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Federated Farmers seek review of ‘special forestry test’

Federated Farmers is calling on the government to live up to its pledge and review the Overseas Investment Act “special forestry test” and be fair to sheep and beef farmers. Source: Hawkes Bay Today

We understand that Forestry Minister Stuart Nash and Agriculture Minister Damien O’Connor have been lobbying for this fair and sensible step but Cabinet is dithering, and this is profoundly impacting our rural communities.

It’s well past time for action. This is hurting rural people in Aotearoa New Zealand.

There are multiple factors driving the alarming and accelerating trend of productive sheep and beef farmland being sold for pine tree carbon farming, and a multitude of changes government must make to restore balance to land use policy. Sorting the special forestry test is straight-forward.

Overseas investors buying farmed land in New Zealand need the permission of the Overseas Investment Office and are required to demonstrate a significant benefit over and above that which would occur if the land was sold to a domestic purchaser (eg, creation of more jobs, export earnings, introduction of new technology). But under the special forestry test, if the overseas purchaser intends to convert the farm to forestry, this benefit requirement is waived.

This policy makes it much easier for foreign investors to purchase New Zealand farms to convert to trees and is one of many distortionary policies that are advantaging carbon farming over other land uses such as sheep and beef farming.

The recent spike in the afforestation of sheep and beef farms is not the result of consumer driven demand, but heavy-handed and short-term government policies designed to incentivise more trees, regardless of whether or not they are the right tree in the right place.

Technically, the forestry test indicates that the planted trees eventually be logged but there is no mechanism to ensure this actually happens, nor even any rules to ensure that pruning or pest control is done.

That’s not fair even to our responsible New Zealand foresters.

Overseas investors can simply plant pine trees, claim the credits, sell them and take the huge profits overseas, while New Zealanders carry the consequences now and into the future.

The price of carbon under the New Zealand Emissions Trading Scheme (ETS) has hit a record NZ$68 per unit – well over double what it was a year earlier. That trajectory is predicted to continue. Polluting industries looking to offset their greenhouse gas emissions are behind big increases in the value of land used for raising sheep and beef cattle.

Quite simply, those wanting to use land to continue farming for the future prosperity of Aotearoa New Zealand are being out-bid. There is little benefit but a huge cost to future generations.

Other than when the trees are first planted for carbon credits, there’s little or no employment benefit. That means rural families move out, school rolls fall, meat processing plants close, downstream industries suffer, and it becomes a vicious cycle of rural downturn – never mind the loss of export earnings from meat and wool. But an overseas investor walks away with big profits.

A report commissioned by Beef+Lamb NZ from Wairarapa-based BakerAg last year found that between 2017 and 2020 some 24,956 hectares of land were approved for sale to overseas buyers under the special forestry test.

More recent data shows another 40 consents were granted under the special forestry test to a foreign applicant between July 2020 and August 2021.

It has been claimed that the forestry expansion is happening on lowest land classes. But the BakerAg research found that 64% of the planting is on low-erosion or moderate erosion land, which is often highly productive hill country.

Federated Farmers is certainly not arguing against planting trees to sequester greenhouse gas emissions. But we need to be strategic about it and consider the long-term picture not just short-term mindless profit – especially when that profit accrues to overseas buyers with little or no benefit to New Zealand.

Feds is advocating for the restoration of policy settings that are agnostic toward land use and allow overseas investment through a smooth efficient system that benefits our nation.

Reviewing the special forestry test is a logical and increasingly urgent first step towards restoring fairness, while the wider sector and government work together urgently to develop sustainable solutions to best transition Aotearoa New Zealand towards a warming neutral nation.

William Beetham is Federated Farmers Meat & Wool chairman