Fonterra explains emissions target
The 30% on-farm reduction is required to futureproof the dairy giant’s exports, Sharon Davis reports.
Fonterra’s goal of a 30 per cent intensity reduction in onfarm emissions comes after a 10-month consultation with the 9000 dairy farmers who are part of the co-operative.
Mid Canterbury Federated Farmers dairy chairman Nick Giera said the new targets would affect each farm differently.
For example, Mid-Canterbury farmers who had access to irrigation water and good soils for growing grass would be less impacted than regions that relied on imported feed, he said.
While Giera felt no one would be “happy” with the targets the good thing was the focus on emissions intensity.
“That is a proxy for efficiency — and New Zealand’s dairy farmers are one of the most emissions efficient producers in the world.”
Giera said that, if the target was to reduce total emissions, then milk production would fall and the gap in the global market would be filled by less-efficient milk producers.
Dorie dairy farmer and Fonterra co-operative councillor Mark Cressey said the announcement did not come as a surprise.
He said Fonterra announced plans to introduce an emissions target 12 months ago and had been talking to farmers all year explaining what competitors were doing. The 30 per cent was similar to competitors’ targets but would be a challenge.
“Most of it comes down to on-farm efficiencies and new and novel technology.”
If a farmer got rid of the poorest performing 10 per cent of the herd, they would come close to the on-farm emission target.
Farmers had achieved 2 per cent of the required 7 per cent reduction in on-farm emissions since 2018 through normal efficiency gains — when there wasn’t a target.
Now farmers would need to make changes a bit faster, he said.
Cressey said the reductions from new technology was the biggest grey area: “Novel technology has to come in at an affordable price.”
Cressey said the emissions target was a consequence of asking Fonterra to sell New Zealand milk at top prices.
The good work already done by farmers does count. — Peter McBride, Fonterra
“If we want that we have to supply what the customers are demanding,” he said.
Shareholders were told at a meeting in Methven that the emissions target was needed to future-proof the business as customers and lenders were increasingly interested in sustainability and carbon emissions.
Fonterra chief executive Miles Hurrell told shareholders that “sustainability was the top concern for customers overseas” and Fonterra’s emissions target would help “future-proof the co-operative and your business”.
Fonterra’s 30 per cent reduction was co-operative-wide and would not be measured on a farm-by-farm basis.
However, every member had a part to play.
Hurrell said every farm would be expected to have an action plan and the plan would look different for each farm.
The co-op hopes to reduce emission intensity per tonne of fat and protein-corrected milk collected by Fonterra.
The emissions target was from a 2018 baseline through to 2030, and progress made since 2018 would be taken into account.
Hurrell said Fonterra had already seen a 2 per cent on-farm emissions savings across the co-operative since 2018.
“The good work already done by farmers does count,” Fonterra chairman Peter McBride said.
He promised that the co-operative would work alongside farmers, not against them, to achieve the target.
McBride said the need for an onfarm emissions target did not change with the election — it was driven by Fonterra’s key customers. “Sustainability and emissions are the
new trade barriers.”
Access to funding and capital from banks could also depend on farm emissions. “Many banks have already set emission reduction targets.”
McBride said a focus on sustainability and emissions was the “commercial reality of doing business” and would “catch up with everyone eventually”.
In response to a shareholder question whether the emissions target was based on science or market politics, Hurrell said the target was “driven by what our customers are seeking”.
McBride said it was science-based but definitely driven by customers and the future need to source capital.
Achieving the target would require a combination of sharing best farming practices and technology to reduce emissions, he said.
Fonterra co-operative council chairman John Stevenson said there had been an increase in tension as the focus on sustainability had encouraged a look “behind the farm gate”.
Fonterra had met all but one of the 10 performance measures — the farmgate milk price — in the last year.
Stevenson said there was a drop in shareholder confidence in both Fonterra and the future of the dairy industry. However, he noted some of the causes of that would be outside Fonterra’s influence.
Fonterra expects to reduce emissions by about 22 per cent through improved farm practices, new technology and offsetting emissions with planting.
The remaining 8 per cent would come from no longer needing to account for emissions created by land use change to dairy farms earlier this century, by the time 2030 rolls around.
Greenpeace Aotearoa has labelled Fonterra’s plans as “woefully insufficient”, saying there are no real measures to reduce emissions. ■