New Law Protects Productive Farmland, Balances Forestry and Food Production

“Through this Act, the Government delivered on protecting food production, supporting rural communities, and ensuring foresters can continue to invest with confidence,” Minister McClay said.

New Zealand’s most fertile farmland will now receive stronger protection under new legislation that limits large-scale farm-to-forest conversions — a move that fulfills a key campaign promise from the Coalition Government.

Agriculture and Forestry Minister Todd McClay announced that the Climate Change Response (Emissions Trading Scheme – Forestry Conversion) Amendment Act officially came into force on 31 October 2025, introducing new restrictions on what land can enter the Emissions Trading Scheme (ETS).

The change represents a major policy shift aimed at preserving high-quality food-producing land, supporting rural communities, and ensuring that the forestry sector continues to operate sustainably and confidently within a rebalanced environmental framework.

“Through this Act, the Government delivered on protecting food production, supporting rural communities, and ensuring foresters can continue to invest with confidence,” Minister McClay said.

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Protecting New Zealand’s Most Productive Land

Under the new legislation, exotic forests are restricted from entering the ETS on land classified as Land Use Capability (LUC) classes 1–6 — which encompass New Zealand’s most productive soils.

However, the Act allows targeted exemptions, including for Māori-owned land and erosion-prone areas, where forestry may provide economic and environmental benefits.

This means farmers will retain the flexibility to plant trees on suitable areas of their land, but large-scale conversions of prime agricultural land into carbon forestry will now be subject to stricter scrutiny.

“Farming and forestry are both vital to our regional economies,” McClay said. “We’re ensuring a balanced approach that supports both sectors to create jobs and grow exports without compromising food production.”

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Transitional Provisions and Fair Adjustment

To ensure fairness for investors already planning forestry projects, the Government has introduced transitional exemptions for those who can demonstrate a clear interest in the land and a qualifying forestry investment made between 1 January 2021 and 4 December 2024.

These transitional measures provide certainty and continuity for projects already in motion before the law took effect. They also allow time for landowners and forest developers to adjust business models and investment decisions under the new rules.

The Ministry for Primary Industries (MPI) will oversee the implementation of these exemptions and ensure the transition is transparent and well-communicated.

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A Balancing Act Between Forestry and Food Production

The new restrictions are designed to address concerns that high volumes of farm-to-forest conversions, particularly for carbon farming, were threatening the sustainability of rural communities, reducing livestock numbers, and driving up land prices in agricultural regions.

The policy aims to strike a balance between maintaining New Zealand’s agricultural output — particularly in dairy, meat, and horticulture — and continuing to support forestry as a critical component of the export economy and carbon management strategy.

“This legislation is about balance and sustainability,” McClay said. “We’re protecting our most productive farmland for food production while ensuring forestry remains a profitable and viable sector.”

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Industry Guidance and Support

The Ministry for Primary Industries (MPI) has taken steps to ensure landowners and investors understand how the new law affects them. MPI has:

• Hosted sector-wide webinars explaining the new ETS restrictions.

• Updated its official website with detailed guidance documents and eligibility criteria.

• Established dedicated support teams to provide one-on-one advice for farmers, foresters, and iwi groups seeking clarity on exemptions or compliance.

These measures are part of the Government’s commitment to transparent implementation and clear communication with affected stakeholders.

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Future of Farming and Forestry in Partnership

The new policy underscores the Government’s broader commitment to sustainable land use management and regional economic growth. By ensuring that productive farmland remains available for agriculture while enabling targeted forestry development, officials hope to foster a more resilient rural economy.

“New Zealand’s future depends on the strength of both our farming and forestry sectors,” McClay said. “This Government is backing both — supporting farmers to keep producing world-class food, and foresters to grow a high-value, sustainable export industry.”

The Climate Change Response (ETS – Forestry Conversion) Amendment Act reflects the Government’s intent to fine-tune climate policy to ensure it works for both the environment and local economies, rather than one at the expense of the other.

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Looking Ahead

The changes are expected to be closely monitored by the Government and sector stakeholders over the coming years to assess their impact on land use, rural employment, and investment patterns.

MPI’s ongoing support, including regional workshops and advisory services, will ensure that farmers, foresters, and Māori landowners continue to have the tools and information needed to make informed, sustainable decisions.

For rural communities across New Zealand, this new law represents not just regulation — but reassurance that the country’s most fertile land will remain dedicated to producing food for generations to come.