The Government’s announcement yesterday on aiming for 100 per cent renewable electricity by 2030 came at the same as a warning that we are still one of the only countries that allows industry to offset their greenhouse gas emissions rather than reduce them.
The warning is in a report showing that substantial areas of productive sheep and beef farms are continuing to be sold for forestry so that the new owners can claim the carbon credits.
The report, commissioned by Beef+LambNZ, found that in 2021 and 2022, 99,000 hectares of farmland were sold for conversion to forestry, with over 40 per cent of the sales going to overseas buyers.
Beef and Lamb NZ C EO Sam McIvor says that figure is likely to increase because there is a backlog of applications for sales approval currently sitting with the Overseas Investment Office.
The report came after the launch in Auckland yesterday of a $2 billion fund with the goal of making New Zealand one of the first countries in the world to reach 100% renewable electricity.
The Government has worked with BlackRock, the world’s largest asset manager with $US8.9 trillion in assets under management, to launch the fund.
But both the Beef and Lamb report and the fund launch point to the fact that moving towards the climate change targets is now having to switch from rhetoric to action.
And that underlines the real difficulty New Zealand is going to have to cut its emissions sufficiently to reach net zero by 2050.
That is why the forest offsets have been so attractive.
And they have also offered a new source of income to financially battered hill country sheep and beef farmers.
The Beef and lamb report says the increase in on-farm costs concerns amongst farmers and landowners trying to navigate the ETS and bringing agriculture into the ETS, combined with the continually changing regulatory agricultural environment, are some of the reasons behind the conversions into forestry.
But they are coming at a price.
“Many landowners are beginning to question the business case behind staying with a traditional farming operation and looking to diversify poorer performing areas of their properties,” the report says.
And other new land uses are also being squeezed by the trees.
The report says purchasing land to plant in Manuka for honey has dropped significantly to 3.5%, as its returns cannot compete with other land uses like forestry.
“The amount of land that has been and continues to be purchased for mānuka operations has dropped significantly as returns for the honey industry mean that they cannot compete at the same levels for new land, or that even new land for the industry can be justified at this stage,” the report says.
“Given the increase in the carbon price and the state of the mānuka honey industry, it may become increasingly difficult for honey producers to compete in the current market to purchase land with only one confirmed sale in 2022 identified in the data.”
Whilst the farms that have been purchased for forestry are all across New Zealand, they are heavily concentrated in South Auckland on the North Island’s east coast in Tairawhiti and the Wairarapa.
McIvor says the scale of change is far more than what is recommended by the Climate Change Commission and will have a negative impact on rural communities, food production and export income, which affects all New Zealanders.
“New Zealand is one of the only countries in the world that allows fossil fuel emitters to offset 100 per cent of their emissions,” he says.
“The Government is currently consulting on changes to the Emissions Trading Scheme, and it needs to act.
Beef and Lamb is not anti-forestry; there is absolutely a place for it and for some offsetting. We know many farmers are interested in integrating trees into their farms, but there is a need for some balance.
“Though less than the sheep and beef industry, forestry does create jobs and export revenue. In contrast, carbon farming doesn’t create jobs or add export returns.
“Production forestry, in combination with carbon forestry, can often be integrated into sheep and beef farms without loss of food production.
“We also recognise the unique circumstances of some Māori landowners who can never sell their land. This is a legitimate instance where carbon credits from offsetting should be available.”
McIvor says the impact of land use change is now being reflected in livestock numbers, with Statistics New Zealand’s 2022 Ag Census data showing the national sheep flock to be 25.3 million as of June 2022, a drop of 400,000 from the previous year, with numbers likely to fall further due to new plantings.
But as the $2 billion fund launched yesterday demonstrated, actually reducing emissions rather than offsetting them is going to cost big money.
However, Prime Minister Chris Hipkins ducked questions on those issues when he launched the Blackrock fund.
“Those are decisions that the government will take in the future,” he said.
“They’re not decisions that we’re taking at the moment.”
But they are decisions that will have to be taken soon if New Zealand is not to be turned into a forest.