If the amount of farmland being converted to forestry each year exceeds 40,000 hectares, the government would look to intervene, Minister of Agriculture Damien O'Connor told Parliament's primary production select committee today.
Increased forestry is a key government policy, with a dual mandate of meeting the net-zero carbon target for 2050 and to create more jobs in woods processing.
But there is growing disquiet, particularly by the agricultural sector, that rules intended to encourage planting don't target marginal land and may take farms out of production instead.
O'Connor said the amount of farmland being converted to forestry was growing quickly and that he would look to intervene if it rose above 40,000 hectares per year.
"If we saw massive afforestation on land classed below six then we'd have to intervene," he told MPs, referring to the classification system where land rated up to four is generally suitable for all farming, including vegetables or arable crops, whereas a rating of eight is unsuitable for even lower-value grazing or production forestry.
"I'm comfortable with the level of forestation at this point, but we are monitoring it very carefully and if we were to see that a rapid rise then we have committed to change the requirements."
Federated Farmers said the emissions trading reform legislation, passed on Tuesday, would accelerate the conversion of productive farmland into pine trees planted for carbon credits.
The group said some 70,000 hectares of sheep and beef land had already been converted to forestry since 2019, with carbon-related investment acting as a major driver.
The Ministry for Primary Industries disputed this number. Its provisional figures show 22,000 hectares of farmland was converted in 2019, with 2020 figures yet to come.
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The vast majority of this afforestation was on land classed six to eight, according to MPI.
If Federated Farmers' numbers are accurate, then afforestation may be approaching O'Connor's 40,000-thousand-hectare annual threshold.
Currently, the Overseas Investment Office permits foreign purchase of farmland for the purpose of planting forestry but not for the purpose of farming — a rule which O'Connor himself described as "a bit odd".
Making up for deforestation
However, he said the policy was brought in to encourage forestation after a sustained period of deforestation through the 2000s.
"We are watching it really carefully, I'm very mindful that we may end up planting trees on really good high-quality farmland," he said.
"If you look back to the 1990s where we had 94,000 hectares in one single year go into forests, then those kinds of figures get pretty alarming, although it didn't destroy our economy."
O'Connor said trying to secure more income from wool will help incentivise famers to continue dry stock farming and be less likely to sell to a company seeking carbon credits.