25 Oct 2012

Carbon price fall could force some farmers off land

7:40 am on 25 October 2012

Landowners encouraged into a Government scheme that awards carbon credits for keeping land permanently in trees could be forced off their farms.

Forestry sources say forced sales of thousands of hectares in the Permanent Forest Sink Initiative are on the cards if the carbon price does not recover soon.

Under the initiative, a covenant preventing the clearing of trees for a minimum of 50 years is placed on land in exchange for annual payments of carbon credits from the Government to the landowner.

One farmer spoken to by Radio New Zealand says he signed over half his farm to the scheme two years ago, when the price of carbon was $23 a tonne, which meant the Government gave him carbon credits he could sell for $200,000.

Now, with the carbon price under $3 dollars a tonne, his credits for this year are worth just $30,000.

The farmer, who spoke under condition of anonymity, is locked into the scheme for 50 years and with no way of making up for that big drop in income, and a mortgage to pay, says he has little choice but to sell his farm.

Ollie Belton of Christchurch consultancy Permanent Forests says up to a quarter of the 45 farms he knows of in the scheme are not covering their costs.

He says it is disappointing that governments encouraged people to join, only to then gut the scheme by allowing the carbon price to fall to record lows.