The review was to be started by October next year but Agriculture Minister Damien O’Connor has confirmed it has already started and will look at the impact of Government changes to the Overseas Investment Act to identify any areas of concern.
The changes streamlined the vetting by the Overseas Investment Office of foreign forestry companies to reflect the fact about 75% of forest companies operating in New Zealand are owned by offshore entities.
O’Connor and Forestry Minister Shane Jones confirmed their support for the $240 million Billion Trees programme and dismissed concerns from rural communities that subsidies are encouraging the purchase of farms to convert them from livestock to forestry.
Community leaders fear that will cost jobs, services and infrastructure but O’Connor says his advice is that is not the case.
“That is a long way from the truth,” he said.
“There wouldn’t be a farmer in the country who could not or should not have more trees planted on their property without incurring any negative impact.”
They said deforestation in the last decade reduced the forested area by about 7000ha a year.
The Billion Trees programme is primarily targeted at increasing the area of native forest and is estimated to add between 230,000ha and 430,000ha of new planting while the area of exotic forest to offset carbon is expected to double the 1.7m hectares in plantations.
The Ministry for Primary Industries says 54 Billion Trees grants worth $4.4m have been approved.
Most applications were for small amounts but MPI expects applications to increase in the next two years as awareness of the fund grows.
The loss of population and jobs from incentivised planting through the programme is just one of the concerns for the community leaders.
They also fear companies buying livestock farms to convert to forestry to offset their greenhouse gas emissions and point to more than 30,000ha of drystock farms bought for planting in the last year.
Similarly, investors are converting farmland for carbon farming, earning carbon credits from trees sequestering carbon, which are then sold to businesses to offset their emissions.
Community leaders fear those trees might not be managed and left to degrade.
MPI data shows that since October eight sales to foreign forestry investors have been approved by the OIO. Five are for existing forests and three for conversions covering 3500ha, of which 2300ha will be planted.
A further 13 applications are under consideration. Four are for land to be converted to forestry and nine for existing forests.
O’Connor does not share the community leaders’ concerns that carbon farmers will not manage forests but abandon them after one rotation, saying owners usually have a mandate to get a return from timber and logs along with carbon.
“The OIO reports that to date the majority of applications under the new screening test have been from existing forestry companies.”
Carbon farmers will not compete for the same class of land as rotation forestry investors and to ignore management will devalue the asset and any future sale price, he says.
“The changes to the Overseas Investment Act provide a simplified screening pathway for purchasing existing forests or land for afforestation, provided that the land is used for forestry activities.
“Forestry activities are defined as the establishment, maintenance or harvest of a crop of trees.
“This means that the current position is that an overseas investor in permanent carbon forestry would need to meet criteria for investment approval.”
O’Connor says a significant increase in the price of carbon could change decisions about whether to harvest forests and at what age.
However, Climate Change Minister James Shaw has previously said it might manage the carbon price, now about $25 a tonne, through a cost containment reserve, a mechanism that could be triggered if the auction price rises to a certain point, allowing the release of more units to the market.
