Forestry estate cleared for cattle

New Zealand's largest farmer, state-owned Landcorp Farming, plans to convert 25,700ha of former Fletcher Challenge forests between Taupo and Reporoa into farms, many for dairying.

The project will involve spending $250 million to convert the land, which will add 400,000 stock units to the 1.4 million stock units Landcorp already runs on 100 farms.

Switches in land use from forestry to pastoral farming are unusual, although two central North Island forestry blocks have recently been sold privately to dairy farmers.

Those sales - 93ha sold at $5300/ha and 183ha sold at $4450/ha - indicated that land planted in pines could be successfully converted.

Landcorp chief executive Chris Kelly said that the project would be based on a long-term lease - probably over 40 years - of forest from Wairakei Pastoral, which is owned by Trevor Farmer, Mark Wyborn, Adrian Burr and Ross Green.

The land, on both sides of State Highway 5, is part of the 105,000ha Central North Island forestry estate bought by Wairakei Pastoral from Tenon, formerly Fletcher Challenge Forests.

The parties will progressively convert the land to pasture as the trees are harvested.

Wairakei has sold the cutting rights to the trees, and will use some of that money to pay for pulling up and grinding the stumps, fertiliser, fencing and other farm facilities.

As the land is redeveloped over 15 to 20 years, it will be leased to Landcorp for pastoral purposes.

"This transaction enables Landcorp to increase its return on assets, as it will only own the livestock and buildings," Kelly said.

Landcorp would materially increase its operations in the Reporoa region, while avoiding the need to acquire further land.

Mr Kelly said that although the mix of farming activities had not been finalised, it was expected that approximately 12,000ha to 15,000ha would be suitable for dairy, with the balance of the new farms running a mix of sheep and beef.

Mr Kelly said an economic analysis suggested the switch from forestry to pastoral use would add 170-180 jobs to the region, and treble the economic return from the land.

"This is a unique opportunity to undertake a large-scale farming operation, recognising that this land can make a much greater economic contribution as a farming operation in comparison to forestry," he said.

Landcorp said in 2002 that it would build its livestock from 1.5 million stock units to 1.8 million.

It is now in the third year of a five-year development programme to reduce its exposure to volatile beef returns by earning half its income from dairy and deer.

But Mr Kelly said the proposed conversions were likely to mean that dairying would generate half the company's income once the new farms came on stream.

The company was looking at converting forestry land because its biggest conversion - a $20 million West Coast project to switch sheep and beef farms to dairying near Cape Foulwind - had built up skills that could be applied elsewhere.

It had also converted a 9500ha station on the Napier-Taupo road from forestry to run 85,000 stock units.

He said that Landcorp would discuss its plans with Fonterra to enable planning around the extra milkflows that would be generated.

- NZPA