Opinion: Commercial forestry vs pastoral farming

Wednesday 20 Feb 2019

Comment: The ramifications of establishing forestry blocks takes some research, writes Jim Childerstone – The Productivity Commission suggests farmers could allocate 20 per cent of their property to plant trees. This may work, dependent on income comparisons with lower production grassland areas. That is commercial plantations verse income from grazing land, excluding carbon credits.

Facts and figures from recent harvests indicate farm woodlots can give better returns from South Island class 1, 2 and 6 lands. Net returns vary from $40,000 to $50,000 per hectare. This can be as high as $1550.00 per hectare per year, dependent on access and distance from port and mills.

But the ramifications of establishing forestry blocks takes some research.

According to extensive data produced by Beef + Lamb NZ, as well as input from Lincoln University, each land classification includes considerable diversity in income. Class 1 is defined as steep, marginal high country grazing properties, carrying under 5 stock units per hectare.

These properties run into 1000s of hectares. Many of these areas would not be suitable for commercial woodlots. Those runholds that have gone into Merino wool breeding could boast far better income than traditional sheep and beef production. Beef + Lamb figures indicates an average of just $37.00/ha/year.

Class 2 lands included lighter hill country grasslands, such as foothill areas running into steeper back country grazing. However Beef + Lamb figures indicated a wide range in income on what were obviously extensive acreages. Stocking rates listed on a Lincoln University graph indicated between five and 10 SUs per ha. Income varied from $400 to $600 /ha/a. Beef + Lamb lists an average of $492.00 net EBITR. Class 6 lands includes rolling hill and flats, usually fattening units, running 10+ SUs/ha, including some cropping. Again, figures indicate huge variations of income, ranging from $636.00 to $1488.00 /ha/a, listing an average of $973.00.

Size of properties would be a factor as to what farmers would have to consider before establishing a woodlot. Recent harvests in eastern Otago and Southland areas last year while log prices were up, indicates net returns.

A farm forestry block netted $45,000/ha of 29-year-old trees. This woodlot was fully tended, pruned and thinned, giving a good return on top pruned grades on more than 10 ha. It was within 60k of port and local mills.

The woodlot required minimal infrastructure suitable for a ground based logging operation on an easy, though hilly, site. It also helped that the contractor had logged nearby woodlots with little time wasted, moving plant and setting up on a new site.

When calculated in annual returns the figure was $1551.72 /ha/annum. Other blocks within similar proximity to port and mill, inland and along coastal Otago, gave similar returns.

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