In an interview with this weeks’ Irish Farmers Journal, Coillte’s strategy and business development director, Bill Stanley said it would start sending all farmers growing trees on their land in partnership with the company more transparent annual statements designed with independent advice from KPMG.

Farmers under contracts with Coillte have raised a number of issues and this is how the company is proposing to address them.

The contracts seen by the Irish Farmers Journal are complex and it is difficult to understand how much the farmer will gain from the forestry on their land.

Stanley acknowledged that nearly 700 partnership agreements signed with farmers between 1993 and 2012 fall under 35 different types, with more individual negotiations leading to even more variations.

“The agreements are quite complex in the way payments are calculated,” he said. However, he stressed that all farmers had received legal advice before signing them and many contracts were witnessed by their solicitors.

The company is now addressing those who raise issues on a case-by-case basis.

“I don’t see the vast majority of contracts changing,” as a result of these reviews, Stanley said.

The new individual statements to be sent annually will reflect the latest status of payments under each contract, translating profit-sharing formulas into euros.

Many farmers do not know what constitutes the profit to be shared with Coillte. Some said that costs and proceeds from sales of thinnings in their forests were not reported to them. A contract seen by the Irish Farmers Journal states that costs are understood “as quantified and determined by Coillte”, without provisions for farmer scrutiny.

Stanley said that annual statements would now provide farmers with costs and sales data. KPMG’s role includes an independent review of these calculations, including access to Coillte’s historical data. However, there are no plans to benchmark the performance of farm partnership against industry figures from outside the company, and some information may be kept from farmers if it is commercially sensitive.

The IFA raised a potential conflict of interest in Coillte sourcing timber from its farmer partners and partly buying it for its own mills, asking whether it really had an interest in achieving the highest price for the farmer.

Stanley said that most of the crop’s value results from clearfell, with sawlogs sold to independent sawmills. Those buyers typically source 75% of their timber from Coillte.

“The partnerships benefit from being sold as Coillte timber,” Stanley said, mentioning certification, annual contracts and online auctions among the advantages making this supply chain more attractive to buyers.

Thinnings harvested from 16 to 20 years in the life of a plantation, meanwhile, are typically used as pulpwood in panel products made by Coillte’s own mills.

“The price paid is the same for farm partners and for Coillte forests,” Stanley assured.

Other outlets include the bedding and bioenergy markets for chips, but he said that exports to lower-priced international markets were exceptional and denied suggestions that they could be used to create a second-tier market for pulpwood from farm partners’ plantations.

Farmer partners have had trouble finding someone to talk to at Coillte. One family told the Irish Farmers Journal they had dealt with seven or eight foresters in 17 years. As soon as their last contact person had made progress on organising thinning, he retired.

“Our communication has been found wanting,” Stanley said, reiterating Coillte’s earlier apology to farm partners for the frustration caused by difficulties in contacting the company. He added that its regional offices, including the teams dealing with farm partnerships, had gone through a restructuring process, with a more stable structure in place since last September. In addition, Coillte wrote to all partners in December to give them a new dedicated helpline number and promised to reply to all queries within two weeks.

A Co Sligo farmer in financial trouble told the Irish Farmers Journal that he has been unable to sell his interest in a forestry partnership with Coillte. As the company has a right of first refusal, he had always understood that Coillte would buy him out if he needed to end the agreement.

Stanley said that Coillte makes decisions on farmers offering to sell out its share of the partnership on a case-by-case basis.

“In general, we are interested, except if the site had not been roaded,” he said. Access roads for harvesting attract a Government subsidy, but Coillte is not eligible to claim it.

“It is hard to make a commercial case” for buying out a partner before such roads are built, Stanley said.

Co Kilkenny farmers’ widow Julie Murphy told the Irish Farmers Journal she was left with a two-year gap with no income between the end of her 20-year forestry premium and the start of payments from her partnership with Coillte.

Stanley said this was due to a shift from the end to the start of the year in the payment date for the forestry premium since some partnerships were signed.

“We are committed in all these cases to bring forward payments falling in year 22,” he said.

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