Carbon Sink Deals Down The Gurgler

By Richard Rennie

NZ Farmers Weekly

A carbon company has reneged on farm deals valued over $50 million in
the Central North Island and could face charges under the Fair Trading
Act from 15 affected farmers.

Last month New Zealand Farmers Weekly reported on CO2 Farming's efforts
to secure hill country land in the Taumarunui, Taihape and Wairarapa
region to plant in trees and sell the carbon credits on the open market.

"CO2 Farming has never paid any of the money owing to buy either my
property or any of the others owned by 14 other farmers," said Janette
Walker of Pongaroa. 

Walker had originally intended to sell the property to CO2 Farming,
headed up by Robin Lewis and his partner Julie Chegwidden of Rotorua. 

Making no secret of her financial difficulties, Walker has been
responsible for organising the Farmers Weekly banker survey, run in

She has been under bank pressure to sell her 840ha property and said the
Lewis offer was unconditional, taking an invoice for the deposit,
claiming the GST back and using that as payment toward the property. 

"However it seems the IRD have not played ball on this, once they
discovered that CO2 Farming could not show any other financial backing."

The IRD would not comment on whether an investigation was being launched
into CO2 Farming. 

Lewis has refused to answer any questions put to him by the Farmers
Weekly about the failed deals. 

Walker said she and other farmers were wary of the deal, but many had
been under pressure to reduce debt in a flat land-market and had to
consider the Lewis offer. 

"The first offer of $2.35 million made at the beginning of 2008 fell
over and we missed the due diligence period for research and planting.
However, I grew wary when the next offer came along last October." 

She said she had to sign a confidentiality agreement, but her concerns
were assuaged when Lewis told her Mighty River Power had agreed to buy
the carbon credits earned off the farms. 

"In my mind that made the deal valid and I was under pressure by the
bank to do all I could to be seen to be looking for the best offer on
the farm. There were no other offers on the table." 

A Mighty River Power spokesman said the power generation company had
entered into no deal with Lewis and CO2 Farming. 

CO2 Farming's failure to close the deals also has wider implications for
the whole forestry industry. 

Forest nurseries have been left with nine million pinus radiate
seedlings by the collapse of CO2 Farming. 

Cambridge Forest and Native Nursery principal Jonathan Sundano said four
nurseries have been caught with unsold seedlings, which need to be
planted out between now and the end of winter. 

Lewis and his partner Julie Chedwiggen had walked away from a four
million seedlings order "without explanation; no letter, call or email".

"CO2 Farming created expectations everywhere, claiming to have signed up
$110 million of farms, but it appears at no time did it have money or
backers," Sudano said. 

"Some of ours will have to be ploughed under, but we will advertise the
rest for sale," he said. 

Sudano said recently the Emissions Trading Scheme (ETS) had sparked
widespread carbon sequestration plans, with many intending investors
inquiring about the availability of seedlings (Farmers Weekly, March 1).

But when firm orders, deposits or payments were required, these ETS
schemes often vaporised. 

Janette Walker is gathering emails from the 15 affected farming families
and has been advised that CO2 Farming has breached the Fair Trading Act
and they (the farm owners) have grounds for action. 

Affected farmers have had their seasonal patterns disrupted.
Anticipating the deals being closed before the farming year, some have
sold off capital stock and engaged in widespread weed control. 

The owner of Split Rock Station, an 1800ha property also on CO2
Farming's shopping list, said his complaints about the deal were similar
to Walker's and he would be joining the action.  "At least we did not
de-stock in order to get ready for planting like some farmers have done,
so it is business as usual for us," he said. 

Another affected farming family, the Duncans of Taumarunui, have been
awaiting some sort of payment on their Makahiwi Station for several
months, with no result. 

The Bayleys real estate agent responsible for the deals would not
comment on CO2 Farming's failure.

(c) NewsRom 2010

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