The Coillte deal with Gresham House is not the "preferred model" for increasing the number of forests in Ireland, the Taoiseach has said.
The €200m fund, which will be managed by Gresham House, has raised fears that the price of land in rural Ireland will become too high for many farmers to buy.
The remarks by Leo Varadkar – his most pointed on the controversy yet – come as the Irish Farmers Association (IFA) last night warned him it does not approve of the deal.
Speaking at the association’s AGM last night, IFA president Tim Cullinan, said: "Forcing farmers to rewet their land is not the way to go.
"Doing a deal with an investment house from the UK to buy up land for forestry is not the way to go. And locking farmers out of an agrienvironment scheme is definitely not the way to go."
In Association with
The Government last night declined to go against an opposition motion challenging the deal, with a spokesman saying that they agreed with much of what the motion said.
A spokesman for the Green Party said there was no indication that Government TDs would have voted in favour of the motion. When it was pointed out to the spokesman that the motion called for the deal to be halted, he said: "That was a deal that was entered into by Coillte as a semi-State with a private fund. The ink is dry on that now."
He said the Government "generally doesn’t tend to tell" semi States to "tear up contracts". Mr Varadkar told the Dáil yesterday that the contracts had been signed and the deal was "not approved by the Government".
He said: "To be clear, this is not our intended or preferred main model for increasing the number of forests in Ireland. Primarily, we want Irish farmers taking up the forestry programme and schemes that are now available."
A spokesman for Fine Gael said a "reasonable" discussion took place at Cabinet about the deal and pointed out that the parameters of the deal only accounted for 1% of the overall national target of 450,000 hectares of new forests by 2050.
Speaking before he went into the IFA AGM, Mr Varadkar said: "I do need to be very straight about this. Coillte is a State-owned enterprise. It’s a commercial entity.
"It makes its own decisions separate from the Government. And we as a Government don’t want to get involved in commercial decisions being made by enterprises, whether it’s ESB [for example].
"What I did say in the Dáil is that we don’t see this current deal as a preferred model for the future. Of course, the Government is part of the fund. Through ISIF [the Irish Strategic Investment Fund] the Government is a minority investor in the fund itself.
"But the preferred model for us is Coillte planting forest on State land and, above all, Irish farmers who are the main landowners in this State getting into forestry on some or part of this land. We are going to make this as attractive as possible," the Taoiseach added.
Mairéad Farrell, Sinn Féin’s public expenditure spokeswoman, said the State should "not be underwriting" or "incentivising" investment funds such as Gresham to enter the forestry market.
