood, etc) which amounts to between 45% and 50% of every log sawn.

On the other hand, WBP mills are dependent not only on sawmills for residue, but forest owners for small logs – or pulpwood – from thinnings to produce medium density fibreboard (MDF), oriented strand board (OSB), moulded door facings and biomass for the wood energy market.

Sawmills process all the available logs on the island and have relied on imports for a number of years to top up supply. This situation is likely to continue, according to the COFORD 2022 report: “Wood Supply and Demand on the Island of Ireland to 2030”.

Pulpwood exceeds capacity

While the COFORD report identifies a shortfall in the supply of roundwood to the sawmilling sector, it estimates that pulpwood and sawmill residue supply is outstripping processing capacity.

A number of forestry companies have been exporting this surplus for some time. These include Dasos, a significant timberland investor with over 250,000ha of forest under management across Europe and the second largest private forest owner in Ireland – through its funds.

While most pulpwood exports are to the UK, Dasos is “exporting shiploads of Irish pulpwood to the continent at a significant price premium over domestic market prices”, according to Cormac O’Carroll, senior adviser, Dasos Capital.

“This situation is likely to continue for the foreseeable future,” he says.

“The current stumpage price for pulpwood sold on the home market is almost 50% below UK prices, compared to the official UK small roundwood price index (Figure 1). Five years ago, the difference was only 20%.”

O’Carroll maintains that “insufficient Irish processing capacity for home produced pulpwood and sawmill residues is at the root of the problem”.

He states: “As farm and other private forestry mature, this type of material is coming on stream in increasing quantities, so the problem is set to get worse unless new capacity emerges. The main domestic markets for pulpwood and sawmill residues are WBP products and bioenergy.”

Without plans to expand, Irish WBP production and unrealistic scenarios for future bioenergy demand, “forest owners are keen to look for alternative markets for their pulpwood,” O’Carroll claims.

“The devastation caused by the spruce bark beetle in mainland Europe has created opportunities for Irish growers who are willing to look further afield.”

“However,” he continued, “the best scenario for both growers and industry is of course more processing capacity here in Ireland, [as] that will add the most value to our forest resource. The silver lining in all this is that Ireland offers a competitive and secure supply of pulpwood and sawmilling residues to wood product manufacturers and energy generators – they should be incentivised to invest.”

Lost opportunity

It is hard to disagree with O’Carroll’s assessment that the WBP mills are unlikely to invest in new capacity in the short- to medium-term. Investment in WBP expansion depends not only on markets, but also on future forest production.

In recent years, annual coniferous afforestation averaged 1,400ha, which will result – at best – in a future pulpwood production plateau, while the future is uncertain for bioenergy.

The Support Scheme for Renewable Heat (SSRH), launched in 2019, provided an opportunity for Ireland to develop a significant renewable energy industry, but the uptake has been disappointing.

The scheme is cumbersome but there has been an increase in conversions to wood biomass by hotels, nursing homes, leisure centres and small businesses over the past two years, which is encouraging.

Unlike most of Europe, Ireland offers a significant, increasing and internationally cost-competitive supply of pulpwood.

“This represents a major industrial investment opportunity, which would be profitable even at higher pulpwood prices, given the proximity of the large UK forest products market, increased energy prices and our green transition needs,” says O’Carroll.

The scheme is cumbersome but there has been an increase in conversions to wood biomass

“In the short term, Irish wood growers can benefit from the higher prices obtainable on export markets, but in the longer term this represents a lost opportunity to our national economy,” he maintains.

The export market for pulpwood has been welcomed by forest owners, including farmers who have forests at or approaching first thinning, even though they – like O’Carroll – would prefer a vibrant domestic market to process this material.

Department expects most existing licences to proceed, but all need reassessment

Department of Agriculture, Food and the Marine (DAFM) inspectors outlined details of the new Forestry Programme (2023-2027) last week. Only 4% of existing licences are likely to be unsuccessful under the new programme, according to Ciaran Nugent, DAFM regional forestry inspector.

Registered foresters and ecologists received information on new requirements for planting in peats, designated areas for breeding waders and high nature value farmland (HNVf).

Nugent divided afforestation applications into the following three categories:

  • Valid licences under the old programme, but awaiting approval.
  • Applications under the old programme where licences have yet to be issued.
  • New licence applications.

    • Category 1

    Applications for afforestation under Category 1, where landowners have a valid licence, will need to meet new requirements. Ciaran Nugent told the Zoom meeting that there are 700 landowners with unused valid licences amounting to 5,506ha.

    While all these have to be reassessed, he told the attendance that the levels of licences not meeting the new requirements are “relatively low” based on spatial analysis carried out by DAFM.

    “When you start to combine all [requirements] for breeding waders, high nature value farmland and peats, the overall interaction of all three overlapping is only 4% out of the 700 cases,” he said.

    “An assessment of applicants who wish to proceed will be carried out by DAFM to ensure that their licences adhere to the new State Aid requirements. Financial approval, which allows the landowner to commence planting, will issue if they are eligible for the scheme. If unsuccessful, they can appeal to the Agricultural Appeals Office.”

    Forestry companies welcomed DAFM’s spatial plan, which estimates 96% approvals, but many of those interviewed by the Irish Farmers Journal believe that this success rate is too optimistic.

    Category 2

    There are 442 applicants, with approximately 3,900ha in this category, all awaiting a decision. They have been contacted and asked to opt in for consideration under the new afforestation scheme.

    If they opt in, foresters must return an Environmental Declaration for each application. The DAFM will carry out any assessment needed on files relative to the new terms and conditions.

    Category 3

    Category 3 applies to new applications to the scheme, which is expected to open on 6 September. Training will be provided to registered foresters “in advance of the opening of the scheme, and details of new environmental conditions and mandatory requirements will be shared,” said Ciaran Nugent.

    Between existing licences and applications in the system, there is an estimated planting programme of 9,500ha available over the next two planting seasons, according to Ciaran Nugent’s analysis.

    What emerges after new environmental requirements are assessed will determine the performance up until the mid-term review, which should begin at the end of next year.