Land-use change from pastoral
farming to large-scale forestry
Summary of independent validation
report and B+LNZ’s analysis
August 2021
Summary report
Purpose of report
BakerAg was commissioned by Beef + Lamb New Zealand (B+LNZ) to independently validate the amount of
sheep and beef farmland that has been, or will be, planted into exotic plantation species in the near future, where
the planting is likely to take land out of pastoral production. By looking at this, BakerAg also identified land sold to
mānuka honey interests and land planted within farms under two government schemes (exotic and native planting).
B+LNZ also asked BakerAg to look at the land types affected and comment on why farms may be being sold.
Methodology
BakerAg used a three-stage process.
1. Analysis of publicly available sales and titles data, cross-referenced with companies known to be forestry or
carbon farming companies, and further investigation.
a. To provide a benchmark for ‘whole of farm’ purchases, BakerAg analysed all sales of 250 ha or more.
b. ‘Plantable area’ (effective forest land) was calculated using declared Overseas Investment Office (OIO)
intentions, 100 percent for honey production and 85 percent for whole of farm domestic sales for forestry.
2. Cross-checking data already obtained and then developing a methodology to determine the quality of land
in terms of its production potential. BakerAg used two GIS layers describing Land Use Capability (LUC)
classification and Erosion Susceptibility Classification (ESC) on top of the property title layer. Satellite
imagery was also used as part of a visual assessment and attempts were made to cross-check with regional
council data.
3. Additional cross-checking of further reports of sales in all regions.
Note that the report only looked at land expected to go from farming to forestry, not from forest to pastoral use.
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Key findings
Year Grand Total Percentage by
Whole of Farm Purchase 2017 2018 2019 2020 (ha) Conversion
Honey (Mānuka) 3,039 7,340 1,678 2,281 14,338 10.3%
NZ Sales 2,510 11,245 26,198 11,881 51,834 37.2%
OIO 1,455 8,982 10,626 4,883 25,946 18.6%
Total Whole of Farm (ha) 7,004 27,567 38,502 19,045 92,118 66.0%
Partial farm plantings by Landowner through 1BT/JV (2018 – 2020)
1BT Landowner Grant 12,124 indigenous + 13,434 exotic 25,560 18.3%
Crown Forestry JV 21,822 21,822 15.6%
Total Partial farm funded 47,382 47,382 34.0%
Totals 139,500 100.0%
Notes on the above:
• The data was based on sales that could be verified during the stated period.
• The areas of farm sales identified could potentially be higher if sales occurred outside the methodology
used for assessing whole of farm sales and within farm plantings. The area could be less if land is sold back
to farming interests and not yet captured in the data.
• While most sales for 2020 have been recorded, it is possible there could be a small additional number from
2020 that could still emerge due to lags in the sales process. BakerAg also noted the slowdown is in part
due to COVID-19 affecting the ability to transact.
Whole of farm purchases
• The gross land area of whole farms purchased between 1 January 2017 and 31 December 2020 for planting
is estimated at 92,118 ha. (In 2017 the gross land area purchased was 7,004 ha. In 2018 it increased to 27,567
ha and in 2019 it increased again to 38,502 ha. In 2020 the total was 19,045 ha)
• Of the total 92,118 ha, based on an analysis of the 2016 LUCAS (Land Use and Carbon Analysis System) layer,
66,665 ha (72.4 percent) is estimated as ‘plantable (effective) area’, or effective forest land.
• Of this 92,118 ha, it is estimated that a gross area of 26,547 ha (or about 34 percent) of these land sales
were to carbon farming companies – ie forestry that is not intended to be harvested. (Noting that the actual
planted area is likely to be less)
• A total of 14,338 ha of whole farm purchases were identified for honey/mānuka planting, making the gross
land area of whole farms purchased for non-mānuka planting 77,780 ha.
Partial farm plantings
• Between 2018 and December 2020 an additional 47,382 ha of land within existing farms was approved
for planting, funded by the One Billion Trees programme or as part of the Crown Forestry Joint Ventures
scheme. (74 percent exotic and 26 percent native trees)
• Of this area, approximately 12,124 ha is identified for mānuka/indigenous plantings.
Land taken out of production
• In total it is therefore estimated that, based on 2017-2020 figures, 139,500 ha (gross) of land has been or
will be planted in the near future, taking this land predominantly out of sheep and beef production. (While
there may be some areas of farms not planted, a significant proportion of the land will be planted)
Analysis of LUCAS layers
• Analysis of the 2016 LUCAS layers of the whole of farm purchases showing how the land was being
used suggests that 65.7 percent of the whole farms sold into forestry was in clear pasture, 6.7 percent in
potentially reverting country (therefore a total of 72.4 percent of the whole farm purchases is estimated as
plantable) and 27.5 percent in either exotic or indigenous forest species.
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Land Use Capability (LUC) classification summary
By far the majority (90.4 percent) of land being converted is land of LUC (class) 6 and above (52 percent of
the area is in LUC 6, 36.7 percent in LUC 7 and 1.7 percent in LUC 8).
Erosion Susceptibility Classification (ESC) summary
• The land falls into the four main ESC classes as follows:
– Low 28.2 percent
– Moderate 35.8 percent
– High 26 percent
– Highly erodible 9.9 percent
• The land in the highly erodible, low and moderate classes are noted as being spread across all farms (the
total land area) as opposed to whole properties.
Location
• At least 21 properties, totalling 12,565 ha, were between 150 km and 200 km from the nearest port.
• With established carbon (cash) flows available to forest plantings, forestry is now an attractive option in
these more remote areas. Throughout the life of these more remote forests (if planted in radiata pine)
there could be decision points which may result in the forests either being managed for timber and carbon
revenues, or for carbon only, depending on relative values.
• Forests closer than 150 km to a port are those most likely to be managed for both timber and carbon
revenues.
Land-use change
• BakerAg also sought to gain an understanding of why there has been the recent increase in farmland
being sold to forestry interests.
• Land prices had been relatively static until the interest from forest investors with ability to pay more for
the more remote and possibly less productive land than farming interests. Forestry investors have been
able to pay thanks to strong log prices, a rise in the carbon price and expectations this will continue to
rise, particularly following the amendments to the Emissions Trading Scheme. Key drivers influencing the
carbon price include an increase in the Fixed Price Option for surrender to $35/NZU (from $25/NZU) and
the eventual move to auctioning. Introduction of averaging and the introduction of a Permanent Forest
Category will also add to the attractiveness of forestry from 2023 onwards.
• The strong uptake of the Crown Joint Venture fund and the One Billion Trees planting grant by existing
landowners provides evidence that many farmers are beginning to assess the long-term benefits
associated with putting part of their farm in trees, planting ‘the right trees in the right place’.
• An unexpected result was a growing understanding of how much land was or is being purchased for
mānuka farming/indigenous plantings, amounting to 16 percent of whole of farm sales and 20 percent of
total plantings.
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B+LNZ’s analysis
Following are B+LNZ’s analysis of the report and policy positions.
The report confirms a significant amount of sheep and beef farmland has been converted
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to forestry and underscores the need for limits on carbon offsetting
B+LNZ, farmers and rural communities have been concerned for some time about the speed and scale of
productive sheep and beef land being converted into pine trees.
The report shows that since 2018 there has been a significant increase in the sale of sheep and beef farms to
transition into forestry and confirms our existing policy positions.
It’s important to note there is a long lag time between sales of farms and when trees are planted, and that official
estimates therefore differ from these figures. Tracking sales is key because it provides an earlier sense of what’s
happening with land conversions.
Drivers behind land conversion
In 2017, 3,965 ha of whole sheep and beef farms were sold into forestry. This increased to 20,227 ha in 2018 and
rose to 36,824 ha in 2019 – coinciding with the consultation and eventual passage of the Zero Carbon Act and
signals about the price ceiling in the ETS being lifted. (Figures are NZ sales plus OIO and not including mānuka)
The report shows that sales slowed to 16,764 ha in 2020. This is likely to be due to COVID-19, and discussions with
real estate agents indicate that demand has increased again in 2021.
There has been some increase in pine prices, but a significant proportion of the increased activity has been the
result of climate change policies, in particular the Zero Carbon Act and reforms to the ETS, and other policy
changes that have made the purchase of pastoral farmland for a combination of forestry production and carbon
(or carbon only) revenue more attractive.
We anticipate this trend will continue as the carbon price continues to increase. Carbon is currently trading around
$46/tonne. The Climate Change Commission in their May 2021 advice to Government modelled prices rapidly
rising to $50/t, further increasing to about $140/t in 2030 and possibly reaching $250/t by 2050.
The need for limits
Both the Climate Change Commission and the Minister for Climate Change have indicated the price of carbon
needs to increase significantly in order to drive down carbon emissions. This is correct, however without limits
on forestry offsets (i.e. the amount of carbon credits emitters can purchase to offset their emissions rather than
reducing them) the more likely outcome is an even faster increase in the sale of sheep and beef farms into forestry,
with little or no change in fossil fuel emissions behaviour.
While there is absolutely a place for forestry, this analysis and subsequent rural reporting supports the need for
an urgent discussion and decisions about placing limits on forestry offsets. This was highlighted by the Climate
Change Commission’s final advice to the Government, which recommends amendments to the ETS and other
climate policies to manage the area of exotic forests planted.
Furthermore, the Climate Change Commission in their advice to Government in June stated that 25,000 ha of new
planting of exotic forestry was needed each year to put the country on a pathway to achieving the net zero target
contained in the Zero Carbon Act.
This report indicates that the Commission’s expectations are already being achieved. Combining the average
‘plantable’ (effective) area within the whole farms sold into forestry with the average of the exotic trees funded
under the IBT and JV programmes results in over 29,000 ha per year between 2018 and 2020.
Average over
2018 2019 2020 Total Average plantable area
three years (ha)
17,800 approx (average
Total farm sales (ha)
20,227 36,824 16,764 73,815 24,605 ‘plantable’ effective area at
(excludes mānuka)
72.4% of a whole farm)
Govt planting programmes
13,434 + 21,822 35,256 11,752 11,752
(ha) (exotic)
Total average plantable each year (ha) 29,500 approx
B+LNZ notes that these figures are a minimum amount. Based on reports from farmers there is far more land being
converted into trees within farms, that has not been part of the two government programmes.
Agriculture Minister Damien O’Connor has previously said the Government may intervene if land conversions reach
40,000 ha a year. BakerAg’s report shows that land purchased for the purposes of forest planting reached 36,824
ha in 2019 (excluding mānuka). We are already nearly at the Minister’s suggested threshold for action, further
underlining that limits are urgently needed.
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Policy options
The Parliamentary Commissioner for the Environment has recently suggested a range of policy options for limiting
forestry offsets, including two options that were similar to the ones put forward by B+LNZ in its submission to the
Government on reforms to New Zealand’s emissions trading legislation in 2020, which were:
• Placing limits on the volume of offsets participants in the ETS can use to meet their surrender obligations. An
example of such a policy exists in California, where entities can only offset their emissions up to a limit of 8
percent of their compliance obligations.
• Restricting the quantity of New Zealand Units (NZUs) issued to forestry participants for post-1989 forests for
carbon sequestration, and in turn limit the quantity of NZUs from forestry available to be used by fossil fuel
emitters through the ETS.
B+LNZ is calling on the Government to urgently work with the sector on the issue of forestry offsets and
introduce limits.
The report busts myths about trees going on ‘unproductive’ land and shows the impacts
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on communities
One of the comments surrounding the sale of farms into forestry is that farms that have been sold consist of
largely ‘unproductive’ land.
However, this report shows that nearly 90 percent of the land that has been sold into forestry is in LUC classes 6
and 7, and that most of this land (64 percent) is of low to moderate erosion susceptibility and therefore still likely
to be highly productive for sheep or beef farming.
The New Zealand hill country is the lifeblood of the sheep and beef sector because most lambs and calves are
born on the hill country and finished on lower land. There is considerable vertical integration.
If the rate of sale of sheep and beef farms continues then this will have significant flow-on effects for many
farmers on the flatter land – and further impacts on New Zealand’s ability to produce and export food, in addition
to negative impacts on rural communities.
Based on average hill country stocking rates of 8 stock units per ha, we estimate that more than 700,000 stock
units (equivalent to about 700,000 sheep) is likely to have been lost from the sector due to over 90,000 ha of
productive land being converted into exotic forest. This is a significant change in a short period – although we
note it may not have shown up in the national data yet because of a lagged effect. (The 90,000 ha estimate is
based on adding together pastureland from whole farm sales excluding mānuka [77,780 ha x 72.4 percent in
clear pasture based on LUCAS layers] plus the 35,256 ha funded to transition to exotic forestry under the 1BT
and JV programmes as partial farm plantings) (Note the 700,000 estimate is conservative as it is based on land
use change into exotic forest and would be larger if we added in land use change for mānuka and indigenous
planting)
Previous research by BakerAg using the Wairoa district as a case study indicates that forestry, especially just
for carbon farming, supports fewer jobs in the surrounding rural community than sheep and beef farms. The
loss of jobs jeopardises local businesses, schools and services essential to rural communities and impacts the
New Zealand economy.
The report reinforces B+LNZ’s position that the Labour Party’s pre-election proposal to place limits on the
sale of land LUC classes 1-5 would not be effective. Labour had said it would make changes to the National
Environmental Standard for Plantation Forestry (NES-PF) to require resource consents to be issued for
plantation of carbon forests within Land Use Capability (LUC) classes 1–5.
While it was positive the Labour Party at the time acknowledged there was an issue to be addressed, this
report shows that the Labour promise would be completely ineffective in resolving the problem because
around 90 percent of the land within whole farms sold into forestry was of LUC classes 6 and above.
3 The report shows better reporting on carbon farming is needed
By studying the names of companies that purchased land between 2017 and 2020, it is estimated that at a gross
area level, 26,543 hectares of the 77,780 hectares of farms sold into exotic forestry (or around 34 percent) was
to carbon farming companies – that is, forestry that will not be harvested. (While we acknowledge that not all
this gross area of land will be planted, this point relates to the amount of overall land sold to carbon farming
companies)
It is difficult, however, to get this information without studying land sales titles.
Buyers are not currently required to indicate their intent if carbon farming, and there is also very poor reporting
by regional councils of forestry plantings in their region.
It was also identified that pure carbon farming activity (i.e. land that is not intended to be harvested) currently
does not require a consent under the NES-PF. This means that it is also not subject to the same environmental
requirements as production forestry. This is a major risk to communities and is something B+LNZ wants to
see addressed.
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Integration of forestry on farms is These recent plantings within farms are on top of the
4 1.4 million ha of woody vegetation already on sheep and
a better solution
beef farms, which sequester a large amount of carbon
The report also highlights that in addition to the increase but for which farmers do not get recognition.
in whole-farm sales, there has also been strong interest
by farmers in integrating trees within their farms. This The Government needs to develop effective incentives
highlights opportunities for the integration of trees as a for tree planting within farms including recognition of
good way for farmers to manage their landscapes, and the sequestration and biodiversity benefits that are
potentially contribute to meeting climate change targets. delivered by native vegetation. There is currently a
mismatch between recognising and providing credit for
The report found that between 2018 and 2020 over the sequestration on carbon farms and not recognising
47,000 ha of land was approved under two government the sequestration occurring on sheep and beef farms.
schemes alone – One Billion Trees and Crown Joint
Venture programmes – to be converted into exotic, The sheep and beef sector is committed to playing
indigenous and mānuka planting within sheep and beef its part to meet New Zealand’s international climate
farms (12,124 ha of this was native trees and 35,265 ha change commitments and has shown this through its
in exotics). We understand most of this funding activity commitment and delivery of He Waka Eke Noa, the
happened in 2019 and 2020. partnership between the primary sector, government
and Māori. It has already reduced its emissions by 30
While farmers can be slow to take up new programmes percent since the early 1990s – one of the few sectors to
due to concerns about red tape, these two programmes have achieved this.
were very successful in a short amount of time. This
success highlights farmer interest in the opportunity We want to build on these gains and integrate sensible
to integrate trees on their farms, and the importance tree planting into sheep and beef farms rather than see
of providing the right incentives to drive interest and wholesale conversions, which is socially, economically,
action. and environmentally unsustainable.
There is also likely to have been more conversion of
land into exotic or native forestry within sheep and beef
farms during this time, funded privately by farmers,
in addition to the two schemes. From its discussions
Next steps
with farmers B+LNZ is aware of far more land being B+LNZ wants to be part of the conversation to
converted within farms, outside of the two government urgently address the issues raised by the report.
schemes. We have already put forward a range of potential
policy solutions to the issue of wholesale land-
B+LNZ therefore believes the total 139,500 ha of land
use change as a starting point. We’re calling
taken out of sheep and beef production identified by
on the Government to work with us and other
BakerAg is a minimum amount.
industry groups to develop and implement
B+LNZ’s position is that there are significant opportunities options before the effects on New Zealand’s
for New Zealand to meet its climate change targets food production and on its rural communities
through encouraging the integration of trees within become much worse.
farms rather than the current policy settings which are
encouraging whole farm conversions. The sector’s view
is that integration is a win-win situation where New
Zealand can meet its climate obligations and still maintain
livestock production – which is in line with provisions in
the Paris Agreement about food production.
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