Tuesday, March 19, 2024

Forestry, farmers equal land contenders

Neal Wallace
The perception that forestry companies are pushing livestock buyers out of the land market by paying above market rates is false, real estate agents and forest owners say. Buoyant log and lumber prices are encouraging forest owners to expand their holdings, but they say purchases are predominantly from farmers who have been unable to sell, are making inadequate profits or who want out because they do not have farm succession options.
Reading Time: 2 minutes

One forest manager said he has overseen the purchase of farms for conversion to forestry that have been unsold on the market for several years and others where they were the only interested purchaser, indicating those properties attracted little interest from farmers.

Bayleys Real Estate Waikato agent Mark Dawe says traditionally commercial forest owners bought property within 100km of ports, but given the improved profitability of the sector, they are now extending that to 150km, opening up interest in land in North Waikato and King Country.

Simon Bousfeld from Bayleys in Gisborne says in the past 18 months both foresters and farmers have been more active on the North Island’s East Coast.

“There are instances of foresters beating farmers but also farmers beating forestry,” Bousfeld said.

“It depends on the individual property but forestry is not blowing farmers out of the water by any means.”

East Coast land prices have risen in the last few years, with properties that were selling for $7000-$8000/ha now selling for $12,000/ha.

Bousfeld says both foresters and farmers are paying up to that price level.

New Zealand Forest Owners Association chair Phil Taylor says data he has seen indicates forest owners and livestock farmers are successfully competing for land, but interest from foresters has increased due to higher carbon returns and growing global and domestic demand for lumber.

He has heard of forestry companies paying up to $14,000/ha, that price based on the actual area of land that can be planted, underpinned by improved returns from both carbon and lumber.

Lumber prices in the US have increased 400% in the past year, but disease and fires have ravished forests in Europe, Canada and northern states of the US, fuelling a global shortage of logs and lumber.

Forest managers say the real rate of return from timber is about 3-5% and carbon adding a further 2-3%.

Taylor says there has been much rhetoric and misinformation about the expansion of forestry and the involvement of overseas buyers, when in reality their land holdings are dwarfed by farming.

Ministry for Primary Industry figures show exotic forests cover 1.69m ha or about 7% of NZ’s land area.

He says in the past year markets have aligned for the sector, with governments investing heavily in infrastructure fuelling demand for wood for which there is a global shortage, and growth in carbon markets and biofuels.

“A lot of things have come together at the same time, which is resulting in opportunities,” he said.

“If this continues longer and forest owners remain bullish about the stability of markets and the carbon price, then they might be confident to go out and buy more land.”

However, sources say constraints with seedling supply and labour will limit the area that can be planted.

Taylor has doubts about permanent carbon forest sinks or carbon farming, saying it is not popular, the Climate Change Commission says we cannot plant trees to offset our emissions and unmanaged forests should not be planted on land that is productive for farming and forestry.

“We have got to tackle our gross emissions and we can’t plant our way out of this,” he said.

He urges farmers to consider the merits of farm forestry, saying most have areas that could be planted and earn income from logs, lumber and carbon.

Total
0
Shares
People are also reading