Urgent action needed on the special forestry test to stop carbon farming rort

1 February 2022

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.

Multiple government policies are driving farmland being sold for pine tree carbon farming, and a multitude of changes are needed to restore balance to land use policy, Feds Meat and Wool Chair William Beetham says.

"Sorting the special forestry test is straight forward and a good first step."

The Overseas Investment Act ‘benefit to New Zealand’ requirement is waived under the special forestry test when overseas investors buy farmed land for ‘forestry activities’.

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, William says.

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," William says.

"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."

The price of carbon under the New Zealand Emissions Trading Scheme (ETS) has hit a record $68 per unit. 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.

"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.

"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. 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, William says.

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.

"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," William says.

"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."


For more information contact:
William Beetham, Federated Farmers Meat & Wool Chair, 027 600 0777
Simon Edwards | Communications Advisor, Federated Farmers
Email: [email protected], Mobile: +64 (0)27 484 8892