New Zealand could plant 41% less in 2024 compared to 2022, the first decline since 2019, with the NZ Farmers Weekly reporting on a “spooked” industry.
That is according to a new survey by the Ministry of Primary Industries, which reports that falling numbers result from the fallout from Cyclone Gabrielle in February 2023 and uncertainty over the future of the ETS, which has deterred investors from investing in tree planting.
The MPI Afforestation and Deforestation Survey, published this week, found that 88,000 hectares of farmland were converted to forestry in 2022, dropping to 68,500 hectares in 2023 and expected to fall to just 51,800 hectares this year – with plantings blunted by ETS uncertainly, changes to the Overseas Investment Office approvals process (OPO), government regulations, resource consents and tree stock availability.
New Zealand’s forest area has shrunk over the past 20 years.
According to Elizabeth Heeg, CEO of the NZ Forest Owners Association, the decline in planting intentions is concerning and reflects a lack of confidence among forest owners:
“They are looking for policy certainty. At this stage, they are not sure about the planting environment. When they buy seedlings, they are unsure where they can plant them.”
Elizabeth Heeg, CEO of the NZ Forest Owners Association
Ms Heeg said it was especially concerning given that the forestry area is less than in 2004 – a missed opportunity given forestry’s role in carbon sequestration.
She nonetheless welcomed recent legislative change, including the repeal this week of Log Trader and Forestry Adviser legislation, which required people in those roles to be registered – and wants to work with the government to stabilize the ETS, improve the OIO process, and work with rural communities to address concerns about the spread of forestry.
“The debate has become them and us when it needs to be us and us.”
AgriHQ reports that log and timber prices are flat, awaiting a market rebound. The sector also faces rising shipping costs and a strengthening exchange rate.”
The MPI survey was done in late 2023 when the NZ Unit price was between $60 and $75/NZU. This week, the spot price varied between $45 and $50/NZU, but the carbon auction failed to attract a bid for the second time this year.
The two trends are driving 2024 planting intentions.
As reported by Farmers Weekly, the decision whether to plant or not is influenced by two distinct motives:
Those accelerating their afforestation intentions because of concerns about pending legislative change, and those who have slashed their planting intentions since last year.
Respondents in the former group commented that they want to plant everything they can if the ETS rules change or before the government imposes land use restrictions.
Whilst comments from respondents in the latter group included:
- “The phone is dead for greenfields afforestation”.
- “Interest in afforestation has waned with government tinkering with ETS”.
- “All our clients have been spooked by the ETS shenanigans over the last 12-24 months.”
The MPI estimates that 73% of exotic afforestation from 2019 to 2023 was in the North Island, with 40% on the east coast, in Hawke’s Bay and the southern North Island. It nonetheless notes that the largest change in planting intentions between 2022 and 2023 was the reduction of new forestry on the North Island’s east coast.
“This is likely to be a consequence of Cyclone Gabrielle. However, there is no reduction in the percentage of intended afforestation in Hawke’s Bay, another region affected by Cyclone Gabrielle.”
The survey revealed that tighter forestry rules introduced by the Otago Regional Council and Environment Canterbury have scuppered some of the planting plans there.
Indigenous afforestation could increase.
An extra 1200 hectares of indigenous afforestation nationally will likely be planted between 2023 and 2024, with 9000 hectares expected to be planted this year. This data is based on planting intentions from those wanting to register land, who are reverting back to native vegetation with the ETS.
The increase reflects the time required and delays in registering the land from last year. The intended area of mānuka planting has declined due to lower mānuka honey prices, with 2100 hectares tagged for planting this year, down from 3500 hectares last year and 2800 hectares in 2022.
- Extracts from article originally published in NZ’s Farmers Weekly.