€200m fund aims to ‘revitalise’ Irish forestry

OVER €200M in additional funding has been committed to the Irish forestry sector over the coming years, with support from the European Investment Bank (EIB) and Ireland Strategic Investment Fund (ISIF) underpinning two major developments.

The initiatives include the establishment of a €112m forestry investment fund, which aims to purchase, lease and manage plantations. In addition, €90m is being invested by Coillte in a major replanting and upgrade programme.

The €112m investment is spearheaded by Dasos Capital, a Finnish-based fund, and is backed by the EIB and ISIF who are investing €28.5m and €55m respectively.

Dasos intends to develop a professionally managed portfolio of forests across Ireland in the coming years by supporting direct land acquisition, lease contracts, afforestation and other forms of land management.

“The Dasos Ireland forestry fund intends to help overcome diverse challenges faced by a fragmented industry and revitalise forestry in rural communities,” said Dasos CEO Dr Olli Haltia.

It is understood that the fund will target privately owned plantations where subsidies are coming to an end, or have already been fully drawn down. These 20-year-old plantations are generally around 15 years off maturity and harvesting.

The announcement was welcomed by the Minister of State at the Department of Agriculture, Andrew Doyle, who said the investment would “underpin continued expansion and development” in the forestry industry.

However, established players in the sector were not convinced that the fund would be able to secure the vast area of forestry mentioned, given the reticence of Irish farmers to sell land. There are an estimated 19,500 private owners of small forests across Ireland.

There was some confusion regarding the exact amount of land being targeted by the investment fund, with the area varying in different press statements from 10,000ha to 18,000ha.

Good-quality, 20-yearold plantations of Sitka or Norway Spruce are selling for around €12,000/ha, which means the €112m fund could theoretically purchase around 10,000ha. These plantations at harvest would give a cost-free return of close to €22,000/ha.

Meanwhile, Coillte has secured €90m in longterm loans from the EIB. The loans will be used to finance the cost of planting, forest management and forest road construction and maintenance over the next four years.