Coillte signs secret deal with British investment fund
"This private investment land-grab deal is an atrocious deal for rural communities, the taxpayer and for farmers. The deal is also an outright attack on our national sovereignty and is a breach of the social contract that is supposed to exist between the state and the people." - Michael Collins, TD for Cork South West.
Irish Strategic Forestry Fund
Last January, Coillte and British asset investment company ‘Gresham House’ announced an Irish-registered company called the Irish Strategic Forestry Fund which will raise money from private investors and pension funds to buy up land from farmers and ‘peripheral land’ for ‘afforestation.’
Coillte has the contract to manage these forests. The Irish Examiner considers the advantages to Coillte to be "obvious", considering it cannot of itself avail of EU and State subsidies for planting on land that it owns.
Coillte as a semi-state company was formed in 1989 and “owns”, or rather has custody over, 441,000 hectares, of which 350,000 are forested. The Minister for Agriculture, Charlie McConalogue, failed to use his office to stall or block the deal and is claiming powerlessness and even unawareness.
On 27th January 2023, the Minister for Agriculture told the Oireachtas Joint Committee on Agriculture, Food and the Marine that that he was “only aware of the deal after the deal was done” in relation to the IFF announcement.
Coillte was engaged in secret and binding negotiations with international fund managers without Government knowledge even though the Minister for Agriculture, Food and the Marine, and Minister for Finance are the principle shareholders, a palpably absurd position.
Public – Private Partnership
The Gresham / Coillte agreement is a public–private partnership (PPP, 3P, or P3) which is a long-term agreement between a government and private corporations. Stage 1 involves private capital financing government projects and services, while stage 2 extracts revenues from taxpayers and/or users over the length of the PPP contract.
PPP options in the forest sector can include joint forest management projects between government agencies, non-governmental organisations, (NGO’s) and investors.
The Third World Model
Foreign companies use PPP contracts in Third World countries, to assist the exploitation of certified timber and non-timber products. These are promoted as an agent of nature conservation and harvesting of commercial forestry despite that it was competition from foreign companies that forced local producers to engage in such unsustainable harvesting practices. Therefore, these forestry sector ‘partnerships’ are a form of greenwashing operations.
Secret deal is 'Done Deal'
The Irish examiner reported an anonymous Government source who stated the following:
1. It was not possible to go back to the drawing board and that it was a “done deal”.
2. Coillte did not require sign-off from the minister.
3. Only a small amount of land was involved.
4. The partnership would not push up the price of land.
The Government’s New Model Forestry
According to the department, of the 100,000 hectares of new forests Coillte will plant by 2050 as part of its strategic vision, just 3.5% of those forests will be created through the ISFF, in other words Coillte’s general forestry practices will not change at all. According to Coillte, the ISFF aims to assemble a €200 million fund to create new forests and buy some existing forestry, will represent 12,000 hectares of new and existing forests.
Capital and Expertise
Gresham House will supply the capital needed to create the new forests, with Coillte providing the expertise to manage the estate. Gresham House claimed that its Irish strategic forestry fund had already received €35 million from (unnamed) Irish investors, including a €25 million ‘investment’ from the Ireland Strategic Investment Fund (ISIF), Ireland’s sovereign state development fund.
The crucial point is that along with purchasing land for planting new forests, Gresham House said its fund will also “acquire existing forest assets” with 8,000 hectares of their Irish portfolio will be existing forestry land, as little as 3,000 hectares will be bare land for new tree-planting. This must mean Coillte owned land.
Vultures Funds in, Farmers out
Farmer representatives have also questioned the advisability of allowing investment funds to draw down State-supported planting grants and forestry premiums, arguing that these should be targeted solely at farmers. Obviously, the point is that the state will subsidise a private fund, and farmers will not benefit, a market is being created in farming land, as a market was created through Government policy., to bring vulture funds into the housing market.
The calculation is political: that the farmers are powerless to stop a land grab for investors, as the Government moved to create a market for private investors in housing., leading to a continual rise in land prices and rents. This will have the further side benefit of land value inflation, further boosting investor profits.
Part 2 of this article will be published shortly.