Forestry subsidies at the heart of Coillte’s investment fund deal, says Minister

By jeorge jacob On Jan 11, 2023

Minister for Agriculture Charlie McConalogue has weighed in on Coillte’s decision to team up with a foreign equity fund in order to plant new forestry.

For Coillte to be able to plant any new forestry, for it to be economically viable for them, they have to be in a position to actually draw premiums,” Minister McConalogue told the Farming Independent.

Speaking at the IFA’s climate summit in Thomond Park on Tuesday, Minister McConalogue confirmed that Coillte’s decision to team up with British money manager Gresham House, did not need his approval.

“Coillte, in the past, would have had a significant role in developing new forests in the country and, indeed, in the past, drawn down premiums for that. State aid rules from the EU means they can’t currently draw down a premium,” Minister McConalogue continued.

“In terms of their new strategic plan, they have been looking at options as to how to start afforestation again. They have been working with the Irish Strategic Investment Fund (ISIF) as to how they might do that.”

Minister McConalogue confirmed that up until this point, he has had no involvement in the deal and now, along with Minister of state Pippa Hackett, he will meet with Coillte to discuss their plans.

The launch of this giant State-backed forestry investment fund could increase competition for land and price farmers out of the market, farm leaders have warned.

The fund, which aims to drive returns for investors through the growth and sale of 12,000ha of timber, will also facilitate access to hundreds of millions of euros in Department of Agriculture forestry subsidies over the next 15 years.

Last week, Gresham House confirmed that it had established a €200m fund that will provide capital to Irish and international investors to create new, and acquire existing, forests across the country.

It said it has already attracted €35m from Irish investors, including a €25m “cornerstone investment” from Ireland’s sovereign development fund.

“Overall, we’ve all accepted that we want to see farmers do more afforestation, that’s why we’ve given farmers preference in relation to the premiums,” Minister McConalogue continued.

“What we prefer is equipping farmers to do afforestation. That’s why we’re giving farmers preference in relation to 20-year premiums instead of 15-year premiums,” he said.

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