Afforestation Grant Scheme Reinstated But Policy Mix Remains Unfavourable for Forestry

This month the National government announced a reinstatement of the (prior) Afforestation Grant Scheme (AGS) – with a few changes. The scheme will build on the success of the earlier AGS, but will be improved and simplified to make participation easier. Funding of $22.5 million will be made available over five years with a view to 15,000 hectares being established in forest in the scheme. Over the five years, that's a planting rate of, on average, 3,500 hectares per year.

The criteria for the new scheme will include:

  • Individual parcels of land between 5 and 300 hectares per grant application.
  • Planting must be on land that is not already forestry land.
  • A flat grant rate of $1300 per hectare from one funding pool for all applicants.
  • In return for a grant, grantees will forfeit carbon credits to the Crown for up to a decade.

It is expected the majority of people taking up this scheme will be farmers and other landowners wanting to diversify and better use marginal land, especially erosion-prone land.

Whilst this scheme is welcomed by the NZ Forest Owner's Association (NZFOA), its president, David Rhodes says the government could transform forest profitability over night by making the emissions trading scheme function as it was intended.

If this happened, new planting would increase across the board at no cost to government or the NZ tax payer. New planting is critically important to reverse the current net deforestation situation which undermines new long-term investment in domestic wood processing. It will also cause a sharp net increase in greenhouse gas emissions from the nations forests (without the offset of younger growing post-1989 forests) when the large 1990s plantings are harvested in the next 10 years.

But no-one is going to make a commitment to a major long-term investment in forestry if they don't have confidence that the policies of successive governments will treat forestry fairly.

Mr Rhodes adds: "We can live with fires, floods and windstorms, as well as market swings and roundabouts. But the political risks in the 30-year life of a typical forest are far greater than these."

Mr Rhodes cites unfair nitrogen allocations in the Lake Taupo catchment that discriminate against Maori forest owners in particular. More recently there was the decision to ban forest owners from paying for their ETS emissions with international units – the only sector to be treated this way. Then there's the ongoing issue of district councils jacking up their rates so that forest owners pay more than farmers.

He says issues like these could easily be addressed without any cost to the country.

"But the fact is they should not have arisen in the first place. Somehow we have to convince politicians of all parties that they need to have a common vision for forestry and how it might be achieved.

"Giving investors the confidence there won't be constant policy shocks during the life of their forests is probably the biggest barrier to the sustainable growth of our industry."