IKEA Shifting Into Carbon Forestry? New Zealand

Country Wide Magazine, May 2022

The company behind multi-national furniture and home accessories brand IKEA claims its purchase of a large Southland farm is for production forestry, not carbon farming, Annabelle Latz reports. An international company which recently bought Wisp Hill Station in Southland claims its objective is, first and foremost, to create a production forest, not to mine carbon. This is despite the fact the company is in the process of registering with the Emissions Trading Scheme (ETS). The 5500ha sheep and beef farm is the first land bought in New Zealand for Ingka Investments, the investment arm of the group and its retail business IKEA.

The purchase agreement became unconditional with the approval of land acquisition by the Overseas Investment Office on Friday, August 27, last year, bought from the Ward family. A lease- back requirement will allow the family to properly phase out their operations over a minimum three-year period. Country-Wide was refused a verbal interview with Ingka Investments, and received written statements instead.

Ingka’s forestland investments portfolio manager of Andriy Hrytsyuk said the plan is to grow a productive forest within an afforestation project which expands its global forestry portfolio and demonstrates its commitment to responsible forest management, with a focus on timber sales to generate a return on investment.

This recent conversation with Ingka Investments was the result of the cover story in Country-Wide’s March issue, Carbon Mining Exposed which stated the neighbouring 1250ha of Southland farm of Logan Evans called Koneburn had been bought by an international company for carbon mining, some 80km from Wisp Hill Station. Country-Wide did not mention the name of the buyer. Ingka Investments contacted Country- Wide directly, specifically referencing Wisp Hill Station but not the farm mentioned in the article.

Two farms bought

Country-Wide understands Ingka Investments has bought at least two farms in Southland on which they plan to plant both pine and native trees, one of them being Koneburn, the ownership being transferred to them on June 30, 2022.

Writing specifically about Wisp Hill Station, Hrytsyuk claimed it will not be a carbon farm, and stated carbon credits will not be part of the calculus. “They are not sold, nor we do not engage in internal carbon offsetting to reduce our carbon footprint.”

In a media release last September, Ingka Investments stated it will be planting 330ha in radiata pine seedlings, with a long term plan to have a total of 3000ha and more than three million seedlings, planted in the next five years. At the same time the plan is to naturally regenerate the remaining 2200ha into native bush. The new forestry investment in NZ will see its forest planned harvest take place at the end of the first rotation, 29 years after planting.

“Our plans include serious investment into native species enhancement, and all the main riparian areas are earmarked to be planted in native species including manuka. A significant gorse and weed control programme has already been implemented on these riparian areas, something that has lacked any investment for over 50 years on the property.”

Hrytsyuk told Country-Wide in March that Ingka Investment’s afforestation business

is a long-term investment which focuses on the cycle of planting seedlings on unforested land that will eventually become mature trees for harvest.

“We have begun the process of registering the property with ETS because it was the logical, prudent step to take as newcomers to the New Zealand market, but again we have no intention of selling carbon credits,” he said, adding that they will calculate and report the amount of carbon removed and stored in the trees, both in NZ and other countries.

It is Ingka Investments’ plan to draw on labour units to develop and eventually harvest the trees, and invest in native species enhancement. Hrytsyuk said the property will require years of labour inputs including preparing the soil, planting the seedlings, pest and weed control, thinnings and more, before harvest can happen.

Hrytsyuk acknowledged NZ’s proud tradition of agriculture, and the importance of its role in the economy, but added “forestry also has a role to play”.

“Our approach to responsibly manage forestry provides jobs and economic growth on the same land while also making a positive impact on the climate through carbon sequestration and biodiversity.”

All wood harvested in their forests is sold on the open market and does not comprise a significant part of the IKEA supply chain, (as a home furnishings retailer).

Logan Evans, a Groundswell member, expressed disappointment in the Government allowing the sale of farms like this to overseas investors.

“The Government has talked about stopping this happening, but when? Policies which suit their agenda get pushed through fast, so why is this taking so long?”

He agreed planting natives is better than mono- culture planting, but it is still way off the mark for attempting to mitigate global warming. Especially when it involves an overseas company whose sole business model is to plant pine trees and claim credits, despite their reasons for registering with the ETS.

Evans said to attempt the stopping of global warming, first the crippling of NZ agriculture needs to stop. The world needs to look at NZ farmers as the prototype of how to farm efficiently and with the environment.

“Collectively everyone must focus on reducing gross emissions rather than off-setting them. We need a global plan to achieve this.”

Evans said if he dotted on a map all the farms around him and NZ where pine trees are being planted for carbon farming (or ‘carbon mining’ as he calls it), it would be huge.

“It’s the silent assassin sneaking through our rural communities.”

See the article online here

IKEA Shifting Into Carbon Forestry? | With Belles On

Constantly making it better, New Zealand

Country Wide Magazine, August 2022

A focus on bull beef following years of drought has worked for a North Canterbury couple. Story and photos by Annabelle Latz.

Drought recovery brought a change in direction for North Canterbury farmers Nic and Andy Fairbain. Farmers in the region have strained memories of the drought-stricken years of 2014 to 2017, but the following recovery years opened up opportunities for the Fairbains from Scargill. Andy, 60, and Nic, 54, live on the 300-hectare rolling hill farm Andy’s great grandfather bought in 1919, where they have always traditionally run sheep. They got into rearing bull calves as a way of restocking after the 2014- 2017 drought. Having dabbled at rearing calves over the years, they had the quick and efficient infrastructure.

“We soon realised we enjoyed farming cattle more than sheep,” Andy says.

They have the place humming, running one third bulls to two thirds sheep, the goal and focus to create a farming system which allows stock to receive optimal feed and water all year-round. Andy is always thinking about feed and feed budgets. “It’s rewarding to see results on margins and finances.” Their 24 year-old son Fergus works in Christchurch as a builder. Until last year Nic has always worked full time off farm. But, it was always a struggle to work both farm and full-time work.

“I used to turn myself inside and out getting it all done between my full-time job off the farm, calf rearing and lambing,” she says.

Now she works more on the farm so it’s a better balance. Andy was a full time shearer for 12 years after completing a Bachelor of Agricultural Science at Lincoln University, and has enjoyed the move towards bull finishing. “I had always wanted to be a farmer, the shearing funded me into the farm.”

Tweaks and changes

Finding the right balance for stock numbers has required some tweaks and changes. After the drought years they peaked at a 250-calf rearing system, which was a 50/50 ratio bulls to sheep. Last year dropping down to 120 calves meant less pressure on water and feed, describing February to October of 2021 as horrendous, where they were constantly tied to the farm feeding out.

The Fairbains have dabbled with bull breed combinations like straight Friesians, Friesians crossed with Angus, Hereford or Murray Grey. For their farming system the timing of the straight Friesian works best, buying in August, and going straight to once a day feeding using a mix of cows’ milk and powdered milk.

They learn from their calf suppliers, North Canterbury’s Rotherham dairy farmers Simon and Leanne McAdams. Nic and Andy say they can always talk to them about problems and questions because they’re the experts. It’s all about continually tweaking what they do to achieve the best outcome.

They worked out that calves need 1.5-2 bags of milk powder equivalent a calf. “By collecting pods of colostrum and penicillin milk we can give them that extra quantity for a cheaper price,” Nic says. “We absolutely thump the feed into them when they first arrive, we give them plenty.” Adapting with North Canterbury’s seasons can be tricky. They buy barley, sell stock and fill the hay sheds when they can.

In the perfect world, Nic and Andy would finish all their bull calves, but the season is dependent. They winter 120 R1s and 120 R2s, having dropped the beef numbers from 230 reared each year to 120, due to water regulations. As of the end of June they were wintering 1356 ewes. They sell half the R2s in June and the rest are carried through to spring, which requires some sort of summer crop either side of February. Last summer they planted eight hectares of kale, and maize is another option.

Maize has been okay but has limitations, it’s not high quality and they can’t make grazing maize into baleage. “Kale can let you down in a drought, maize is good in drought,” Andy says. Andy and Nic buy extra water units from their local Council and no longer rely on animals drinking from creeks. Upgrading all the troughs and power supply have been significant expenses, but unavoidable and worth the investment.

Andy and Nic now pay for two more points of water from their local council which cost about $20,000 a year in total, as they can no longer rely on animals drinking from creeks. They have about 15 new cattle troughs which cost about $10,000. “Upgrading all the troughs and power supply have been significant expenses, but unavoidable and worth the investment.” When comparing a prime bull of about 600kg to a prime steer about 540kg, Andy says they are magnificent animals. “The way they produce meat, they definitely have a higher growth rate.” The Fairbains aim for 550-600kg for a finished bull, weather dependent. Last year the bulls were sold around the $1800 mark.

The temperament of bulls is well-managed.

The R1 bulls reaching puberty pose challenges running on winter feed when they are harassing each other and subsequently losing condition. The solution has been Bopriva, a two-dose vaccination to inhibit testosterone temporarily. The young bulls have their second injection timed just before they go on the fodder beet. They learned about Bopriva from their local vet Gerard Poff. The cost is $15 per animal, and has no effect on the meat. “It means they use their energy to eat rather than chase each other around,” Nic says.

They’ve tried other options to mitigate challenging behaviour, such as smaller mob sizes, mixing steers in with the bulls or mixing the ages. Bopriva proved the best option. “Nic does the winter breaks on the fodder beet, and it’s much preferable when they’re behaving themselves.”

Ewes a good fit

Andy and Nic see the good fit that ewes are to their farm, that it’s good to have options and capitalise on a good market. “With the way prices are at the moment for sheep, it makes the option pretty irresistible,” he says. They would like to run one big mob of ewes on a long winter rotation. Increasing sheep numbers has been an easy decision with the attractive schedule of $8 or $9. Buying in 1400 Composite ewes at the moment was easy, given the “unbelievable” season with continual grass growth throughout summer into winter. Feed’s been so good the last few months, they recently bought a unit load of lambs from Southland to keep the feed under control.

Buying in 1400 Composite ewes at the moment was easy, given the “unbelievable” season with continual grass growth throughout summer into winter, paying about $220 for the in-lamb ewes. Feed’s been so good the last few months, they recently bought 710 lambs from Southland to keep the feed under control, paying $116.36 excl gst/head. Nic says Andy is good at managing feed and water. “So in a testing year we can keep options open, like buying in-lamb ewes which we don’t always do, but if the market is right, it’s ideal.”

Sheep performance is enhanced by farming bulls who retain the quality in the pasture by not grazing it down too hard, and controlling surplus growth. Cattle dilute the number of parasites which could potentially be affecting the sheep. “That is a big part of the reason of why you would want to be farming both, because the biggest enemy of a sheep is another sheep,” Andy says.

Buying younger sheep if they’re at a good price, if there is a good feed surplus, is another part of their sheep farming model. “It’s about getting a good price when you can and jumping on board.” They lamb at an average of 140%, with 70% of the lambs going to the works straight off the ewe, which Andy says is a great way to farm sheep and an incentive to focus on a quality feed programme for both the bulls and sheep.

“What it boils down to is doing the basics well.”

Pinch time is mid-August to mid-September, so the right balance of stock is a huge benefit. Expenses in the 2020 year were sitting at about 42% of the gross farm income, which is a culmination of good prices, efficient feeding, turning stock over at optimal times, and keeping a close eye on body conditioning. “We draft out the bottom end and run them on better feed if we need to.” Contrasting seasons is the biggest challenge of farming in the region and makes planning hard.

It’s hard work and to make it profitable Andy is constantly asking himself, “How can I make it better?”.

FARM FIGURES

2020 (2021 was a write-off with the drought.)

EBIT $106.78/ su

Farm expenses: 42% of gross income

Fert/ha/year: 230kg

Installed stock water system

Wintered 120 R1, 120 R2 bull beef and 1356 composite ewes.

See the article online here

Constantly making it better | With Belles On

Disappointingly unconvincing, New Zealand

Country Wide Magazine, April 2022

He Waka roadshow feedback, Balcairn, North Canterbury. By Annabelle Latz.

Winton Dalley, a sheep farmer from Hawarden, read the executive summary and attended the public meeting in February. Dalley said the presentation of the two He Waka options was disappointingly unconvincing. The presenters openly acknowledged significant inequities, (pre-2008 vegetation excluded), uncertainties (pricing), and anomalies (exotic versus native vegetation). He said the presenters could not give any assurances that the cost to the landowner under their options would be any less than the ETS.

“In fact there appeared to be an indication that the cost over time could well be higher.”

The main selling tactic for their options was engendering fear of the ETS, done with plenty of rhetoric but little substance. “I suggest that farmers should ‘fear’ the fact that this Government is skilled at divide and rule, and manipulation.” He believes the moment farmers choose one option, no matter how detrimental that He Waka option is with its as-yet unknown detail and implementation for food and fibre production, the Government can claim it was designed and agreed to by the agricultural Industry. Groundswell spokesperson Jamie McFadden, a former sheep and beef farmer from Cheviot, has thoroughly read the He Waka Eke Noa summary and understands what’s involved.

Because of his environmental work with farmers he has a good understanding of the implications for farmers, including how the sequestration criteria don’t work. He said there were so many anomalies and inequities mainly because it is impossible (because of the poorer quality imagery pre-2008) to come up with sequestration criteria that was administratively cost feasible and fair. McFadden said the He Waka options were flawed and caused perverse outcomes. Like many other Government environmental policies, they have been developed in a policy silo.

“For example, virtually none of our hundreds of riparian planting projects will be eligible under the criteria.”

The criteria only considered climate change benefits, not others such as water quality (a key driver of riparian plantings) and biodiversity. He said the additional vegetation credits under He Waka have been massively overstated and it is likely most hill country farmers will find very little of all their native vegetation and exotic plantings will qualify. He has received a lot more questions from farmers about planting their farms in more trees (mainly pines because the incentives and cost to establish are so much more in favour of pines).

“Disastrous for our environment, disastrous for our rural communities, disastrous for our country.”

He said there was also the cost with millions of dollars being sucked out of farmers’ pockets which would reduce discretionary environmental spend, thus the environment would be worse off. Scargill sheep and beef farmer Andy Fox is pleased he attended the presentation in person, and has concluded a processor-based levy is a good option. He went to the meeting feeling annoyed that sheep and beef farmers have been sold down the road to the benefit of the dairy industry. He strongly believes sheep emit substantially less greenhouse gases today than they did in 1990. But after attending the presentation, grasping an understanding of why exotic trees are excluded from this proposal, and learning about what the proposal means in monetary terms, he admits it’s not as scary as he initially thought.

“Hearing the discussion in person, rather than trying to read up on this complex issue, meant I ended up with a much better informed opinion. While on the night I was undecided as to which was the better option, I have now decided a processor- based levy would be the best of the two proposals.”

He is concerned that although farmers can come to a reasonable collective consensus, it will be tweaked in some aspect by central Government to suit an agenda.

“And that in turn will mean a worse outcome for pastoral farming.”

See the article online here

Disappointingly unconvincing | With Belles On

The tree planting gamble, New Zealand

Country Wide Magazine, August 2022

Planting 10% of a farm in trees has extra benefits with little loss of production. Annabelle Latz reports.

Retiring livestock farming on a small portion of a North Canterbury hill farm and putting it into trees would result in very little drop in production, a forestry advocate says. Alistair adds there would be the extra benefit of claiming carbon credits.

“It surprises me that not more farmers are seeing it, changing even just 10 to 20% of the land use.”

He said young farmers were starting to look at their budgets and do it. The former fruit grower said farmers have a choice of why to grow trees, whether that be for carbon credits or timber, and the end reason can change, depending on the market. The 72-year-old retiree describes it as a coincidence that his hobby and interest came up trumps because of the Emissions Trading Scheme (ETS), and said his venture with eucalyptus trees is one decision he is certain of. Alistair was the first chairman of New Zealand Summer Fruit Export Council and the 2021 South Island Farm Forester of the year. He left behind an extensive and comprehensive career in fruit growing on the northern fringe of Christchurch nine years ago for retirement. He and his wife bought 63 hectares of bare land in Glenmark, North Canterbury to pursue Alistair’s long interest in forestry, which he’d followed for some 40 years after a course through Wellington Open Polytechnic.

Upon arrival at Glenmark, they logged two thirds of the Indian cedars that were there, and built their house. Nearly a decade ago under the ETS, NZ carbon units were only $3 to $4 per tonne, so Alistair’s initial thought was to plant the property in radiata pine, adding to the 6ha already in the ground. In the following years, their value leapt to $15/tonne.

About three years ago things started to change again, when unit prices hit better than $25/tonne, and a year ago unit prices hit $35/tonne. “At that rate, you’d be best to keep them growing rather than harvesting, they’ll have significant tonnages to 100 years old.” The retirement venture has certainly kept them busy. They farm 100 composite ewes which they breed from with a Texel ram.

Focus on trees

For the tree side of the operation, they have planted most of land in eucalyptus totaling 44ha, one hectare of beech and kauri, half a hectare of totara, five hectares of poplars, one hectare of redwoods, and two hectares of Douglas fir. In addition, they have a hectare of native plantings in two different blocks. “It has cost $2000/ha to plant eucalyptus, which includes the trees, pre-planting and post planting spray. Poplar poles are the much cheaper option, as I cut my own poles.” The carbon unit price is $76/tonne for any tree whether that be pine or hardwood and Alistair admits the Minister for Climate Change would be comfortable to see prices above $100/tonne.

“I don’t see much downside for the carbon price, unless a world war or something like that. While ETS is at a high price, I won’t be logging them.” “I do acknowledge that things that go up can come down… our policy from now on is to cash the credits in each year.”

Eucalyptus not pine

What steered Alistair towards eucalyptus was the shorter harvest time as these trees can be milled six years earlier than pine, and the uses for the timber are growing with options in fence posts, the pulp industry, and there is research into flooring options.

“It’s also being used for feed stock in heating systems instead of coal because it’s a renewable energy.”

The oldest area of trees is the eucalyptus block that was planted in 2016, which Alistair had initially planned to thin and harvest in 25 years, but will now take carbon credits and leave the trees standing in the meantime. To sell for carbon under ETS, a farm must be registered with the Ministry for Primary Industries (MPI), as a carbon forest in five- year tranches and carbon credits must be claimed every five years. Trees must be at least one-hectare blocks, shelter belts do not count unless they are greater than 30 metres wide, and the land must be planted in a species that will grow at least five metres tall when mature.

“Manuka will grow this tall in the North Island, but not always necessarily in the South Island.”

Under these rules, Alistair said claiming carbon credits on the one hectare of native trees poses a complication because they were planted more than five years ago and are less than one hectare. Look-up tables supplied by MPI are used to measure areas of trees under 100ha, and over 100ha they must be measured every five years to calculate tonnage. There is only one table for all hardwood across all of NZ, and prices are the same for poplars and eucalyptus. Also under ETS, trees must be on land that was not forest at the beginning of 1990, and this must be proved through photos or other solid evidence. The canopy must cover at least 30% of the land area when mature, Alistair has planted poplars to fit this bill. To work best within the rules, Alistair has focused on eucalyptus nitens and some poplars.

“They are idiot-proof, and grow easily.”

From 2023 some rules are changing and blocks planted from then will sit under the ‘averaging regime,’ meaning carbon credits can be claimed for the first 15 years from landowners and the government gets the credits for the second half of the 30-year rotation.

“This means when the trees are harvested farmers don’t have to repay any carbon credits.”

It’s a gamble

Alistair said it’s dangerous ground when the Government sets the rules, and can change them at any time, thus creating uncertainty. “I do acknowledge that things that go up can come down. At the moment it is pretty good, but our policy from now on is to cash the credits in each year.” He believes new forests will not be milled for timber, but if carbon dropped back, people would register out of ETS. “It is a real gamble, taking into account maintenance costs like pruning also add up. But whatever happens in the long term, we will always have trees in the ground.”

See the article online here

The tree planting gamble | With Belles On