New rules fall short of delivering a level playing field when overseas investors buy our farmland for forestry, Federated Farmers says.
It’s a “step in the right direction” to scrap the much-criticised special forestry test, Feds Gisborne-Wairoa President Toby Williams said. Instead, overseas investors purchasing farmed land for conversion to forestry would be required to meet the Overseas Investment Office ‘general benefit to New Zealand test’.
“But it will continue to be an uneven land-use playing field because investors buying land to continue to raise crops and livestock run up against the much more stringent Farm Land Benefit test.”
Speaking to the Finance & Expenditure Select Committee on the Overseas Investment (Forestry) Amendment Bill this morning, Toby said the general benefit test that would apply to farmland to forestry conversions “provides a slightly higher hurdle but it is nothing like as onerous as the farmland test.
“In our view it’s very strange that conversions of farmland will not, under this Bill, be considered under the farmland test. Farmland is farmland after all.”
Toby’s Gisborne province is just one that has been hit hard by farmed land being snapped up for forestry, including ‘carbon-only’ not-for-harvest blanket pine afforestation. Feds believes that pace of conversion in large part is because of distortionary government policies and incentives.
According to an independent study commissioned by Beef + Lamb NZ, in 2017, 3,965 hectares of entire sheep and beef farms were sold into forestry. That jumped to 20,227ha in 2018 and 36,824 in 2019. The dampening impacts and uncertainty of COVID saw a decrease to 24,864 of farmland sold for forestry in 2020, and 14,219 in the first six months of last year.
The researchers said based on discussions with real estate agents, land sales across 2021 were expected to exceed those of 2019 – meaning an amount of exotic planting that will far exceed what the Climate Change Commission projected as a sustainable amount (25,000 ha/pa).
Toby told the select committee that when productive farmland is swallowed up by forestry – especially pines planted just for carbon credits that are not pruned and eventually harvested – the cuts into the lifeblood of rural communities are deep. With fewer people on the land there is less employment, rural schools close, supporting businesses such as meatworks, fertiliser and transport depots fail, there are fewer volunteers for fire brigades, sports club, etc.
Decline escalates, and it’s harder to attract staff and shearing gangs to the farms that struggle on. Those looking to buy farmland are outbid by forestry investors chasing carbon income by a factor of two or three.
There is no guarantee that overseas companies who say today they will harvest trees planted, having reaped years of carbon credit income, will still be around 15-20 years hence to meet those undertakings.
“By allowing overseas investors to buy land, convert to forestry, sell credits and take the funds back off shore you are allowing wealthy overseas investors the opportunity to get richer through the ETS. All while the most vulnerable in NZ rural communities suffer through loss of jobs, schools and communities,” Toby said.