Do you have land suitable for Forestry, but want someone else to take the market risk?

Creating a Forestry Right agreement with a forest investor may be a suitable option for you

Forestry Rights are legal rights granted by the landowner to someone else to establish, maintain and harvest a forest. Forestry rights typically last more than 30 years and create a separate legal interest in the trees.  The landowner is paid an annual rental or share of revenue.  

The Forestry Right agreement will clearly define the tree crop area and all access routes. The agreement will also outline which party is responsible for which costs. The agreement will also set out a range of other rights and responsibilities for both parties to ensure they can undertake their core activities. Typically, the landowner contributes the land and pays the rates. The forest owner then pays the forestry costs and an annual land rental to the landowner and receives the harvest and carbon revenue. The Forestry Right agreement will outline any sharing of the harvest and/or the carbon revenues, or the landowner may simply receive an annual land rental. There are also combinations of lower land rentals with a share in either or both of harvest and carbon revenue for the landowner. This will be negotiated between the landowner and the forest owner. You should always engage legal advice through this process.

The landowner should be aware of:

  • Rights and responsibilities they and the forest owner have under the Forestry Right.
  • Any ETS liability on the land after harvesting. This should generally be avoided and can be achieved under a Carbon Averaging regime. There may be an obligation on the landowner to replant to avoid ETS liabilities?
  • A high-level harvest plan that shows where the proposed roads will be located at harvest time, as well as log extraction methods. (The landowner will have responsibilities under the RMA). 
  • The required condition of cutover after harvesting and any other hand-back requirements, such as conditions of fences, roads etc.

PF Olsen has reputable investors for forest projects that will enter into Forestry Right agreements.   

 To discuss with PF Olsen if this is a suitable option for you please contact:

Scott Downs

Director of Sales and Marketing PF Olsen

Phone: 021481875 or Email to scott.downs@pfolsen.com