New Zealand has introduced new legislation to Parliament that will restrict large-scale farm-to-forestry conversions. Todd McClay, the Agriculture and Forestry Minister, announced the legislation today, confirming that if successful, it will curb the race to replace productive sheep and beef farms with pine to attract carbon credits. “That ends under this government,” McClay said today. “The Climate Change Response (Emissions Trading Scheme – Forestry Conversions) Amendment Bill will restrict wholesale conversions of farmland to exotic forestry by stopping Land Use Capability (LUC) 1-5 land from entering the ETS and capping new ETS registrations on LUC 6 land.”
“It will also protect farmers’ ability to diversify – allowing up to 25% of a farm to go into trees while stopping the kind of blanket ETS planting that’s been gutting rural communities in places like the east coast, Wairarapa, the King Country and Southland.”
The changes are tipped to come into effect in October 2025
As previously announced, Wood Central understands the new restrictions will be backdated to take effect from 4 December 2024 (with special exemptions also applying). The law will:
- Restrict farm conversions to exotic ETS forests on high-to-medium versatility farmland (LUC classes 1-6);
- A limit of 15,000 hectares per year for exotic conversions on medium versatility farmland (LUC class 6);
- The annual limit of 15,000 hectares for LUC 6 farmland will be allocated by a ballot process, including a reserved quota for small block holders, with the first ballot proposed to be held in mid-2026.
- Allow for up to 25% of a farm’s LUC 1-6 land to still be planted in exotic forestry for the ETS, ensuring farmers retain flexibility and choice;
- Protect specific categories of Māori-owned land, in line with Treaty obligations;
The Bill proposes time-limited transitional exemptions in rare cases for people in the process of afforestation prior to these changes being announced on 4 December 2024. Applicants must show sufficient evidence that they made a qualifying forestry investment between 1 January 2021 and 4 December 2024 to be eligible for a transitional exemption.
Transactions that commence after this date will not be eligible to register in the ETS. The applicant must demonstrate that the investment relates to the specific Land Use Capability (LUC) class 1–6 land they are applying to register in the ETS. A registry of 25% of LUC 1-6 land will be registered against the property’s title to restrict further planting due to subdivision.
“Labour’s careless ETS settings turbocharged the sell-off of our farming base. They let speculators put short-term profits ahead of long-term food production. That was careless – and it ends now,” McClay said. “This government is backing farmers, restoring balance, and ensuring the ETS doesn’t come at the cost of New Zealand’s rural economy.”
New Zealand is losing one million sheep a year.
The new legislation comes after Wood Central yesterday revealed that New Zealand was losing one million heads of sheep every year, with farm-to-forestry conversions, dairy and the country’s emission trading scheme blamed for the country’s stocks dropping from 70 million in 1982 to 25 million in 2025.
It comes as the country’s farmers launched a new campaign, “Save Our Sheep,” calling for the Luxon government to take urgent action to prevent the industry from further collapse: “Losing a million sheep a year … it’s looking like it’s going to be an industry that is not sustainable,” said Jim Galloway, president of the Hawkes Bay Farmers Federation, who spoke to Hawke’s Bay Today yesterday.
According to Galloway, the head of sheep in the Hawkes Bay region alone has dropped from just under 5 million in 1990 (4,995,476) to below 3 million in 2022 (2,788,789), with the number of farms in the region dropping from 3,923 in 2002 to just 2,427 in 2022 – and that number could fall further, with the area becoming a hot spot for farm-to-forestry conversion: “Just in the last three months (alone), we’ve seen 2,800 hectares approved for forestry in the Central Hawkes Bay region,” he said. “What we are looking for is to make sure the government settings are not disadvantaging farming over forestry.”
- To learn more about changes in sheep numbers across New Zealand, click here for Wood Central’s story from last month.
