Industry group Beef and Lamb NZ is asking the government to crack down on the amount of farm land being turned into carbon forestry.
This comes after an independent report they commissioned found in the past four years nearly 140,000 hectares of land has been earmarked for forestry.
It is predominantly sheep and beef farms that will be taken out of production.
Wairarapa-based BakerAg reviewed land use change data, analysed farm sales and looked at Overseas Investment Office Intentions.
It found significant increases in the amount of farmland sold into forestry, driven largely by an increase in the carbon price.
The report couldn't outline exactly how much of the pastoral land sold into forestry was intended for carbon farming, but it estimated about 26,000 hectares of the land went to carbon-only entities.
Beef and Lamb chief executive Sam McIvor said rural communities have been concerned about this for some time.
"While we see a role for forestry in addressing climate change, we are calling for urgent discussions and government action on mechanisms to ensure that not to much productive land is turned into carbon farms.
"They've repeated a mantra of 'right tree, right purpose, right place' but frankly the evidence shows that's not happening - it's threatening rural communities and undermining New Zealand's future economic viability," McIvor said.
Agriculture Minister Damien O'Connor has previously said the government may intervene if land conversions reach 40,000 hectares a year.
BakerAg's report shows that land purchased for the purposes of forest planting reached 36,824 hectares in 2019, excluding mānuka.
We are already nearly at the Minister's suggested threshold for action, further underlining that limits are urgently needed, McIvor said.
Of the whole of farm sales identified over 90 percent of land being converted is land class 6 or above - land use class (LUC) indicates capability for sustained production with one being the most productive and 8 the least productive.
"Fifty-two percent is LUC6, 36.7 percent is LUC 7 and 1.7 percent is LUC 8.
"There has been some increase in pine prices, but a significant proportion of the increased activity has been the result of climate change policies, in particular the Zero Carbon Act and reforms to the Emissions Trading Scheme, and other policy changes that have made the purchase of pastoral farmland for a combination of forestry production and carbon (or carbon only) revenue more attractive," the report found.
McIvor said the report showed an uptick in farmers planting trees on their own land.
Between 2018 and December 2020 an additional 47,382 hectares of land within existing farms was approved for planting, funded by the One Billion Trees programme or as part of the Crown Forestry Joint Ventures scheme.
He said farmers know their land and are more likely to plant trees in the right place rather than on prime productive land.
"This is what the government should be encouraging more of and that's what we are working on with them."
The project also sought to gain an understanding of why there has been the recent increase in farmland being sold to forestry interests.
An unexpected result was a growing understanding of how much land was/ is being purchased for mānuka farming/indigenous plantings amounting to 16 percent of whole of farm sales and 20 percent of total plantings.
It also found most of the land being sold is a considerable distance from the nearest port which due to it's land use class and remoteness has previously been less valuable.
"But with projected returns on forestry investment increasing due to the addition of carbon revenues, 'forestry' has been prepared to pay more for the land than 'farming', and as forestry buyers have arrived on the scene, some landowners have chosen to take the opportunity to benefit with the time being right to move on to the next farm or next stage in life," the report found."