Emissions Trading Scheme incentivising whole farm conversions into forestry, farmers say

Federated Farmers is urging the government to listen to its submission on legislation that looks to prevent whole-farm conversions into forestry.

The Climate Change Response (Emissions Trading Scheme-Forestry Conversion) Amendment Bill had its first reading in June and a number of submissions were heard in a parliamentary select committee on Tuesday.

Federated Farmers Forestry spokesperson Richard Dawkins told RNZ the future of rural communities was at stake if the government did not take this opportunity to make serious changes to the ETS.

"The logic is clear. We just can't continue to undermine our productive sector or we're never gonna get ahead as a country," he said.

• The government has signalled it will review the ETS, as the bill seeks to amend the Climate Change Response Act 2002 to limit whole-farm conversions to exotic forestry registering in the New Zealand emissions trading scheme.
• Federated Farmers is running a campaign called 'SOS: Save our Sheep', calling for urgent action to halt what it says is the collapse of New Zealand's sheep industry by reviewing the Emissions Trading Scheme (ETS).
• The organisation is advocating for a 25 percent restriction on foresters ability to claim carbon credits on planted areas, to apply to all land use classes, to stop whole-farm land conversions.
• Since 1982, New Zealand's sheep numbers have fallen from over 70 million sheep to fewer than 25 million sheep today.
• Federated Farmers said between 2017 and 2024, more than 260,000 hectares of productive sheep farming land was lost to pine trees, partly because of the ETS but also because of lower returns for wool, sheep and beef.

Dawkins said Federated Farmers had no issue with forestry, but with the current ETS settings.

"There's no problem with the right tree in the right place.

"We encourage that, but with the way the ETS settings are at the moment, you're just incentivising whole farm conversions into permanent exotics and that, it's just no good, no good for anyone," he said.

Gisborne farmer and former Federated Farmers forestry spokesperson Toby Williams told RNZ the campaign was launched out of widespread concern for the increase in productive farm land being planted in pine trees.

"We're really concerned that the continuing government policy looks to drive down the available land for sheep production.

"We already know that our meat processors are struggling and we want to ensure that we actually have an industry still that can play its part in thriving rural communities, but also a thriving New Zealand and driving our export returns," he said.

The Ministry for Primary Industries had a goal of doubling primary sector exports by 2035, but Williams said the sheep flock was declining.

"Shrinking the sheep flock and shrinking the area that we farm sheep on isn't a great way to drive that forward," he said.

Federated Farmers wants the government's review of the ETS to make two key changes - reducing the amount of emissions that large polluters can offset with trees, and capping the number of pine tree credits entered into the ETS.

"We'd like to see a sinking lid on how many offsets a polluter could do every year. For example, we'd say in 2025 this year you could do 100 percent, but next year it drops to 95 into 9085 and so on," he said.

The farming group was also keen to cap how many pine tree credits a polluter could enter into the ETS.

"That will also have the same effect of slowing conversions of sheep and beef land into pine trees just for carbon offsets, and it will bring some actual balance," he said.

Williams said if nothing changed with the ETS, then in 25 years time about 750,000 hectares of sheep producing land would be turned into pine trees.

'It's nuts' - Forestry Owners Association

Forestry Owners Association chief executive Elizabeth Heeg told RNZ it was not impressed with the Federated Farmers campaign targeting forestry.

"We are disappointed that trees, and particularly pine trees, are being singled out as being the primary cause of some kind of a decline in the sheep numbers where actually we are not the correlation or the cause of the decline in sheep numbers.

"Sheep numbers have been declining over the past 20 years and the forestry area has just started to come back in the last few years. So we are actually at a position at the national level of the same amount of forestry land area that we had 20 years ago," she said.

While Heeg agrees that land use had changed over the past 20 years, she said it was more complicated than blaming it on forestry.

"We're not seeing some kind of exponential growth in forestry planting. Actually, we did have an increase in forestry planting in the last couple of years, but we're seeing that largely kind of plateau at this stage," said Heeg.

The group was alarmed by Federated Farmers idea of a 'sinking lid' policy on how many trees a polluter could plant to offset its emissions.

"We would be deeply concerned if the government looked to take forestry out of the emissions trading scheme, because trees are still the only proven mitigation technology that we have.

"I find it interesting that farmers would be asking for that when it's one of the chief ways that they could mitigate their climate emissions. So the inclusion or not of trees in the Emissions Trading Scheme, I feel like that horse has already bolted," said Heeg.

The association was strongly against phasing forestry out of the ETS, instead urging more action from polluters.

"I think it's nuts that we would get rid of our only proven mitigation tool rather than look at achieving gross emissions reductions.

"It's a little bananas that when the rural sector needs as much support as possible, that we've got people pitting elements of the sector against itself when actually a lot of farmers are foresters as well and they're happily doing both in the landscape," she said.

Government legislation to be passed in October

However, Federated Farmers said its members were definitely not happy - and wanted to see more action from the government.

"We want to see an urgent review of the ETS as the government has held off doing it. There have been tweaks over the years, but that's it.

"We're not the only organisation calling for changes to how we're doing this because of the threat to our economy," said Toby Williams.

Minister for Forestry Todd McClay said the Federated Farmers' Save Our Sheep campaign highlighted exactly why his government was taking action to stop the wholesale loss of productive farmland to pine trees.

"Under the last government, sheep and beef farms across regions like Hawke's Bay were bought out by carbon speculators, driven by careless and unbalanced ETS settings. Labour made it more profitable to plant pine trees than to farm sheep - and rural communities paid the price," said McClay.

However, Labour Party forestry spokesperson Cushla Tangaere-Manuel said this was not a matter of sheep and beef farming versus forestry.

"It's a matter of striking the right balance between industry growth and environmental protection. Labour has always believed the right tree should be planted in the right place - anything to the contrary is scaremongering.

"This government has taken nearly two years to do anything about this. Labour were the ones with policy that put decision-making back into local hands on farm to forestry conversions and we are committed to finding long-term, locally-led, sustainable solutions," she said.

Todd McClay said his government was moving forward on the issue.

"On 4 December last year, we announced a ban on full farm-to-forest conversions, and legislation will be passed by October this year and backdated to that announcement - stopping blanket ETS planting on productive farmland and giving sheep and beef farmers a fair go," he said.

However, McClay said the ETS was not the only challenge the sheep sector faced, as the wool industry had struggled - which is why he was supporting the sector by using wool in government buildings and housing, and investing in new uses through public-private partnerships.

"We're not anti-forestry, but it can't come at the expense of highly-quality, safe and sustainable food production. We're levelling the playing field and backing farmers to grow the best lamb and mutton in the world - and sell it to the world," said McClay.

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