3 Feb 2022

Rules helping foreign investors turn NZ farmland into forestry reviewed

6:03 pm on 3 February 2022

Rules which help foreign investors purchase farmland in New Zealand for forestry conversions are under review, with a paper expected to be brought to Cabinet later this month.

Young radiata pine trees grow on a hillside near Tiraumea, north of Masterton

Young radiata pine trees grow on a hillside near Tiraumea, north of Masterton. Photo: RNZ / Kate Newton

Figures provided to RNZ by the Overseas Investment Office (OIO) show in the last three years 36,000 hectares of farmland has been approved for sale to overseas investors under the special forestry test. About 23,000 hectares of the consented land will be the subject of new planting.

The special forestry test is used when an investor is looking to invest in production forestry for harvesting, it was introduced in late 2018 in a bid to support the government's forestry priorities, including more tree planting.

But farming groups have raised concerns too much productive farmland is being lost and repeatedly called on the government to urgently review foreign investment in forestry.

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Photo: Supplied / Overseas Investment Office

The OIO said between 2019 and 2021, 92 one-off consents had been granted under the special forestry test. It said 52 of those involved land already planted in forestry, while the remaining 40 were investors who planned to buy farmland and convert it.

"Approximately 23,402 hectares [of consented farmland] will be the subject of new planting, with the remainder of the land including land that is unsuitable for production forestry, indigenous vegetation, existing forestry land, or land that is being subdivided and sold," the OIO said.

Federated Farmers meat and wool chairperson William Beetham said rural communities had been waiting too long for the government to sort out the special forestry test.

"There has been lots of issues around carbon farming and mass afforestation being put forward and we see this one is quite an easy issue that could have been quite expediently addressed and hasn't," Beetham said.

"The impacts are so vast that we're seeing at this point in time, from land values going to a point where it's shutting out New Zealanders from being able to buy farms.... people moving away from our rural communities."

Forest Owners Association President Phil Taylor said the Climate Change Commission had recommended the government plant 380,000 hectares of production forest by 2035 to meet New Zealand's greenhouse gas reduction targets.

"Federated Farmers' campaign would restrict all plantation forestry, and so there is a real risk that the planting rate will fall short."

Associate Minister of Finance David Parker said the Overseas Investment Act forestry test was currently under review and he intended to take a paper to cabinet later this month on proposed policy options.

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