Government Confirms Farm-to-Forest Conversion Limits from December 2024

The Government’s approach reflects increasing concern over the rapid expansion of exotic forestry on pastoral land — often driven by carbon offset schemes.

In a significant policy move aimed at preserving New Zealand’s most productive farmland while supporting sustainable land use, Agriculture and Forestry Minister Todd McClay has confirmed that new restrictions on full farm-to-forest conversions will take effect from 4 December 2024 — aligning with the date of the Government's original announcement.

The restrictions will apply to farmland classified under the Land Use Classification (LUC) system as categories 1 through 6, with the strongest protections reserved for LUC 1–5, which represent the country's most versatile and productive agricultural land.

Legislative Framework Coming in Q2 2025

The enabling legislation to enforce these rules is set to be introduced to Parliament in the second quarter of 2025. Minister McClay emphasized that the Government is committed to striking a balance between maintaining the nation’s food and fibre production and promoting environmentally sustainable land management practices.

“We remain concerned about the effect that farm conversions are having on highly productive land — particularly sheep and beef farms in Northland, the East Coast, and parts of Otago and Southland,” said McClay.

Key Policy Measures: Balancing Forestry and Food Security

The Government has outlined a suite of changes intended to guide land use while allowing flexibility for farmers and continued investment in forestry:

• Moratorium on ETS Entry for LUC 1–5 Farmland: Full conversions of actively farmed land in LUC classes 1 through 5 will be prevented from entering the Emissions Trading Scheme (ETS). This move aims to protect fertile and high-output farmland from being fully transitioned into exotic forests.

• Annual Cap for LUC 6 Farmland: For lower-classified farmland under LUC 6 — often more marginal land — the Government will impose an annual registration cap of 15,000 hectares for forest conversion eligible to enter the ETS. This measure will curb excessive afforestation while still enabling carbon farming on appropriate terrain.

• Flexibility Within Farms: The policy will allow up to 25% of any farm’s LUC 1–6 land to be planted in forest and still be eligible for ETS participation. This ensures that farmers have the autonomy to diversify their income streams while retaining the land’s primary use for food and fibre production.

• Protection of Māori Interests: Recognising obligations under the Treaty of Waitangi, certain categories of Māori-owned land will be excluded from the new restrictions. This provision is designed to ensure that Māori landowners are not unfairly constrained and can continue to pursue economic development in line with cultural and commercial aspirations.

Transitional Provisions for In-Progress Projects

Minister McClay also acknowledged that some landowners had begun the process of afforestation prior to the 4 December 2024 announcement. In such cases, transitional measures will apply. Landowners who can provide qualifying evidence of a forestry investment already underway may be granted exemptions or alternative support to account for their planning and commitments.

“These sensible rules will give certainty to rural communities while providing clarity for foresters,” McClay noted. “We want to ensure that the transition to a lower-carbon economy does not come at the cost of our rural communities or our ability to produce food.”

Background and Outlook

The Government’s approach reflects increasing concern over the rapid expansion of exotic forestry on pastoral land — often driven by carbon offset schemes. While forest planting is a vital part of New Zealand’s emissions reduction strategy, policymakers have become wary of unintended consequences such as rural depopulation, loss of livestock production, and strain on local economies.

Industry groups and rural stakeholders have expressed cautious optimism about the changes. The caps and partial land-use allowances are seen as a middle ground between climate objectives and agricultural sustainability.

As the legislation moves through Cabinet and eventually Parliament, more detailed guidance and compliance mechanisms are expected to follow. For now, the confirmation of the 4 December 2024 implementation date provides a crucial timeline for landowners, farmers, and forestry investors alike.