§ Lord Hyltonasked Her Majesty's Government:
Further to the Written Answer by Baroness Hayman on 16 October (WA 67), whether Forest Enterprise has in the last five years sold timber, including softwood thinnings, at roadside prices less than the landed prices of equivalent imports (including cost, freight, insurance etc); and, if so, in what quantities. [HL4495]
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman)The subject of the question relates to matters undertaken by Forest Enterprise. We 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, Dr Bob McIntosh
I have been asked to reply to your question about whether Forest Enterprise has been selling timber at less than imported prices.
I should perhaps start by saying that it is not possible to make a direct comparison between the prices received by Forest Enterprise for its timber and the prices of imported timber. This is because most imports are of sawn timber while Forest Enterprise sells all its timber in the round. There is very little round timber imported, other than for particular specialist needs.
The key issue is the link between imported sawn timber prices and the price that sawmills can afford to pay for round timber purchased from British growers. As the pound has strengthened against key currencies such as the Swedish Kroner, the price of imported sawn timber has fallen. The price of sawn timber produced by British sawmills has to match the imported price and has fallen accordingly. Since the purchase of sawlogs is a high proportion of the cost of running a sawmill, there is a clear relationship between sawn timber prices and the price paid for sawlogs. The reduction in prices obtained for sawlogs by Forest Enterprise amd other woodland owners is entirely in line with what might be expected, given the sharp drop in sawn timber prices.
It is unrealistic for growers to expect to achieve price levels that are not justified by the selling price of the final end product, after allowing for sawmilling costs. As you will be aware, even at the reduced sawlog prices operating at the moment, a number of small to medium sized sawmills have gone out of business because they cannot compete with imported sawn timber prices. This does not suggest that the sawmillers are currently profiting at the expense of the growers.
The movement in timber prices in GB is affected by a number of factors outwith the control of the grower, and no single supply/demand equation exists within 36WA GB because of the overwhelming impact of imported timber prices. We monitor closely all of these factors and make every effort to ensure that the prices received for our timber are at least as good as the prevailing market conditions. Withdrawing timber from the market would reduce our income, would disadvantage British sawmillers and would not affect the price of imported sawn timber (the key determinant of log price) in any way.
I hope this satisfactorily answers your questions but, if not, please do not hesitate to contact me again.