Changes proposed in the MPI discussion paper ‘Managing Exotic Afforestation Incentives’ fall short of what’s required to restore a level playing field to land use policy settings, Federated Farmers says.
In its submission to government, the Federation has said achieving that balance will require all eight of the recommendations set at the Federated Farmers National Council meeting in March (see below).
Feds has recognised as “an important first step” the announcement in mid-February that Cabinet has approved changes to the Overseas Investment Act 2005 that will remove the streamlined ‘special forestry test’ option for overseas investors intending to buy farmland for forestry. Such purchases will be subject to the tougher ‘benefit to New Zealand’ test.
However, the proposed changes will still not create a level playing field for foreign investment in New Zealand, with the general ‘benefit to NZ’ test being much less strict than the ‘national interest’ test that foreign investor applications in farmland are subject to. Feds argures a level playing field shouldn’t be too much to ask for and the Government should either make it easier for foreigners to invest in farmland if they plan on continuing to farm, or make it as difficult to invest in farmland if they intend to blanket convert the farm to pine trees. Just make the rules the same.
Since the special forestry test was introduced in late 2018, the OIO has approved a total of 26,094 hectares of pasture for forest conversion via 46 applications. There will be more farmland lost before a law change is passed, which won’t happen quickly given the necessary amendment Bill has yet to be introduced, let alone debated and considered.
The Feds submission on Afforestation Incentives, put together by Senior Policy Advisor on climate change, forestry and trade Macaulay Jones, acknowledges the MPI discussion document provides an excellent synthesis of the runaway blanket afforestation problem facing many farmers.
Opening up a new permanent post-1989 forest category within the NZ ETS from 1 January next year to non-harvest plantations, with no limits to the total area of land that can be registered under this category, is likely to result in large area of land nationwide being covered in ‘carbon only’ pinus radiata, MPI said.
As well as lower export earnings, fewer jobs and distortion of land values squeezing out other uses, the discussion documents lists other downsides:
- Low long-term economic activity and job creation in the region directly surrounding that land relative to competing land uses (generally sheep and beef, deer, and production forestry). If cumulative land conversion occurs at scale or is concentrated in particular regions, this can work against the economic and social outcomes sought by those communities.
- With permanent exotic forests being a highly profitable use of land at current carbon price levels, the resulting increase in the supply of NZUs to the NZ ETS from these forests is likely to dampen medium-term carbon prices in the NZ ETS. This risks curtailing investment and uptake of low-carbon technologies to reduce emissions. The Climate Change Commission also identified a clear role for indigenous afforestation which provides slower but sustained sequestration throughout this century.
- Large areas of exotic planting with little ongoing management poses long-term risks of animal pests, disease, fire and wilding conifer spread. Over time, fast-growing, heavy forests planted on steep, erosion-prone land are also at risk of instability through heavy rain and windthrow, which can present long-term risks to downstream communities and for landowners. Unlike many indigenous trees, few exotic species are long-lived in New Zealand (for example, Pinus radiata has an average lifespan of 80-90 years) and without ongoing management there is no certainty that a self-sustaining forest will develop or provide biodiversity or other benefits.
Federated Farmers supports the proposal that exotic forestry should not be allowed to register in the permanent category of the ETS, with exemptions.
A moratorium should be put in place while “time and care is taken to develop an appropriate, workable and long-lasting exemptions regime,” Feds said.
“An initial starting point would be to enable exotic afforestation that currently does not qualify for the ETS that meets the criteria developed under the He Waka Eke Noa process. This could include space planted in poplar and willow poles that are integrated into farms for erosion control, biodiversity and animal welfare purposes.”
Another potential exception floated by MPI are those permanent exotic forests established with the stated intent of transitioning to indigenous forest over time.
The discussion document also asked questions on an option for a long-term rotation forest category under averaging, and incentivising permanent indigenous afforestation but Federated Farmers opted not to comment on these sections.
What Federated Farmers says is needed:
These are the eight recommendations of the Federated Farmers National Council for a true ‘levelling out’ of government farming/forestry land use policies:
1. The Emissions Trading Scheme (ETS) be amended to limit how many forestry units participants can surrender for non-forestry related activities. NZ is the only country in the world with an ETS allowing 100% of fossil emissions to be offset with trees.
2. The National Environmental Standard for Plantation Forestry (NES PF) be amended to include permanent, carbon-only forestry. This recommendation is subject to Recommendation 3.
3. The resource consenting process be amended so that particular land uses are not discriminated against, and all land uses are treated equally as regards to their effects. This would involve exploring the suitability of requiring afforestation of farmland above a certain area or percentage to require a resource consent (in a process like that required for other types of land use change).
4. The Overseas Investment regime be amended to restrict the streamlined special Forestry Test to the purchase of land that is already in forestry. This policy partially aligns with the 24 February announcement by Associate Minister of Finance David Parker.
5. Changes to legislation be made that would result in forestry land paying rates that accurately reflect its impact on council activities, such as roading. Changes are needed to ensure the rating system is fair and should include: a. Councils required to have forestry rates differentials b. Value of forestry in the ETS to be rateable as per permanent crops c. Councils be given the ability to recover costs for damage to infrastructure.
6. The risk of fire to rural communities from afforestation be better managed, including via legislating for a National Policy Statement (NPS) for Fire Management.
7. Forestry be bound to nationally consistent ‘good neighbour’ pest management rules to help prevent the spread of pest species across boundaries with productive farmland.
8. A review to be undertaken on the impact of market speculation on the price of NZUs and the subsequent impact on the wellbeing of rural communities.
ETS and flawed metric is skewing optimal long-term pathway
Emissions trading is the most efficient means of achieving long-term greenhouse gas reductions at least cost but the government has failed to put in place measures to address the regressive impacts of the ETS, and how forestry is treated under the scheme.
Federated Farmers said MPI’s forestry discussion paper doesn’t adequately address the extent to which the sudden unsustainable wave of blanket afforestation is driven by government policies designed to achieve targets, and not a market-driven private sector solution to climate change.
“The NZU price is determined by market price discovery, but this price discovery occurs based on Government legislated supply and demand, with the demand being set based on emissions reduction targets which use a metric (GWP100) that is fundamentally unfit for estimating the warming from approximately a third of New Zealand’s reported emissions,” the submission to MPI said.
Feds pointed to recent research by Yule Alexander Ltd included in a Beef + Lamb NZ paper that showed the impact of the ETS on the profitability of forestry (both permanent and rotational) relative to sheep and beef farms (see table). Without the ETS, sheep and beef farms closely compete with timber forestry (as is to be expected with two industries that have competed in a largely deregulated market for decades), but with the ETS, forestry (both permanent and rotational) is dramatically more profitable.
The Feds submission said limitless allocation of increasingly valuable NZUs to forestry owners is not a precise means of recognising a public good “but rather a crude means of meeting relatively arbitrary accounting guidelines which are an imperfect proxy for the net-GHG impact of activities.
Forestry is not expected to internalise “negative externalities” such as the decrease in soil carbon levels and the warming from the albedo effect from blanket exotic afforestation of pasture. But forest owners are financially recognised for the positive externality of storing carbon in wood.
Feds is not alone in pointing this out. In a recent article Dame Anne Salmond noted: “The ETS is a spreadsheet designed in a silo, and an ecologist’s nightmare. It privileges the planting of monocultures of exotic conifers in New Zealand, while failing to assess their social, cultural, ecological, and economic impacts on local communities and landscapes.”
Or as one farmer told the Federation: “Not being clear and open in this discussion on what are the inadequacies of metrics used and the policy drivers causing the problem has a now evidenced severe cost on the people and environment of Aotearoa New Zealand. Creating a regulatory market based on unfit metrics is now clearly causing suffering amongst our most vulnerable communities whilst creating a gold rush for the wealthy (people who can enter into the ETS market) that future generations will have to pay for.”
As an alternative to increasing public spending on such things as the recent three-month 25 cents a litre fuel cut, Feds re-stated its support for recycling ETS revenue by way of a uniform payment for all New Zealanders to address the inevitable increase in the cost of living from climate action.
Price increases resulting from the ETS, such as rises in the price of fuel, electricity, and food, will disproportionately impact poorer New Zealanders. As well as stressing family budgets it has the potential to threaten the long-term political support for the ETS, which is critical if the scheme is to result in significant private green capital investment.
“Implementing a climate dividend would disproportionately benefit poorer New Zealanders and disproportionately benefit New Zealanders who emit fewer GHGs (as they would pay less into the ETS but receive the same dividend back),” Feds said.
Gisborne fights for future of farm production, rural communities
On May 13, Federated Farmers Gisborne-Wairoa President Toby Williams handed over to Conservation Minister Kiri Allen this morning the Feds province’s 8,990 signature petition calling for a stop to the sale of the Huiarua and Matanui Stations. The 6000 hectares of mostly easy rolling flat land is destined for planting out in trees, which will likely see the Mata School close and loss of employment.
The deal is pending Overseas Investment Office approval, but Toby is hopeful that with the Minister taking the petition to Parliament the sale may not go ahead as planned.
Toby has said an argument could be made that parts of the stations might be suitable for trees, but the vast majority of the 6000ha is highly production farmland, and if the stations were closer to Gisborne, they would quite likely be in dairy.
“There’s no criticism of the people selling the land. They’re doing exactly what anybody would do and taking the highest offer. It’s the rules that are the problem,” Toby said.