Alliance Group told staff on Friday it planned to fully close its meat processing plant in Timaru. Federated Farmers said land use change was to blame, saying farms were being converted into carbon forests at alarming rates.
The New Zealand Forest Owners Association said the area of production forestry across the country had decreased in the last 20 years, but Beef + Lamb New Zealand said focusing on total forestry area overlooked the impact of recent land-use change on the sector.
Statistics from Te Uru Rākau - New Zealand Forest Service show there was 1,696,604 hectares of forestry across the country in 2019. The total area had grown from 1,176,614ha in 1990 peaking at 1,827,339ha in 2003 but had fallen since then, with the same trend observed in Canterbury.
Agricultural and horticultural land use data from Statistics NZ showed while the area devoted to sheep farming nationally had decreased over time (5,779,173ha in 2002 to 4,101,801ha in 2019), it remained higher than the total production area of forestry. Meanwhile, the area of land devoted to dairy in the region had increased over the same period (1,230,484ha in 2002 to 2,221,459ha in 2019).
Forest Owners Association acting chief executive Brendan Gould said those statistics did not show forestry was responsible for the reduction in sheep farming, nor the closure of regional meat works, given forestry was on the decline in Canterbury and at its lowest point in a decade.
"Forest planting currently still hasn't reached the levels it was at in the early 2000s ... and from a plantation forestry estate, we are still 70,000ha smaller than we were 70 years ago."
He said land use change was likely having an impact, but it was not just forestry that was responsible.
"In Canterbury, the area devoted to dairy has increased significantly over the last decade and that aligns with some of the feedback that we have been getting from our forest owners that afforestation rates have declined due to landowners prioritising land use towards pastoral farming."
Gould said the organisation was saddened to hear of the proposed Smithfield closure, which highlighted the pressure being felt across the primary industry sector, evident given the recent closures of the two Winstone Pulp International mills near Ohakune and the Oji Fibre Solutions mill in Auckland.
"Much of New Zealand's food and fibre sector is hurting right now with reduced export demand, increased regulation and compliance costs, staff shortages and also some of highest power prices in the OECD."
He said forest owners were supportive of integrated land use approaches where farming and forestry co-existed.
"We certainly support landowners having the right to make decisions about how they use their land to their benefit."
Meanwhile, Beef + Lamb New Zealand chairperson Kate Acland said an analysis of farm title sales since 2017 showed nearly 300,000ha of sheep and beef whole farms had been sold to be converted into forestry.
"We know that for every 100,000ha of productive sheep and beef farmland sold, just under one million stock units are displaced and effectively gone from the sector."
Statistics NZ's latest figures shows that New Zealand sheep numbers have declined since 2017 by 12 percent (3.2 million).
"While there may have been less conversion in Canterbury, there has been significant conversion in parts of Otago and the ripple effects of land use change has consequences for capacity in the supply chain for each island."
Acland said despite the reduction of land area in forestry production since 2003, it was unlikely to go back to being farmed for sheep and beef, so the focus on land-use change was justified.
She said the impact of the Emissions Trading Scheme (ETS) on land-use change since the government signalled it was going to lift the cap on the carbon price was clear as prior to 2018, only a few thousand hectares of sheep and beef farms were sold to forestry each year.
In 2017, 7000ha of sheep and beef farms were sold to forestry and preliminary figures for 2022 showed that had increased to over 70,000ha.
"While the returns over a 30-year period between sheep and beef farming and forestry alone are quite similar, the ETS price significantly distorts forestry returns and therefore how much forestry can pay for sheep and beef farmland."
