Bill before Parliament targets large-scale farm-to-forest conversions

McClay explained that the bill aims to restrict wholesale farmland conversions to exotic forestry by preventing land use classification (LUC) 1–5 land areas from entering the emissions trading scheme (ETS) and limiting new ETS registrations on LUC 6 land. 

“This Government is backing farmers, restoring balance, and making sure the ETS doesn’t come at the cost of New Zealand’s rural economy,” McClay added in the news release. “This policy is pro-farming, pro-food production, pro-commercial forestry and pro-rural New Zealand.” 

McClay added that the proposed law seeks to support farmers’ diversification efforts through permitting a maximum of 25 percent of a farm to venture into trees, while halting “the kind of blanket ETS planting that’s been gutting rural communities in places like the East Coast, Wairarapa, the King Country, and Southland.” 

New restrictions

According to the government’s news release, the bill aims to: 

• Limit farm conversions to exotic ETS forests on high-to-medium versatility farmland (LUC classes 1–6) 
• Annually restrict 15,000 hectares to exotic conversions on medium versatility farmland (LUC class 6) 
• Annually allocate 15,000 hectares for LUC 6 farmland via a ballot system reserving a quota for small block holders, with the first ballot expected to occur in mid-2026 
• Permit the planting of up to 25 percent of a farm’s LUC 1–6 land in exotic ETS forests so that farmers can stay flexible 
• Safeguard specified categories of Māori-owned land under treaty obligations 
• Propose time-limited transitional exemptions in rare cases involving afforestation processes pending before the original announcement of the legislative changes on 4 December 2024 
• Require applicants seeking transitional exemptions to provide enough evidence supporting that they made qualifying forestry investments between 1 January 2021 and 4 December 2024 
• Prevent transactions initiated after this date from registering in the ETS 
• Obligate applicants to show their investments’ connections to the specific LUC class 1–6 land that they seek to register in the ETS 
• Register 25 percent of the LUC 1–6 land against the property title to limit even more planting due to subdivision