The move will not affect the returns from sheep and beef farming on the big property, the company said in its latest annual report.
More land might be planted in future.
Carbon credits earned from the trees will be a source of income for the group or be used to offset potential carbon liabilities from the group’s other farming operations, as part of attractive long-term returns from forestry, chairman David Cushing said.
Waikoha is REL’s biggest farm, with 2510ha of land though the effective grazing area is just 1800ha. It already has 84ha in pines planted in 2010 from harvest of the previous crop.
REL farms Waikoha (near Hamilton) in tandem with the 1146ha Puketotara block near Huntly. About 26,500 stock units are farmed on 2800 effective hectares, chief executive Brian Burrough said.
Waikoha is a breeding unit with about 7800 ewes and 450 beef cows. Puketotara is a finishing farm.
The integration of the two blocks allows store lambs and surplus weaner cattle bred at Waikoha to be farmed until they are ready for slaughter.
The properties support each other during periods of drought as well as allowing more finishing stock to be traded at Puketotara.
This farm typically finishes 1400 bulls and 8000 lambs each year though the difficult spring last season meant just 1363 bulls were finished and lamb numbers also fell.
However, the high lamb prices meant store lambs were correspondingly more valuable and that helped Waikoha as a breeding property.
The group has achieved big productivity gains at Waikoha over the last decade and bringing ewe hoggets into lambing last season brought in 1470 more lambs for a record total of 11,540 for the farm, Burrough said.
REL is working with the Waikato Regional Council on a farm environmental programme at Waikoha, which includes the permanent retirement from grazing of 190ha of native bush as well as extensive stream bank and wetland fencing and planting.
Cushing said the radiata pine project is independent of the Government’s Provincial Growth Fund. REL’s deputy-chairman Rodger Finlay chairs the advisory panel for that fund.
REL made an operating profit before interest and tax of $5.03 million for the year ended June 30, marginally higher than the $4.99m a year earlier. It has dairying sheep and beef and arable farms, some directly managed and others leased.
Firm prices were achieved for milk and beef with sheep values markedly higher in a satisfactory result, Cushing said.
After including non-operating items, the total comprehensive income for the year was $4.45m, down from $8.98m a year earlier. That figure was driven by property value gains of $4.3m but in the latest year values reduced by $1.5m, Cushing said.
The reduction was more than offset by an increase of $3.09m in REL’s shareholding in New South Wales-based farming group Webster, Australia’s biggest walnut producer, which also farms cotton and organic sheep as well as having substantial irrigation and water interests.
Rural Equities has total assets of $209.7m; the farms (land only) are worth $145m, plus another $8.8m in properties held for sale, $4.78m in livestock and share investments (Websters and Fonterra) of nearly $16m. Borrowings at balance were $12.8m, leaving a group equity ratio at a very strong 92%.
At balance date the net asset backing of the shares was $5.79c, a rise of 8c on a year earlier.
Since then the company has spent just over $3m buying back shares. Two South Canterbury farms have been sold since balance date with settlement due in April. It has three more farms being marketed by agents.
The directors have looked at making investments outside the rural sector and possibly outside New Zealand. Cushing said no investments have met the directors’ criteria so far but the process is continuing.
The annual reported also highlighted environmental issues affecting its dairy operations.
REL supplies Synlait with A2-protein milk from its three Canterbury dairy farms Eiffelton, Milford and Rocklea. Eiffelton is receiving full premium payments from its Lead With Pride gold status. Rocklea will be Lead With Pride accredited during the season and Milford by next season.
During the financial year REL bought 31.5ha next to its Penshurst dairy farm near Palmerston North, allowing the farm to increase its milking herd by 80 to 800 cows.
