5 Jun 2019

Farmland loss to forestry: land prices raise fears for economy, mayor says

2:43 pm on 5 June 2019

The mayor of Wairoa in the Hawke's Bay thinks soaring prices for forest land prove he was right all along to worry about farmland disappearing under trees.

Forestry section in Port Underwood, South Island, New Zealand

Photo: 123RF

Craig Little joined a local government delegation last week, telling ministers farm land being lost to tree cover would rip the economic heart out of small communities.

Figures released by the Real Estate Institute showed the median price of forestry across New Zealand rose 45 percent in a year and almost doubled in the North Island.

It attributed much of this to government policy including easier foreign investment rules.

Wairoa mayor Craig Little by the Waihi Dam

Craig Little. Photo: RNZ / Kate Gudsell

Mr Little said the Real Estate Institute's numbers proved his point.

"Those figures actually nail what we are saying," Mr Little said.

"Up here we have farmers selling land for 50 to 100 percent more for forestry than they would ever sell to a farmer.

"Entire farms are going into forestry and they will be lost to forestry for ever under the Emissions Trading Scheme because [the new owners] will never be able to pull them back out.

"If people use the carbon, they will have to pay back [unless carbon stays locked in the trees for ever]."

After meeting Mr Little and others last week, government ministers asked officials to look again at this matter, to make sure the policy of promoting forestry was not bringing negative consequences.

Mr Little welcomed that, but said ministers should hurry up - at the current rate of conversion to forestry, all farmland in his district could be gone in 11 years.

That would pull the rug out from industries in his area such as meat processing.

The figures

In its figures, the Real Estate Institute said the median price of forestry farms across New Zealand had increased by 45 percent in the year to April.

In dollar terms, prices from from $6487 per hectare to $9394 per hectare.

Prices in the South Island fell slightly but prices in the North Island almost doubled.

The institute attributed the increase to government's incentives towards planting trees are favouring forestry sales including easier foreign investment rules.

Not only were more people wanting to buy into forestry, existing owners were not selling because they thought values would be even greater later.

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