Pāmu wants to establish 10,000 hectares of new plantation forest by 2030, David Williams writes in this content partnership article
Away from the conflict about forestry – fears of entire farms being planted in trees, and the slow death of rural communities – state-owned farmer Pāmu is quietly making the economics of tree-planting work.
Farming is the core business for Pāmu (which means “to farm” in Māori), the trading name for Landcorp Farming. Forestry has been seen as a sideline. “But it’s bloody not,” Pāmu’s environment manager Gordon Williams says. “It’s actually a production system for the land that should not be pastorally farmed.”
That system is starting to pay off.
The carbon credits on its books were worth approximately $50 million in July, although some credits will have to be surrendered after harvesting. A further $4 million (of Pāmu’s $224 million total farm revenue) came from the sale of logs.
“We’re making a no-brainer decision to increase our revenue streams,” Williams says. “Then this will enable us to concentrate our expenditure on the best land on the farms.”
More on that later.
Pāmu chairman Warren Parker – a former chief executive of Scion, the Crown research institute that researches forests and wood products – says that beyond the direct cash return from the sale of logs, forestry also has important environmental benefits, such as providing habitat for native birds. It helps with nutrient management – slowing sediment and phosphate runoff into waterways, which improves water quality. Planting trees also stabilises erosion-prone land.
When the previous Forestry Minister Shane Jones announced the forestry-encouraging one billion trees programme in the last Government, he said New Zealand faced a potential $36 billion liability by 2030 under its international climate change obligations.
“Planting trees is a sustainable and effective contribution towards our transition to a zero carbon economy,” Jones said at the time.
The buzz-phrase was ‘the right trees planted in the right places for the right purpose’.
Front and centre as part of the one billion trees programme was state-owned Pāmu, which agreed to plant 2000 hectares of trees over the following two years.
Since then, the company has refined its strategy and will now see 10,000ha of plantation forestry over the next decade.
Pāmu has a significant amount of land that is classified as either erosion prone or of lower productive value – over 60,000 ha of class 6 and 7 land. Pāmu considers some land is commercially, environmentally and strategically better suited to forestry.
Its current forest estate spans some 13,500 hectares, 85 percent of which is pinus radiata. The remainder is alternative exotic species and some indigenous plantations.
An additional 16,000 hectares of land has been retired and protected in QEII and DoC covenants. (Pāmu is the country’s third-biggest QEII covenantor of land with close to 10,000 hectares registered.)
According to its latest annual accounts, the company’s trees sucked up an estimated 334,000 carbon equivalent tonnes in 2020. That’s only about a third of its 790,000 tonnes of emissions from farming operations – two-thirds of which is methane from livestock.
But once Pāmu’s current plantation forest estate reaches its maximum annual sequestration potential, that picture changes. The total figure is expected to rise to over 500,000 tonnes. The publicly owned business will try to get the same profits from farms with fewer livestock and a smaller environmental footprint.
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Parker, the chairman, says the company can be aspirational, “but at the end of the day we have to do what’s affordable and commercially sensible.
“The biggest thing is to ensure that we are reducing our emissions through more efficient farming practices, because generally more productive animals sold at heavier weights at younger ages, and which are kept healthy, have lower emissions than their counterparts. Efficient farming is also climate-friendly farming.”
Different classes of land
Smarter livestock farming means smarter use of the most productive land. But that land has to be identified first.
Williams, the environment manager, says farmers are great averagers – happy to sit down and work out their earnings (EBIT) per hectare across the whole farm. “But many won’t sit down and work out how much EBIT that they get off parts of the farm. And that’s where the land use capability can help them.”
Between 2010 and 2016, Pāmu completed land and environment plans on all its farms – it owns 84 and manages 117 in total. Farm land is classified by capability and versatility, taking into account variables such as slope, soil type, wetness, and climate. Different parts of the farm are rated from between 1 and 8. The higher the number the more difficult it is to farm.
Class 1 is generally the best horticulture land, used for things like market gardens and orchards. A lot of Pāmu’s dairy farms are on class 2 to 4 , Williams says. Then there’s a transition into intensive livestock between classes 3 and 4. The more extensive livestock sits on classes 6 and 7, which is typically medium to steep hill country. Class 8 is unfarmable, like wetlands.
“On certain properties, we’re probably getting up to 90 percent of our EBIT off 60 percent of the farm,” Williams says. “A lot of the class 7 country in particular can actually cost more to maintain than it earns.
“Because we can’t farm these land classes as intensively, and also because it’s got an erosion risk, forestry comes into play as having a higher return than farming on class 6-7 country.”
(Such areas might have a carrying capacity of fewer than six stock units per hectare, annually, producing between 3000 and 4000 kilograms of pasture dry matter per hectare. The best land, by contrast, might produce more than 12,000 kg of pasture dry matter per hectare.)
Williams says Pāmu’s average earnings on a stock-standard livestock farm is about $300 to $350 a hectare. Forestry on erosion-prone land, with the harvest managed sensitively and properly, can generate over $400 a hectare and more when the carbon credit component is added.
“This means the poorer or difficult to manage livestock parts of the farm, can earn more than the average farm earns. Inputs can be used more efficiently and concentrated into the rest of the farm, increasing overall farm productivity and net returns.”
The king of trees
Williams describes radiata as the king of trees.
“It’s so resilient, it’s had so much research put into it, the breeding is excellent. It’s probably the best tree in the world for timber production. There are not many trees around the world that will produce the amount of timber, and of the quality of radiata, over a 25-to-30-year rotation.”
It’s also cheap to plant, at about $1800 a hectare – much less than other exotic species and especially native forest, which can cost over $20,000 a hectare for a “Rolls Royce” planting.
The harvest returns for pine are important because it’s expensive to build the initial infrastructure for harvesting trees – the skid sites to collect logs, the roads to get trucks in. “The returns from your first rotation will comfortably pay for that, plus a healthy profit,” Williams says. “And then your second time around, you can choose what you want to plant.”
Future forests might emerge from the research trials Pāmu’s involved in, with Scion, the NZ Dryland Forest Initiative, Farm Forestry Association, and Tāne’s Tree Trust. Species being trialed include varieties of eucalyptus, cypress, redwood, and natives like tōtara, beech and kahikatea.
There’s not necessarily a current market for some of these trees, but Williams reckons there’s enough talk to suggest one might develop. “Even though it’s a risk, it’s not a big risk, because they do sequester a lot of carbon. So carbon will always be the back-up.”
Pine foresters are exposed to the vagaries of the log export market, Williams explains, because it’s a commodity. Whole logs are mostly exported offshore, rather than being processed within New Zealand.
Now there’s a push to plant other hardwood exotics, in the hope of fostering a domestic industry for the likes of garden furniture, decking, and fence posts – the timber for which has historically come from equatorial rainforests in South America and Indonesia.
The University of Canterbury and Marlborough Research Institute are backing the NZ Dryland Forest Initiative, which wants to establish eucalypt plantations on the North Island’s drought prone east coast and Marlborough. Another group is pushing for redwood forests to be established in the King Country. (One advantage of redwoods and eucalypts is they “coppice” – the roots don’t die and they can re-grow from the stump, meaning they can hold sloping land together and there’s not the issue, after harvesting, that happened at Tolaga Bay.)
With a reasonably consistent annual harvest of between 150ha and 250ha, Pāmu can make a quick switch if it wants to. “If an industry based on a different tree species arose tomorrow we would just go, right, we won’t re-plant in radiata, we’ll plant in this different species. We can choose to do that as soon as it happens.” This is particularly useful in the situation where regional initiatives are able to be established for alternative species.
While its main focus is on exotic forestry, Pāmu is still exploring natives.
“We are doing quite a bit of indigenous plantation and trying to get the costs of establishment down to increase the opportunity for some niche forests producing our native timber in the future,” Williams says.
Chairman Parker thinks tagging of carbon credits sourced from native trees for the emissions trading scheme is a useful way to achieve a premium for native biodiversity. “Each tonne of carbon credit is obviously not quite the same when it comes to ecological or emissions reduction value.”
Somewhat defensively, he says investments in forestry, based on an expected rise in the carbon credit prices, are no different to farmers investing in dairy farming two decades ago on the assumption milk prices would rise. Even with this incentive, planting rates have not reached the annual targets in the Climate Change Commission’s recent report.
Politics of forestry
Some farmers seem alienated and frightened by policies that might blanket hillsides in pines.
They’re concerned about a rush to convert sheep and beef farms, which were further encouraged by the previous coalition Government’s one billion trees fund.
Traditional farmers fear their communities will be gutted of people and services, and there might be a repeat of environmental problems with slash, such as happened at Tolaga Bay.
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The politics of forestry seem fraught with mismanagement and unintended consequences. Think about the flood of cheap and dodgy international carbon credits into the country for emitters in the emissions trading scheme. And in the early days of the afforestation grant scheme, companies were given more money than it cost to plant the trees.
Parker thinks people have short memories. The more than 100,000ha of plantation forest removed in recent years would otherwise have been a major contributor to New Zealand’s international climate obligations.
(Indeed, the country’s greenhouse gas inventory says 200,000ha of forestry was removed between 1990 and 2017. However, over the same period 680,100ha was either afforested or reforested, especially during the 1990s.)
New Zealand needs to produce enough timber and fibre to keep up with local demand, Parker says – and this is a challenge in regions such as Canterbury and Northland.
Concerns about depopulation of rural communities and losing services are real, the company says, but this has an associated challenge in respecting property rights and meeting longer-term national interests such as how best to achieve a net zero emissions economy by 2050.
Pāmu says it's sympathetic to the concerns raised about carbon-only farming with exotic species (i.e. planting trees with no intention of harvesting), and believes this merits closer investigation.
“We will continue to manage most of our forests for a harvest outcome, meaning we’ll plant at a lower stocking rate, thin the stands and prune when appropriate. This means more jobs and a better land use option."
Not forestry vs farming
Williams says the public debate seems to have polarised people, to the point where they’re either for forestry or are against it. That’s not helpful.
“It’s not forestry versus farming,” he says. “It’s the two working together on the right classes of land to actually do the environmental job on erodible, less productive hill country and allow the rest of the farm to focus on efficient livestock production. I think farmers should not close their minds to how to optimally integrate trees onto their farms.”
A few months back, Williams visited two Pāmu farms in Northland to discuss forestry and planting plans for the least productive land or that which did support easy movement of livestock. A week later he visited two King Country farms for similar discussions.
“This is an area where we are demonstrating in different districts how to optimise the integration of forestry. We’re not planting the whole farms, we’re protecting the part of the farm that you can continue farming or even increase production on, and make more money from the enterprise as a whole.”
Of Pāmu’s own drive for more forestry, its general manager of forestry and horticulture Andrew Sliper says: “There’s no way we want to plant every farm. Every big farm of ours has a really good portion of land in it, and [is] a really well-operating, high quality farm. But by taking the forestry route, we’re winning at both ends – we’re concentrating our farming money onto an asset that will return us more, the [best] chunk of the farm, and we’re getting more money out of our forestry.”
Sliper acknowledges the Climate Change Commission’s advice to the Government.
“The commission's advice that recommends a mix of native and exotic planting, planting for a timber outcome (rather than permanent exotic carbon only forests) and targeting land that is more suitable to forestry than livestock farming are all consistent with our strategy and what we’ve been doing to date.
“It’s good to see the commission point out a more realistic cost of native forest establishment and a recommendation to make it easier to claim credit on smaller planted areas. We look forward to seeing what comes of these recommendations.”
Williams, Pāmu’s environment manager, has seen it all over the past 52 years. He started working as a shepherd at Kapiro farm in Northland (which is still in the Pāmu stable) for the old Department of Lands and Survey in 1969, straight out of school. He gained a scholarship for a rural field cadet scheme at Lincoln University and, in 1977, found himself in the Taupō area where farms were being settled.
In those days, trees were being knocked down. Now, under Pāmu, they’re keener on planting them. The circle of life also applies to farming, it seems.
Should some of these research trials into different tree species work, New Zealand could see niche forests planted to serve niche mills, in a nascent local industry.
Williams, meanwhile, concentrates on the present. For him it’s all about caring for the land. “That’s what gets me out of bed every day. It makes me want to keep working as long as I can. I do think that what I’m doing is both protecting the land and enhancing the land.”
This is the final in a Newsroom series, with Pāmu, on innovations by the publicly owned farming business
