Horticulture in search of growth capital
Despite its good market returns, growth capital is limited for the horticulture sector.
A fund has been set up to generate carbon credits through growing pine plantations on steep North Island hill country.
The CQuest Forestation and Carbon Fund, managed by MyFarm, is embarking on a fund raising drive, seeking an initial $15 million of investor equity to buy up to 1,500 hectares of land to plant in pine. It has secured contracts for the first two properties for purchase.
MyFarm chief executive Andrew Watters says most sheep and beef farmers will have land that is suited to planting trees and be able to directly gain exposure to increasing carbon prices. But for dairy farmers, acquiring suitable land is more difficult and not part of their core business.
CQuest offers an income from carbon credits and a hedge against the increasing price of carbon.
"We know that some form of emission charge is coming - either through the work being done by He Waka Eka Noa or the Emissions Trading Scheme. It makes sense for dairy farmers to plan ahead for this."
He Waka Eka Noa is the primary sector umbrella organisation that is tasked with building the knowledge on farm emissions and formulating and implementing an alternative plan to agriculture entering the Emissions Trading Scheme (ETS). This plan needs to be agreed by government by December 2022.
If the He Waka Eka Noa plan is not agreed, agriculture will enter the ETS in 2025, initially having to account for 5% of its emissions (increasing 1% p.a. thereafter).
Watters, who is also a dairy farm owner, says at today's carbon pricing and a 5% exposure to the ETS dairy farmers could face costs of 3 to 4 cents/kgMS - and higher at higher prices.
He says via CQuest, price exposure for 5% of emissions can be held at 1 cent/kgMS.
"While it's unclear what the impost of future carbon schemes will be, an investment in CQuest Fund is a simple way to mitigate the risk of rising carbon prices."
The fund envisages sequestering around 520 tonnes of carbon per hectare through the planting of pine trees, generating carbon credits at a cost of $20-25$/tonne.
As the trees grow to maturity, CQuest will sell the credits on the secondary market where carbon credit prices have been trading as high as $59/tonne.
The CQuest Carbon and Forestation Fund offer is open to wholesale investors with a minimum of $50,000 to invest. The offer closes Friday, October 8.
Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.
Shipping disruption caused by Houthi rebels in the Red Sea has so far not impacted fertiliser prices or supply on farm.
The opportunity to spend more time on farm while providing a dedicated service for shareholders attracted new environmental manager Ben Howden to work for Waimakariri Irrigation Limited (WIL).
Federated Farmers claims that the Otago Regional Council is charging ahead unnecessarily with piling more regulation on rural communities.
Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.
OPINION: We have good friends from way back who had lived in one of our major cities for many years.