HL Deb 12 January 2000 vol 608 cc124-5WA
Lord Hylton

asked Her Majesty's Government:

Whether Forest Enterprise has sold softwood thinnings during the 1998–99 and 1999–2000 financial years, at uneconomic prices, with consequent harm to other softwood owners, as a result of financial pressure from the Treasury; and, if so, whether they will stop such selling. [HL258]

Baroness Hayman

The subject of the question relates to matters undertaken by Forest Enterprise. I have asked its Chief Executive, Dr Bob McIntosh, to arrange for a reply to be given.

Letter to Lord Hylton from the Chief Executive of Forest Enterprise, Mr B McIntosh dated 20 December 1999.

I have been asked to reply to your question about the sale of softwood thinnings by Forest Enterprise.

Most managed forests are thinned several times during their life. Thinning allows the remaining trees to grow larger, which means that they are more valuable. Thinning is therefore a standard part of good forest management.

The income from the timber from thinning usually more than meets the cost of the thinning, although early thinnings sometimes cost more than the timber is worth. Nevertheless, early thinning, like weeding, is often a worthwhile investment as it improves the quality and value of the final forest. It is therefore impossible to say whether particular prices for thinnings are uneconomic as this depends on how much the thinnings benefit the remaining trees in the forest.

Of course, Forest Enterprise aims to sell all its timber at market prices. However, the world market in timber effectively sets these prices. Prices for timber are much lower than they were two years ago because of, amongst other things, the strength of sterling, the weakness of the Swedish Krona, the increasing supply of timber from the Baltic States, and the downturn in the Asian economy. These prices may seem uneconomic to some forest owners, but the income from Forest Enterprise's thinning operations has more than met the costs. Within this, of course, some individual thinnings made a large profit, while others were an investment for the future.

As regards the amount of timber sold each year, Forest Enterprise's Corporate Plan sets out the volume that we plan to sell each year, in line with our production forecasts. By offering this volume for sale every year, far from harming other softwood owners, we help to bring stability to the market, benefiting processors and growers alike.

I hope that this has reassured you that our thinning operations are guided by long-term policies rather than short-term financial pressures.