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Endless shades of green - calculating the economic thresholds between farming and forestry

Authors: Lochie MacGillivray, Phil Tither
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2020, Issue N.Z.J.For. 65(2) 2020, pp 16-20, Aug 2020

Abstract: Land use options have been evaluated to explore at which point it become economically worthwhile to plant pastoral land in trees by considering the relative returns between production forestry and pastoral options in the Hawke’s Bay. The work indicates that land carrying less than 6.5 stock units/ha (su ha-1) would produce higher returns in production forestry. If carbon is included at $25 t-1 then the breakeven is closer to 13 su ha-1 for the first rotation. This would mean that Land Use Capability (LUC) class VI and the better class VII is more viable in the long term for pastoral production than for production forestry. A high-resolution land inventory with an updated legend, reflecting more modern livestock (and possibly forestry) stocking and production systems, would assist land managers allocating land between the farming, forestry (and even permanent planting) as they seek to maximise their earnings before interest and tax (EBIT).