New Law Limits Farm-to-Forestry Conversions to Safeguard NZ Food Production

Introduction: A Shift Toward Rural Sustainability and Food Security

New Zealand’s Government has taken a bold legislative step to halt the unchecked conversion of productive farmland into exotic carbon forests, a trend that critics say has been damaging the nation’s food production base and gutting rural communities. Agriculture and Forestry Minister Todd McClay announced the Climate Change Response (Emissions Trading Scheme - Forestry Conversions) Amendment Bill, delivering on a major election promise to bring balance back to land use policy while still supporting climate goals and rural livelihoods.

The Problem: Farmland Lost to Carbon Farming

For years, large-scale conversions of sheep and beef farms into pine plantations have surged under incentives provided by New Zealand’s Emissions Trading Scheme (ETS). Speculators and overseas investors often prioritized carbon credits over food production, buying up high-value farmland and planting it in exotic forests. The effect was twofold: a decline in New Zealand’s core farming base and social and economic decline in rural areas such as the East Coast, Wairarapa, the King Country, and Southland.

Minister McClay said, “For too long, productive sheep and beef farms have been replaced by pine trees in the race for carbon credits. That ends under this Government.”

Key Provisions of the Amendment Bill

The new Bill, introduced in Parliament today and set to become law by October 2025, sets strict new limits on exotic afforestation for ETS purposes:

• Land Use Restrictions:

  • Farmland categorized as LUC classes 1 to 5, which denotes high to medium productive land, will be banned from entering the ETS as exotic forestry.

  • For LUC class 6 land (moderate versatility), a cap of 15,000 hectares per year will apply for new exotic ETS registrations.

• Ballot Allocation System:

  • The annual 15,000-hectare quota for LUC 6 land will be distributed via a ballot process, with a reserved portion for small block landowners to ensure equitable access.

  • The first ballot is expected to be held in mid-2026.

• Partial Farm Planting Allowed:

  • Farmers will retain flexibility to diversify. Up to 25% of LUC 1-6 land on a farm can still be planted in exotic forests and registered in the ETS.

• Property Title Restrictions:

  • Once a farm registers 25% of its LUC 1-6 land in the ETS, no further planting will be allowed on that title, even if the land is subdivided.

• Māori Land Protections:

  • Specific protections and exemptions are in place for Māori-owned land, upholding Treaty of Waitangi obligations and ensuring Māori landowners retain development rights.

Transitional Exemptions for In-Progress Projects

The Government is also offering time-limited transitional exemptions to accommodate those who had made credible afforestation investments before the policy shift was announced. To qualify:

• The investment must have occurred between 1 January 2021 and 4 December 2024.

• Applicants must provide evidence that the investment was tied to LUC 1-6 land.

• Projects that began after 4 December 2024 will be ineligible for ETS registration.

Restoring Agricultural Sovereignty

“This Government is backing farmers, restoring balance, and making sure the ETS doesn’t come at the cost of New Zealand’s rural economy,” Minister McClay said. “Labour’s careless ETS settings turbocharged the sell-off of our farming base. They let speculators put short-term profits ahead of long-term food production. That was careless – and it ends now.”

McClay emphasized that the policy strikes a pragmatic middle ground. It is:

• Pro-farming, by preserving agricultural land;

• Pro-food production, by securing national food systems;

• Pro-commercial forestry, by allowing measured, sustainable growth;

• Pro-rural New Zealand, by keeping communities intact and thriving.

Looking Ahead

The legislation’s rollout will take place over the coming months, with major restrictions beginning 4 December 2024, and full enactment by October 2025. The transition phase will allow farmers, foresters, and investors time to adjust their plans and align with the new legal framework.

In doing so, New Zealand aims to preserve its global reputation not just as a climate-conscious nation, but as a proud food-producing powerhouse with thriving rural communities and balanced land use priorities.