European investors big fans of billion trees project

New Zealand’s billion trees planting project has attracted the eye of some of the world’s most deep-pocketed timber sector players interested in growing much more than raw radiata logs

Article published on NZ Herald website, 28 March 2019 

A director of Kronospan, the world’s largest manufacturer of wood-based boards and panels, was among European visitors recently to New Zealand forests and the Beehive office of Forestry and Regional Development Minister Shane Jones, as they explored investment opportunities.

“One billion trees by 2028” is Jones’ brainchild. He wants one billion trees – including native trees – planted between 2018 and 2028, with support funding available from the Government. It is estimated about half that number will be achieved by existing industry planting programmes.

Two of his visitors were specialist forestry and agriculture investors from Germany whose company GlenSilva last year formed a joint venture, Kauri Forestry, with New Zealand farm and forest manager Craigmore Sustainables.

Kauri is awaiting word from the Overseas Investment Office on whether it’s cleared to buy 5000 hectares of Wairarapa and Northland land to further its programme of growing sustainable native tree and radiata forests for commercial timber use.

GlenSilva founding partners Matthias Graf von Westphalen and Josef Naegel have been visiting New Zealand and investing here for several years – and introducing other European investors to primary industry here.

Via GlenSilva, or in partnership with Craigmore, the pair have invested more than $65 million in agriculture and forestry in the North Island.

Coming from Europe, where commercial forests and farms are many hundreds of years old and intergenerationally-owned and managed, the pair are big fans of the Government’s billion trees project for its drive to build a long-term, sustainable forestry industry, its support for ecosystems, and its potential contribution to climate change management through this country’s Emissions Trading Scheme (ETS).

Graf von Westphalen called one billion trees a “beautiful” programme.

Also impressed is Dr Christian Golsner of Kronospan, a E4 billion ($6.6b) revenue Austrian family company founded 122 years ago.

“We welcome the Government’s long-term thinking for the benefit of the current and the next generation. The one billion trees programme is an excellent initiative to preserve our precious nature for future generations,” Golsner said.

“We are well-positioned to support this programme to help realise those ambition plans and become a significant investor ourselves.”

Jones said his visitors were prepared to invest in a multi-generational business and could see a return on assets from forestry “over a long period of time, they’re not just chasing the fast buck … in contrast to the quick buck thinking that has dominated the New Zealand log trade”.

Jones said the group was not seeking money from the Provincial Growth Fund he oversees.

“These were not people who came to my office hustling for dough. They came to get a sense, at a political level, of do they have someone (in New Zealand) they can report back to Europe on in a positive way, who is not only deeply committed in terms of the political mission of our project but who has a good grasp of the multi-faceted dimensions of the billion tree strategy.”

Graf von Westphalen said, “Christian was impressed – we all were – that not only are you minimising your carbon footprint but giving more scope to forestry.

“Everyone is excited about biomass. Being excited is one thing but preserving it for future generations is more important. New Zealand has made a very good impression. We would like to invest in forestry as a first step (with a view to) access growing markets in Asia such as Indonesia – not only China. Some countries are overlooked (as export markets).”

Craigmore chief executive Che Charteris said he and the Europeans weren’t looking for Government funding.

“It’s the policy setting (we like), the emissions trading scheme. It means the Government likes forestry.”

Craigmore was established in 2008 by two New Zealand family farmers – Forbes Elworthy and Mark Cox. Today it manages dairy, grazing, forestry and horticulture operations spanning more than 15,000 hectares in both islands.

It was the largest planter of forest in the first stages of the ETS and is an exporter of fresh produce. It has an office in the UK to find capital partners to invest in New Zealand and is developing the country’s biggest apple orchard after getting the tick from the Overseas Investment Office.

The Kauri joint venture will focus mostly on afforestation, with some investment in existing trees, but the new company is keen to plant more than the New Zealand plantation staple pinus radiata.

It is already growing native trees, mainly kauri and totara, for added-value commercial use, in cooperation with Maori landowners in Northland.

Mixed forests have many advantages, including being a blue ribbon ecosystem for birds and insects, said Graf von Westphalen.

“There’s a core of radiata (here) you can’t escape but there’s much more detail to be applied as to what you wrap around that to make a forest everyone is proud of rather than just another radiata forest.

“Mixed stands are stronger against disease and against the wind, so in the end you get a more healthy forest. Not many products come out of radiata but with a mixed forest 30 to 40 products can come out of it.

“Of course it’s much more difficult to manage and to live from it – but you have to do something for your local indigenous trees.”

The Europeans believe our native trees should be promoted more for use in house building, for added value products and for arts, like carving. Through Kauri, they’re also keen to plant rimu, cabbage trees, manuka and kanuka.

Charteris said his European partners are always highly amused when Kiwis say it takes too long to grow native trees. The totara takes 40 years to be ready for harvest.

Graf von Westphalen: “My family has been in agriculture and forestry for 700 years. About 300 years ago (in Germany) people started thinking about sustainability because people were driving cattle into the forests and there was no regeneration.

“Our fastest growing tree is the spruce. The rotation for that is 80 to 120 years.  Our indigenous tree in the area where I live is the beech – it takes 120 to 140 years until harvest. And we have lots and lots of oak – they take 250 years.

“It’s a generational contract. I plant for my grandchildren as my grandfather planted for me.”

Naegel said New Zealand’s ETS is a role model for other countries.

“In other areas (carbon schemes) are highly fragmented, they’re driven by NGOs (non-government organisations) and bureaucrats rather than all the components of the industry, including the operators. In Europe it’s just not existing at all.”

Naegel said GlenSilva is keen to step up the exchange of forestry knowledge between Europe and New Zealand. GlenSilva has sent an intern forestry student here and would like that to become reciprocal.

“We can learn a lot from each other.”

Charteris said Kauri takes a “moral position” on forestry.

“We will not plant any exotic forest that we will not harvest. It’s timber first – timber means jobs and regional development.

“Forestry is good for carbon but we don’t want to be planting and turning good farms into carbon sinks. Where there is flat land and land that shouldn’t be in trees, that will be farmland. We will subdivide it off.

“We will try to keep the woolsheds and the houses going. Ultimately there will be a radiata core but there will be very different looking forests.

“We are learning from these guys.”

From left, Josef Naegel, Matthias Graf von Westphalen and Che Charteris. 08 March 2019 Daily Post photograph by Stephen Parker