From the mayor's desk: Stratford Mayor Neil Volzke discusses forestry's impact on land use

The forestry industry has been copping a fair bit of flack recently, writes Mayor Neil Volzke. Photo / Kat Closon on Unsplash

The forestry industry has been copping its fair share of criticism of late as questions are asked about some of the negative effects and impacts the industry creates.

In the main the criticisms are based around two focus areas: one being the impact on road networks, which I will discuss in next week's column, the other being the impact on land use across many of New Zealand's rural communities often resulting in further de-population of the more remote farming areas.

The land-use issue has brought together 16 councils, along with Beef & Lamb New Zealand, to form a lobby group to seek change to the policy settings around forestry in light of the Emissions Trading Scheme (ETS), the rapid increase in the price of carbon and concerns about productive sheep, beef and wool-producing farmland being converted to forestry/ carbon farms.

It is a complex and controversial topic but the Government has signalled it is considering changes. Let's have a look at some of the main points.

In March 2021 the Climate Change Commission provided its final advice to the Government on the first three emissions budgets and direction for its first emissions reduction plan. This included a list of actions to meet our targets and recommendations for new afforestation for planting by 2035.

If adopted this is likely to drive considerable change for rural communities. In simple terms, this means it is certain that we are going to continue to plant more trees (and lots of them) because it is a vital part of the lowering of emissions strategy.

The debate heats up considerably when you start asking about the type of planting that is planned. Is it exotic or native planting, is it planting trees for logging in 25 years' time or is it planting permanent forestry for carbon capture and then, when you have these things sorted, where should these forests be planted?

The catchphrase is "right tree, right place". This seems a fairly legitimate goal but to achieve it, the policy settings need to ensure decisions are being made on the correct basis. The potential to transform significant swathes of sheep, beef and wool-producing farmland to production forestry and permanent carbon forestry is very real and is already occurring, despite some current short-term constraints.

Figures provided by Beef and Lamb New Zealand show that the average annualised farm profit before interest, tax and rent for 2019, 2020 and 2021 is: hard hill country $300 per hectare, hill country $450 per hectare and finishing country $700 per hectare. Compare this to the equivalent analysis for pruned production forest regime incorporating carbon averaging at current prices that generates $2000 per hectare/per annum for the first rotation of trees.

This will become an even greater imbalance as the price of carbon, currently, around $70 per tonne, is predicted to soar in the future. Commentators believe that speculative institutional investment not linked to emissions or liabilities is now a factor accelerating the trend.

To combat this, some options have been suggested to change the behaviour of forestry investors that include: amending or abolishing tax incentives, land use regulations imposed, overseas investment office approvals can be reviewed.

So, what happens to the local farmer wanting to exit his traditional sheep and beef farm? Often these farms will have been in their families for generations and developed by sheer hard work, grit and determination. Often there will be a strong desire to keep the property within the family and hopefully, maybe the next generation wants to take it on, even though the financial returns aren't always brilliant.

The desire to farm livestock and the attraction of lifestyle sometimes prevails, which means the property remains without significant change.

But now sitting on the other side of the fence looking at the same land is a complicating factor; it is a forestry investor that is willing and able to pay substantially more for the property. Once acquired, they will still make a damn sight more money than the livestock farmer and will have a significant impact on the broader community.

Traditional land use or forestry, generations of work maintained or undone, rural de-population, commercial and social impacts all come into play. What a dilemma for the farmer selling the property? right tree, right place.

Next week, the impact of forestry on rural roads.