New Zealand Farmers Look to Carbon Credits

In New Zealand, sheep outnumber humans 9 to 1, and this crucial sector of the economy is now proving profitable in more then just wool and lamp chops. Sheep farmers are planting tree farms that could prove valuable when the country's agricultural sector is forced to pay for greenhouse gas emissions starting in 2015.

Prime Minister John Key's government in Wellington has said a carbon trading regime will boost the country's green credentials and clout in global climate talks. The government's carbon program is also a welcome opportunity for some sheep farmers, struggling against slumping wool prices, drought, and competition for land from the dairy and lumber industries, to diversify, says Neil Walker, a forester in the Taranaki region of New Zealand's North Island.

Although New Zealand was the world's largest sheep meat exporter last year, the number of sheep have fallen from a 1982 peak of 70 million to about 40 million, official data show. New Zealand's carbon trading system requires polluting industries to buy credits that allow them to emit certain amounts of greenhouse gases, while businesses that reduce emissions can earn credits and sell them to polluters.

Farmers who convert their land from sheep grazing to planting trees could add $172 per acre in value each year to their land holdings, says David Evison, a senior lecturer at the University of Canterbury's New Zealand School of Forestry. Forests planted for carbon credits may increase to 74,000 acres, or about 0.27 percent of all pasture and grass land a year, compared with about 8,650 acres in 2009, the government estimates. "It turns forestry into a cash-flow business," says Evison.

Edwyn Kight, a farmer on New Zealand's North Island, sees the upside from the shift to forestry. He says carbon farming could improve the profitability of hill country property if converted to tree farms. "That land is not marginally economic for raising sheep and cattle, it's totally uneconomic," Kight says from his nearly 8,900-acre Akitio Station. He's planted about 1,500 acres of forest since carbon trading began and plans almost 2,000 more.

---

To find out more about investment opportunities in carbon farming talk to 360 Invest Group today.