Are Feds telling members they can’t sell land for forestry?
Federated Farmers is asking the government to restrict the right of its farmer members to plant trees or sell their land for forestry, claims the NZ Forest Owners Association (NZFOA).
So says Forestry Owners Association (FOA) president Peter Clark.
Under the upgraded TPP – the 11-country CPTPP -- whatever rules a country has at the time of signing are what prevail, Clark says.
“Under our legislation, forestry rights are not included in the Overseas Investment Act (OIA) so that would prevail,” Clark explained to Rural News.
“What concerns our Trade Minister (David Parker) is that if it is signed, the opportunity to bring those forestry rights into the OIA [would be] lost forever. So the proposal now is to legislate to bring forestry rights and sensitive land into the OIA.”
Forestry rights do not confer an interest in land; they give the right to grow and harvest a crop.
Treasury invited submissions, now closed, on a proposal to expand the scope of the OIO to include forest cutting rights for forest blocks of 50ha and larger.
“If they brought that in, any foreigner who went into a forestry right for more than 50ha – or whatever the threshold was – would need to go through an application.”
An OIO application is “quite an onerous process – very expensive and time consuming”.
“So that [would] be quite negative for foreign investment and negative for the New Zealand economy because we need foreign investors in our forestry sector,” says Clark. “It is a capital intensive business. Foreigners now own about 65-70% of all the forests in NZ.”
He says Kiwis, including farmers, would be affected.
“Once you bring in a rule like this you effectively remove a big chunk of potential investors in these tree crops -- people who might want to invest in new planting under a forestry right instrument. They are already disincentivised to invest in new planting or to grow a forest that involves land because they are already captured under the OIA for transactions on land.
“But to capture them under a forestry right -- which is to grow and harvest trees -- would be negative for those investors and therefore negative for forest owners whether those forest owners are foreigners or Kiwis because it reduces the liquidity of the asset. It reduces the number of buyers.
“If you reduce the liquidity of an asset you raise your hurdle rate. It is harder to get the investment across the line in the first place.
“That is negative and goes against the other policy the Government has of getting more trees planted. It’s two policies clashing.”
Clark says this would jeopardise the Government’s ambitions of seeing a billion trees planted and of meeting its Paris Agreement obligations to reduce carbon emissions.
Poor yield hits Seeka
Fruit grower and marketer Seeka’s 2017 kiwifruit crop was down 21% on the previous year, slashing its annual profit.
The orchard-to-market trader’s profit after tax was $5.8 million, 44% less than the previous year, which also included a one-off tax gain of $3m.
The company says the reduced kiwifruit yield had the potential to significantly impact earnings but it had seen these coming. It says its new and upgraded plant, precooling and cool storage capacity -- in anticipation of higher crop volumes, particularly Zespri SunGold fruit -- enabled it to optimise plant configuration and staff utilisation. Growers benefited through record low fruit loss and operating efficiencies reduced costs. 2017 fruit loss to Seeka’s New Zealand kiwifruit growers was at a record low of 1.18% for Hayward (green) conventional growers, 0.42% for Hayward (green) organic growers and 0.73% for Zespri SunGold growers.
