Farm forestry creates diversity and income on land
Forestry and farming do not need to compete and can be combined as a diverse use of land to create greater income streams. By Scott Downs.
Forestry and farming are often viewed as rivals in New Zealand, meaning some landowners stubbornly persist with one or the other. We encourage farm owners, investors, and rural advisers to see the opportunity forestry can provide as part of a mixedland-use approach. With the right advice, forestry can help to optimise farm profitability and resilience, and even provide a pathway to farm ownership.
Forestry assets can also help with family succession planning, providing valuable income and assets that can be easily separated from the land value.
The NZ Emissions Trading Scheme (ETS) has changed the game. Farmers can now achieve annual returns significantly higher from forestry than sheep and beef on less productive parts of their farm, as well as the harvest revenue. Cash flow from carbon is positive as early as four years after planting and can provide excellent returns out to age 16 for radiata pine under ‘Carbon Averaging’. Under this accounting rule, there is no liability at harvest provided the forest is replanted.
We encourage landowners to be bold in their thinking when considering forestry. Do not muck around with a few hectares here and there. Identify the least productive 20-30% of your farm, so you can spread costs such as machinery transportation and infrastructure construction.
Get advice, then make informed decisions about what is best for the future of your property and business. There may be parts of your farm that are less accessible for harvesting, and these areas are probably more suited to a longerrotation species for carbon revenue. There will also be areas more suited to native tree species.
Native trees are a great option for permanent riparian and aesthetic planting. Planning these areas to meet the ETS requirements means you can at least get some carbon or economic return on top of the environmental benefits like property aesthetics, stock shelter, improved water quality, biodiversity and soil and erosion protection.
PF Olsen does not support large-scale permanent exotic forestry converting to natives purely for financial investment, as it is reliant on the ETS for any profit and is therefore very exposed to policy changes and carbon price movement. Iwi and landowners with a commitment to land custodianship are exceptions who can manage this transition. Damaged areas not only have carbon earnings paused, but there is a requirement to re-establish which may require expensive intervention to achieve. Many people do not fully understand the long-term risks associated with permanent forestry using short-term species such as radiata.
Permanent exotics have a place along riparian margins, or with long-lived species like redwoods in the right areas. But our advice is almost always to target a timber crop with carbon as a bonus. The ETS is not a silver bullet – land that was not suited for exotic forestry before is still not suited now.
Every little bit helps mitigate climate change and will increase the resilience of your property, as well as improve the aesthetics, water quality and biodiversity in your environment.■
Scott Downs is director of sales and marketing at PF Olsen, New Zealand's largest independent forestry services provider.