Maelor Forest Nurseries managing director Mike Harvey said the commission is "effectively privatising plant seed supply".
The issue has arisen partly because Forestry Commission Wales is now part of Natural Resources Wales (NRW) and looking for tree supply, with the Forestry Commission able to tender for it. Scotland could soon be in the same situation.
Harvey said the Forestry Commission seed supply unit could have a big advantage over the private sector because it controls the seed. The commission has changed an old agreement to spilt seed collected from Forest Research-established seed orchards 50-50 so it only gave seed it does not want to the private sector, he added. The commission is being "very aggressive" and is "resolute" in continuing with its policy, and this means "unfair competition", he said. Forest nurseries are already "in a fragile place" because of excess production of 800,000 Douglas fir by the Forestry Commission and these are "very worrying" times for them.
Confor vice-chair Matt Hommel, of Christie-Elite, said if the Forestry Commission only collects enough seed for itself - with no surplus, as growers say increasingly seems to be the case - the commission could have an advantage over the private sector in gaining contracts. "There's certainly not the seed around there was and I don't think it's because of natural conditions. They've probably just not got the resource. The reason it's an issue is NRW is putting out a tender for their tree supply and the Forestry Commission will be able to bid and if they are the only ones that have access to the seed that's an unfair advantage."
HTA horticulture head Raoul Curtis-Machin said: "The HTA is concerned about the blurring of the lines between public and private sectors. It's become one of the most confused markets that I've ever seen. For a start, tree growers face the huge uncertainty of whether the poorly run public sector grants scheme will actually delver any physical planting orders. Then the growers face uncertainty when the Forestry Commission puts huge numbers of free tree seedlings on the market.
"This needs sorting out by the Environment, Food & Rural Affairs select committee inquiry. It is not remotely healthy for UK production or for the economy. Public sector market meddling is threatening biosecurity and UK businesses."
Dave Richardson of private seed supply company Forestar said the firm is happy to supply any requirements growers may have from its large worldwide network. A future issue with Scots pine seed supply is being addressed through the planting of an orchard, he added.
The Forestry Commission's Delamere nursery has recently undergone a £5m expansion. It is one of three that are run by the plant and seed supply branch of the commission. The Delamere nursery, close to Chester, has two sites - Lobslack and Old Pale - where tree seedlings and cuttings are grown in polytunnels.
Harvey added: "The commission are investing £5m in expanding Delamere but the point is they haven't won these tenders yet. Wales will go out to tender in 2017 and Scotland probably will (at some point) as well. EU rules and UK legislation mean this has to go to public tender, so why invest £5m if you don't know if you've got the business? Because you have to be confident, and why are you confident? Because they control the seed."
A Forestry Commission spokesperson said: "Surplus seeds are readily available from us for other nurseries to buy and there will always be natural variation in abundance that will affect availability. We intend to continue to work with the trade to supply seed and, of course, other seed suppliers are also available. This year we have already supplied more than 200kg of Sitka orchard seed this year, with more orders in the pipeline that we will also be able to meet.
"There is currently a surplus of Douglas fir due to changes in demand from the Forestry Commission since sowing and a much greater germination rate than expected. The surplus has been offered to the nursery trade for resale via ConFor and the HTA as previously agreed with them. There is not an oversupply - what the trade does not take to resell will be destroyed. We have existing arrangements to supply plants and seed to NRW and Forestry Commission Scotland. Should NRW tender for future supply we anticipate normal procurement regulations would apply."