Forestry on farms – implications for farm sustainability and regional impact

Planting forest to sequester carbon, either for carbon farming or directly offsetting farm emissions, is likely to increase, a new study from AgFirst, Groundtruth and Market Economics shows.

There are strong financial drivers for the increase.  Traditional sheep and beef hill country returns 2-5% on capital invested, whereas carbon farming (when priced at $65/t) will give returns of three to five times this amount.

The research report, Forestry on Farms: Implications for Farm Sustainability and Regional Impact, highlights wide concern that the social and economic impact of these changes could be significant.

At an on-farm level the integration of forestry could strengthen the farm business, as well as providing carbon credits to offset GHG emissions from the farm. At a wider regional or national level impacts would include a reduction in pastoral production, processing capacity or exports.  This would be offset by increased income generated by carbon credits, and eventual timber sales.

This analysis has explored the likely macro-economic impacts by considering three scenarios:

• Status quo
• On-farm integrated forestry planting
• Blanket forestry planting

The study was commissioned by the Fertiliser Association of New Zealand with the aim of:

• Understanding the impact at the on-farm level of planting areas into forest, with respect to overall business profitability, and changes in production. This includes the value of carbon and the proposed farm-level levy.
• The intent was to consider how changes in profitability relate to long-term farm resilience and sustainable farm level income.
• Understanding the wider macro-economic impacts of such land use changes with respect to changes in income, employment, and value add e.g., by farm/forestry type, servicing/processing industry.
• Accounting for land use changes within the regions, such as areas transitioning of steeper sheep and beef hill country land into production forestry and natives.
• Understanding the impact of blanket planting (i.e., whole farms) into forestry for carbon/timber.

Representative case study examples, assessed 10%, 30% or 100% of the farm area being planted into three forestry types. The impacts were assessed at both farm and regional levels for Northland, Hawke’s Bay, and the rest of the North Island.

Download a summary of the report here or the full report here.