New Zealand imports of controversial feed supplement palm kernel expeller (PKE) fell by about one third last year, reflecting cost-cutting measures as farmers adjusted to sharply lower milk prices.
Data out this week showed PKE imports came to 1.5 million tonnes in 2016, down from a record 2.2m tonnes in 2015 and 2.12m tonnes in 2014.
Environmentalists are against the use of PKE - a by-product of the palm oil industry - because they say it promotes deforestation.
Fonterra has discouraged its use as it says it detracts from New Zealand's image as a predominantly pasture-based dairy producer.
AgriHQ dairy analyst Susan Kilsby said farmers were still very conscious of their costs, despite the Fonterra milk price improving to $6 per kg of milksolids from $3.90/kg in 2015/6 and $4.40/kg in 2014/5.