Most plantations are in “production” – for the harvesting of logs – while planting under the ETS is for carbon sequestration.
Minister of Agriculture Todd McClay said ETS incentives have driven the wrong outcomes for the rural sector “for too long”.
“Once farms are planted in trees as a result of carbon credits we lose the ability to produce the high-quality, safe food that consumers demand – and we lose rural jobs, export earnings and the families that go with them,” he said at the bill’s first reading.
“Today we are putting a stop to the harm that this has done to rural New Zealand.”
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Climate Forestry Association chief executive Andrew Cushen says various reviews under the previous Government have already dented confidence and participation in the ETS.
“We don’t love the direction of travel of it [the bill], but that’s an argument that the minister has been clear he’s not up for having, so practicality is what’s going to be what matters,” Cushen told the Herald.
“What we see in the legislation at the moment is something that we can’t work out how to make work yet from a practical sense.
“That’s because of the ballot system that is included in it, which just includes too much randomness, in terms of whether or not you’re able to access land.”
Andrew Cushen, chief executive of the Climate Forestry Association.
Acquiring land for forestry is complicated.
“There’s a lot of ‘pre-work’ before you go and buy land, and then to have all of that put at risk through just a random roll of the dice at the end is too much risk and too much uncertainty.”
He says planting under the ETS has gone off the boil over the last three years.
“This new Government has been clear that they want to restore clarity and confidence in the settings to allow us to get on with stuff.
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“This particular uncertainty in the ballot piece unfortunately undermines that direction, and it creates the same risks that we’ve talked about previously,” he says.
A lobbying win
Cushen says forestry has a role to play in New Zealand’s emissions reduction plans and climate commitments work.
“The risk of this is that we won’t use forestry to the extent that we were planning to.
“That creates larger holes in the rest of the emissions plan and those holes will need to be made up somewhere else.”
Cushen says the “workhorse” categories for ETS planting are grades LUC 6 and 7.
“The licence to plant on LUC 1 to LUC 5 has never been good, and responsible providers have never really used that land,” he says.
New Zealand Carbon Farming – the biggest planter under the ETS and a member of the association – says 96% of the land it manages is LUC 6, 7 and 8 – areas that are often steep, erosion-prone and inaccessible.
Cushen says conversations about farm versus forest land competition were “a bit disingenuous”.
“We all have our role and our part to play, based on the agricultural system and supporting the right land uses that support landowner profitability, and equally in response to national climate issues.
“But simply put, forestry doesn’t use the same land that agricultural uses do, so I do find this argument a bit frustrating.
“I respect the fact that they [farmers] have their concerns, but I do worry that the more we imbalance our climate settings, the more we have to look for those solutions elsewhere,” he said.
In May, Federated Farmers launched its “Save Our Sheep” (SOS) campaign, calling for urgent action to halt the collapse of New Zealand’s sheep industry.
“Once the backbone of New Zealand’s economy, sheep are fast becoming an endangered species in this country,” the group’s former meat & wool chairman, Toby Williams, said in publicity material released before he was ousted from the chair position in June.
“Each year, we’re losing tens of thousands of hectares of productive farmland. Where sheep and lambs once grazed, pine trees are taking their place.”
Williams, who lost the Federated Farmers chairmanship to Marlborough provincial vice-president Richard Dawkins in late June, was vocal in saying sheep farming is at a crossroads.
“In just one generation, New Zealand has lost over two-thirds of our national flock, reducing from over 70 million sheep in 1982 to fewer than 25 million sheep today.
“The Emissions Trading Scheme is effectively subsidising pine trees to offset fossil fuel emissions, and that’s pushing sheep farmers off the land, never to return.”
Williams says that between 2017 and 2024, 260,000 hectares of sheep and beef country were “swallowed up” by pines.
“That’s not because forestry is necessarily a better use of the land, but because Government policy makes it more profitable to plant pine trees than to farm sheep,” he says.
Former Federated Farmers chairman Toby Williams says sheep farming is at a crossroads
Photo / Supplied
Beef + Lamb says the Government has not gone far enough.
The farmer-funded organisation and the Meat Industry Association (MIA) want urgent changes to strengthen the legislation, including tightening the criteria for temporary exemptions that currently allow land converted after December 4, 2024, to enter the ETS.
They also want the Government to extend the proposed moratorium on whole-farm conversions to all land classes, not just classes LUC 1–5.
B+L NZ chairwoman Kate Acland says while the bill is a step in the right direction, the changes proposed by B+L NZ and MIA are essential if the legislation is to have real impact.
Dennis Neilson, a director of forest industry advisory and publishing firm, DANA, says the farming sector has been laying it on a bit thick, but he concedes it has done a better job of lobbying than the forestry sector.
Neilson says there is now less land area in plantation trees in 2024 than there was in 2003.
That’s borne out by the numbers.
Official data from the Ministry for Primary Industries shows the area in exotic forestry peaked at 1.827 million hectares in 2003.
Since then, the area in forestry has fluctuated at around 1.7 million to 1.8 million hectares.
Neilson says the farming lobby had been more effective in using social media to score a “win” for farmers and a defeat for forest owners.
“But the reverse is true. It’s a victory for forest owners and a defeat for farmers.
“Forest owners with existing forests don’t want any more trees planted – it increases the value of their existing trees because there will be fewer of them.
“Overseas funds looking to buy land for trees are going to be redirected back to buying existing forests, and there are only so many existing forests for sale,” Neilson says.
“Farmers lose because they will not have the opportunity to sell to people with money, so it’s forest owners 10, farmers zero as far as I am concerned,” he says.
Neilson says the farm lobby had exaggerated claims and used emotive words and images in the Save Our Sheep campaign.
Sheep farming has long been in decline. Photo / NZME
“They have not fully informed their membership of the whole range of arguments, both positive and negative.
“The Beef + Lamb advocacy and its social media machine have done a superb job – better than the forest industry – but they might have scored an own goal this time.”
Neilson points out that large tracts of sheep-farming country – particularly in Canterbury and Southland – have gone into dairy.
Richard Holloway, an agricultural economist with 40 years’ experience who now farms sheep and cattle, alongside a 270ha forest estate in Canterbury, takes issue with farmer messaging.
The campaign portrays exotic forestry as being largely responsible for the significant decline in the national sheep flock over the past 30 years.
“The facts simply do not support this and deserve to be put on record considering the importance of these two sectors to the NZ economy,” he says.
“Let’s face it, sheep and beef returns have steadily declined over time, and [forestry] is a nice option for a bit of diversification into another enterprise.”
Laying the blame on forestry for the decline in sheep farming is “palpably incorrect”.
Holloway says if bodies like Federated Farmers or B+L are trying to influence public policy, it should be “rational and evidence-based“.
“The tenor of that whole Save our Sheep campaign was anything but that.
“There’s been a very active campaign by the Feds and Beef + Lamb that has resulted in the legislation that’s before a select committee at the moment, legislation which aims to restrict whole-farm conversions of pastoral land into forestry.
The legislation that is in progress is largely a result of that campaign over the last year by the Feds and Beef + Lamb New Zealand, Holloway says.
Doubts on the regulatory front and particularly uncertainty around the ETS had slowed down the rush towards carbon forestry, which Holloway said “probably needed to happen” while the Government decided on what the ETS settings were going to be in the longer term.
“Every country in the world is going to be heavily reliant on carbon removals as opposed to reducing gross emissions and cutting back on the use of fossil fuels.
“Clearly, cutting back gross emissions is not going to happen fast enough to avert the sort of climate disaster that we’ve got in front of us, and that we’re seeing play out almost every day in New Zealand.
“That means that carbon removals are going to be an important part of the equation, an important part of that solution for some time to come.
“And if you look at the range of carbon removal options that exist, you’ve got nature-based options such as forestry, and engineered options such as locking carbon dioxide in a rock substrate form and putting it back into the ground.”
Engineered options are expensive in terms of the cost per tonne of carbon sequestered, he says.
“Of the nature-based options that are there now, forestry is the one that works and is financially viable.
“You can plant a tree today and it’s sucking carbon dioxide out of the atmosphere from tomorrow, at scale.”
New Zealand also has a large amount of marginal hill country that is suitable for tree production.
Farmers pointed the finger at forestry for the closure last year of Alliance Group’s Smithfield meatworks at Timaru, but Holloway said the closure was an inevitable rationalisation.
“Back in the 1990s we had industrial capacity to process sheep coming from a population of 70 or 80 million sheep, and that’s now reduced by 60% so clearly you need to have some rationalisation of processing capacity.
“You’ve also had at the same time the advent of new, modern, efficient processing plants, and we have a legacy of a lot of pretty old, inefficient plants.
“I think the way they have played the game has been a bit mischievous, and certainly hasn’t been evidence-based, or based on fact.”
Farm prices
Constraints on where trees can be planted could become a positive for existing forest owners but may end up depressing farm prices, as it will make them less attractive for conversion.
However, PGG Wrightson’s general manager for real estate, Peter Newbold, says it is too early to tell if moves to curtail planting were depressing rural property prices.
“There has been a resurgence in sheep and beef farms because of high farmgate prices,” he says.
“Cattle prices are at an all-time high and sheep prices are well above the five-year average, so suddenly sheep and cattle farms have become more favourable.
“But it’s fair to say that by the end of this year, we will be seeing very few of those farm-to-forestry sales.
“Recent sales show the premium paid by those forestry companies is north of what you would get for a sheep and beef farm.
“Every farm is different, but it could be as much as a 10 to 15% premium being paid for those properties sold before the changes that the Government is bringing through,” Newbold says.
As a bystander to the farm-versus-forestry debate, does he think the bill will have the desired effect?
“My feeling is that the horse has already bolted.”
TOMORROW: See all the farms sold to overseas companies for forestry