You shouldn't plant fully for the carbon concerned, because it's an unknown, whereas we do know that there's a market for lumber.Dougal McIntoshJoining the ETS to make the best of their erosion-prone property is a
way forward for Tokomaru West farmers - but not for the unwary
Registering a forest with the ETS and trading carbon units provides much-needed cashflow for a farm forester - but it has some risks, Di and Dougal McIntosh say.
Parts of their steep and erosion-prone 1100ha Tokomaru West farm have just been registered with New Zealand's new emissions trading scheme (ETS).
Mr McIntosh said 1 tonne of wood equals one carbon unit - and at the moment that's worth $18.40.
The Westpac bank will pay cash for it. Or the units can be kept - their value may rise - or traded.
"There are brokers advertising for units already, and there's been significant trade both within and outside New Zealand."
One hectare of pine trees grows 25 tonnes of wood a year. At the current carbon price that's a potential income of $460 a hectare a year for a growing forest - not a lot, but possibly more than income from grazing marginal land.
The bonus for farm foresters is that money from selling carbon units can be put into planting, pruning and harvesting more forest. Growing a forest takes 30 years and costs money, Mr McIntosh said, and usually there's no income until harvest.
There are several catches to using the ETS though.
When a forest is milled 50 per cent of the carbon is lost and that has to be paid for at the going rate. It is impossible to guess the price of carbon units in the future - it could be high enough to put people off harvesting. Prudent foresters will keep some units in reserve against this.
And the process of registering with the ETS is rigorous. For the McIntoshes, it took nine months and they needed an adviser. There are complexities like the 20 per cent of carbon stored underground in tree roots, and carbon units only being available for post 2008 growth. There are tables for working out the values.
Registrations finish at the end of 2012, and Mr McIntosh suggests anyone who hasn't yet started the process needs to get going.
He also warns people to plant valuable tree species, in places where they can be harvested, and tend them well.
"You shouldn't plant fully for the carbon concerned, because it's an unknown, whereas we do know that there's a market for lumber.
"It's essential that when you come to harvest, you've got something that's worth harvesting."
Despite all that, the ETS will be an encouragement for sustainable land use, he said, and most farmers want to do what's best for their property.
"The ability to generate cashflow from carbon units will make forestry viable on a stand alone basis."
The McIntoshes had a Whole Farm Plan done by Horizons after prolonged rain in 2006 caused slips.
"In some areas 15 to 20 per cent of the paddock was lost in slips. Two more events like that and the land would be absolutely shot," Mr McIntosh said.
They had already planted many hundreds of hectares in trees. Since 2007 they have done another 200ha - in a joint venture with Horizons.
They provided the land and the regional council paid for the work. When the trees are harvested the proceeds will be divided up according to the inputs from the parties.
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