Meat & Livestock News

New Investment Criteria Impact Foreign Forestry Investments in New Zealand


  • New standards for foreign investors in New Zealand have led to more applications being declined than approved for farmland conversion to forestry.
  • The Overseas Investment Act amendment in August 2022 introduced a “benefit to NZ” test, raising the threshold for approval.
  • LINZ manages the Crown pastoral estate, with new reforms introduced last year to balance ecological and cultural values, despite pastoral lessees’ concerns about restrictions.

Recent changes in New Zealand’s investment criteria have seen a notable decrease in the approval rate of applications by foreign forestry companies seeking to buy farmland for conversion.

According to a briefing by Land Information New Zealand (LINZ) to the Minister for Land Information, Chris Penk, the stricter standards introduced have resulted in seven applications being declined and only four approved up to mid-October last year.

The amendment to the Overseas Investment Act in August 2022 has introduced a more rigorous “benefit to NZ” test for foreign investors. This test requires that the conversion of farmland to forestry must demonstrate a significant benefit to the country, a criterion that has led to a reduction in successful forestry investment applications.

Officials explained that the new test allows decision-makers to weigh the sensitivity of the land acquisition against the benefits of its conversion to forestry more heavily.

Despite the tighter restrictions on acquiring farmland for forestry, foreign investors can still apply for consent to acquire existing forests under the special forestry test. LINZ, which also oversees the Crown pastoral estate under the Crown Pastoral Land Act 1998, is tasked with managing and approving various land-related activities, including fencing, farm track creation, and the issuance of easements and recreational permits on pastoral leases.

The introduction of the Crown Pastoral Land Reform Act by the previous government aims to ensure a balance between the ecological, landscape, cultural, heritage, and scientific values of the land. This legislation has introduced a requirement for consultation with iwi on new land developments or improvements and established infringement fees for non-compliance.

However, pastoral lessees have expressed concerns that the new regulations are overly restrictive and lack practicality. The final components of these reforms, including a strategic intentions document and performance reporting mechanisms for the chief executive and the commissioner, are set to be implemented this year, marking a significant shift in the management and oversight of New Zealand’s pastoral lands.