Forestry Minister Shane Jones confirmed $2.2 million of the $118 million Billion Trees fund has been allocated, of which $1.5m is for planting native trees and the balance for exotics.
The sudden expansion of large-scale forest planting on farmland has rural community leaders worried it could lead to the gutting of jobs and services.
More than 40,000ha of farmland has been bought for forestry, mostly in the North Island.
That rising demand is reflected in prices the Real Estate Institute says. Its figures show prices of farms sold for forestry rose 45% in the year to the end of April.
North Island prices rose 97% while South Island prices eased 4%.
Institute chief executive Bindi Norwell said the price increase is driven by Government incentives to plant trees and underpins renewed interest in grazing land for conversion to forestry.
Jones said the Billion Trees programme is designed to let landowners diversify income, improve land productivity, address environmental issues, improve habitats and enhance landscapes.
“By planting the right tree in the right place for the right purpose we will see many farmers turning lower-producing land into an asset.
“The fund will also support our goal to move towards a low-emissions economy.”
The fund has attracted 237 applications of which 36 covering 1100ha have been approved.
Of that, 80% is for planting native trees in areas less than 140ha. Two-thirds of applications are for less than 50ha.
An Primary Industries Ministry spokesman said the target is for two-thirds of the fund to help planting of native trees.
The fund provides landowners with help to plant up to 300ha, for which they receive up to $4000/ha for indigenous trees or $1500/ha for exotic.
Further subsidies for fencing and erosion control are available, depending on the type of planting.
The spokesman said the fund is not for whole farm conversions to trees but to support landowners, particularly farmers.
However, MPI confirms foreign and corporate landowners are eligible.
Forestry NZ chief executive Julie Collins said Overseas Investment Office data shows four foreign buyers for existing forests and three for farmland with a total of 2300ha of land to be planted and a further 1200ha to remain in existing land use.
“We know how important farming is to our economy and will continue to be.”
Farming and forestry are not mutually exclusive and forestry can support rural communities be more resilient through integrated land management, she said.
The Billion Trees programme is estimated to need 230,000ha to 430,000ha over 10 years.
The OIO this month approved the $13.4m sale of a 1700ha Lone Star Farms Wairarapa property to Austrian aristocrat Veronika Leeb-Goess-Saurau.
This year 1280ha will be planted in trees with the rest sold in three farming blocks and 20.5ha of native bush protected by a QEII covenant.
The OIO said it assessed the sale under new rules, which eased the criteria for foreign forestry investors.
“Under the new forestry test, the criteria include that the land must be used exclusively or nearly exclusively for forestry activities, not be used for residential purposes, existing arrangements must be maintained or implemented and harvested trees must be replanted.”
It noted Leeb-Goess-Saurau bought 381ha of land in Hawke’s Bay in 2016, which is now the Carlsberg Forest
Norwell said Government incentives to plant trees are boosting land prices and fueling interest in grazing land for conversion to forestry.
The national median price of forestry land in the year to the end of April increased from $6487/ha to $9394/ha, driven by an almost doubling in prices in the North Island from $6656/ha to $13,128/ha while in the South Island prices fell from $6450/ha to $6162/ha.
There were 70 sales in the year to the end April 2018 compared to 50 for the comparable 2019 period but Norwell says the reduction could be because forestry is a desirable investment.
“Unsurprisingly, the number of forestry farms sold over the past year has fallen too, as investors are seeing forestry farms as a highly sought-after investment.
“Those investors are holding onto their farms, which is also contributing to the price rises.”
She says the institute is hearing the concerns of rural communities about the impact of livestock farms converting to forestry.
“Feedback from farmers and rural salespeople around the country is increasingly one of concern with many saying that once beef or sheep farms have been converted to forestry they will never be converted back again because of the loss of infrastructure and the high barrier to entry should re-conversion be considered in the future.”
