Coillte representatives have explained the background to the Irish Strategic Forestry Fund and its link up with British asset managers Gresham House at a hearing of the Oireachtas Agriculture Commitee this evening.
Coillte chairperson Bernie Gray said the semi-state forestry company aims to create 100,000 hectares of new forests by 2050, half of which will be native woodland.
She said the company preference is to do direct afforestation but it has not done so at scale since 2003 because it was precluded from drawing down afforestation grants due to EU state aid rules.
Ms Gray said they made a submisson to the Euorpean Commission in this regard but it was clear any changes would take a lenghty period of time and there was no certainty of the outcome.
Therefore the company looked at other options.
She said the Irish Strategic Forestry Fund, launched with British asset manager Gresham House, is just one of many initiatives required to deliver Coillte's afforestation targets.
Ms Gray said it will create mixed woodlands, mixing productive conifers and native broadleaves, which is in line with Coillte's ambition to deliver multiple benefits from forestry.
She added that the Ireland Strategic Investment Fund owned by the State is the cornerstone investor in the fund with €25 million invested.
Ms Gray also outlined other options they are exploring to reach afforestation targets, including workng with Bord na Móna to enable woodland regeneration that could result in 1,500 hectares of new forests and working with the Nature Trust, a not-for-profit entity that works with organisations that want to deliver social good through funding new trees.
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As part of considering further initiatives, Ms Gray said the Government has asked Coillte to examine how it can work more closely with farmers, as well as potentially acquiring land directly, subject to state-aid rules.
In this regard she said they are aware of recent changes to state aid guidelines and are reviewing these and engaging with the Department of Agriculture, Food and the Marine on the potential for public bodies to be able to access afforestation premiums.
The new rules could potentially deal with the current state-aid challenge she said.
However, Ms Gray added that if the new guidelines mean Coillte will be able to access afforestation premiums, there remains the challenge in terms of the scale of capital required.
Ms Gray said Coillte is also engaging with the Irish Farmers' Association on "how we can support farmers because farmers are the major landowners in Ireland..... significantly more that Coillte's 7%".
She said the key challenges are land and capital and even if they got access to premiums it would still be a siginifcant challenge.
Ms Gray said the cost of land for 100,000 hectares would be €2 billion.
On the Gresham House fund, Ms Gray said she wrote to the Minister for Agriculture on 16 September, the day after the fund was established to inform him.
Asked had Goverment been informed informally, she said they were clear they were going to pursue a foresty fund but not necessarily with Gresham House.
Chief Executive Imelda Hurley added that Coillte has potential access to state aid funds under new rules, but there is still a legal determination to be made within the Department of Agriculture about Coillte access.
Asked whether they were worried that more money has not flowed into the Gresham House managed fund, beyond the €25 million from the Ireland Strategic Investment Fund and €10 million from corporate
sources, Ms Hurley said the €35 million is committed capital and there is a good level of engagement and interest in the fund and what it is aiming to deliver.
She said none of the corporate €10 million has been lost due to the controversy over the fund.
Ms Hurley said investors have to do their due diligence and the fund was only announced in January and it is very early days.
She said she is not worried about hitting the €200 million target.
Ms Gray added that Coillte applied to the Department of Agriculture for a €10 million investment in the fund last December, before the public reaction unfolded.
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