Sun, Sep 19, 2021 8:30 AM

Overseas investment branching out

Forestry could have an effect on sheep and beef farm production, a local farmer says. File photo.

Chris Valli

A UK company has snapped up a 230 hectare forestry block in Marlborough.

The sale of the land at an undisclosed location, has been approved by the Overseas Investment Office under the special forestry test.

Designed to encourage tree planting, the move is prompting concern for some farming groups who say jobs and productive farmlands are being lost.

It is a decision that will have an impact on sheep and beef farms and production too, says a local farmer.

Retired farmer Doug Avery says the concept of carbon forestry is commendable from an emissions sustainable model.

However, there seems to be no back up viable solution from the government with the latest round of Overseas Investment decisions, he says.

There is a wider issue at stake as a result he says. “Most forestry companies are looking for wetter areas. Carbon unit prices are now so high the government has run out of money to bid against its own top limit of $50 per tonne.

“So that market is now in the hands of overseas speculators.”

To compete farmers will need $20 per kg for lamb. Lamb is currently at an all time high of $10 per kg so expect lots of pine trees and not much meat as farmers make the change. “Brazil has Mad Cow disease. China has stopped imports from there, and all other meat exporting countries have record and rising prices. We are about to see a food crisis that will make the housing crisis look like a pup,” Doug says.

“It means higher prices and ultimately huge competition to get our meat.”

Ironically, Doug says his son in Western Australia is getting record prices for all his grain, despite China no longer buying there. “We are about to enter a whole new time in food supply and food demand.”

Doug’s comments come after Industry group Beef and Lamb NZ is asking the government to crack down on the amount of farmland being turned into carbon forestry.

An independent report commissioned by Beef and Lamb NZ found in the past four years nearly 140, 000 hectares of land has been earmarked for forestry.

It found significant increases in the amount of farmland sold into forestry, driven largely by an increase in the carbon price, and Government subsidies.

Agriculture Minister Damien O’Connor has previously said the government may intervene if land conversions reach 40,000 hectares a year.

Beef and Lamb chief executive Sam McIvor says rural communities have been concerned about this for some time. “While we see a role for forestry in addressing climate change, we are calling for urgent discussions and government action on mechanisms to ensure that not too much productive land is turned into carbon farms.

“They’ve repeated a mantra of ‘right tree, right purpose, right place’ but frankly the evidence shows that’s not happening - it’s threatening rural communities and undermining New Zealand’s future economic viability.”

The Overseas Investment Office is the New Zealand government agency responsible for regulating foreign direct investment into New Zealand. The Office is responsible for high value investments and investments in sensitive land (non-urban rural land) more than five hectares in area.

Carbon forestry covers new opportunities and policies in carbon planting, investment and the growing carbon emissions offset markets.

The latest round of Overseas Investment Office decisions show five more overseas companies have been allowed to buy forestry land or farm land for conversion.

Doug says he doesn’t see an alternative or a solution around overseas companies purchasing land for forestry and carbon alternatives. “It’s a great time to live in New Zealand at the moment, and to farm, but consumers should be aware. Food supply is tipping over with Covid in poorer countries and global logistics hampering distribution - it’s a perfect storm.”