Planting forest to sequester carbon, either for carbon farming or directly offsetting farm emissions, is likely to increase, according to research commissioned by the Fertiliser Association of New Zealand.
The study was undertaken by a consortium of AgFirst, Groundtruth and Market Economics. Its objectives were: impact at the on-farm level of planting areas into forest, with business profits, and changes in production. This includes the value of carbon and the proposed farm‐level levy.
It also includes assessment of the wider macro‐economic impacts of such land use changes, analysis based on targeted sensible land use changes within the regions e.g., areas of steeper sheep and beef hill country land transitioning into production forestry and natives Assessment of the impact of blanket planting (i.e., whole farms) into forestry for carbon/timber.
This was done by analysing the impact on statistically “average” farms for Northland and Hawke’s Bay, and involved planting either 10%, 30% or 100% of the farms in three forest types: Pinus radiata, Cypress or indigenous. The impacts of this were then assessed at the regional level.
At the farm level, as increasing areas of less productive land were planted into forestry, the pastoral operation intensified on the more productive land. This resulted in an increase in earnings before interest, tax, depreciation and amortisation (EBITDA), meat and wool production, and greenhouse gas emissions on a per-grazed hectare basis, but a decrease in total farm output across all three.
In the absence of any carbon value, the addition of 10% of pinus radiata resulted in very similar total EBITDA returns relative to the 100% pastoral operation. A higher proportion of radiata, and all levels of planting of either cypress or natives resulted in a much lower total EBITDA.
The addition of a carbon value ($85/T CO2e) resulted in all exotic forest scenarios lifting total farm EBITDA above the base level of profitability, with the most profitable option being 100% planting in radiata followed by 100% planting in cypress.
Assuming the carbon credits were used solely to offset proposed emissions levy, the analysis indicates that a 10% planting of pines, could do so for over 30 years.
The report found that establishment of forests on farm can improve farm returns and resilience, while still maintaining significant livestock farming operations. Farmers who have carried out forestry plantings on lower-productive land have experienced a positive impact on farm profitability due to an increase in per head livestock performance and a decrease in running costs for weed control, infrastructure maintenance and labour associated with managing reduced land area.
However, the report also noted that blanket planting of pines for carbon-only is much more profitable than harvesting, meaning that farms are more likely to be blanket planted. ‘This may well not be in the national interest. In many respects therefore, the answer for profitability, climate change, water quality protection and biodiversity improvement, would appear to be “trees on farms” rather than “farms into trees.”