PKE under pressure

New Zealand farmers buy one third of the global production of palm kernel expeller (PKE) as a feed stock for its cattle, but increasing consumer awareness may increase pressure to find alternatives.

Primary industry: The cattle grazing on Mike Barton's Tihoi farm, west of Lake Taupo, are fed on grass, and nothing but grass.

It's a decision made by Barton and the three other farmers growing 'Taupo Beef' - a product sold to the best restaurants in the district - based on their experience that if educated, consumers will pay more for sustainably-reared meat where the farms on which they were raised don't contribute to the pollution of Lake Taupo and the stock feed doesn't contribute to deforestation.

In Barton's case, where stock numbers are restricted around the lake, not using PKE as a feed stock is made easier; he can source feed on his - or neighbouring - properties.

But for dairy farmers the intensification of their herds to remain competitive means extra feed is required. As Dairy NZ strategy and investment leader Bruce Thorrold explains, PKE is "a very good supplementary feed; it's a good price, it's safe, it keeps capital requirements down."

But the problem lies overseas, where the blame for deforestation in Indonesia and Malaysia lies with the palm oil industry, which is clearing rainforests to make way for the plantations.

New Zealand imported over 1.4 million tonnes of PKE in the 2010/2011 seasonal year (Statistics New Zealand), which is over a third of the global trade (which stands at 4.86 million tonnes, according to the United States Department of Agriculture Foreign Agricultural Service).

A report released by Greenpeace New Zealand in 2011 said that the PKE imported into New Zealand during that same dairy season produced up to 8.9 million tonnes of greenhouse gas emissions, equivalent to 12 per cent of New Zealand's entire annual greenhouse gas emissions. Yet Greenpeace does not know of a single dairy farmer in New Zealand who refuses to use PKE on environmental grounds.

Both Dairy NZ and Fonterra disagree with environmentalists who say that PKE is a co-product, rather than a waste product. Fonterra claims that PKE makes up just two percent of the revenue from oil palms, but that is still a large number.

Change is perhaps going to come from increased consumer awareness and demand. Barton says: "We have had feedback from customers that they would prefer food made without palm kernel. There is also an increasing body of science that grass-fed animals have higher Omega 3 levels."

Barton says that dairy farmers are facing a cost spiral. "In real terms they are earning less than they were 15 years ago. So they intensify. They're running more animals than they can grow grass for." But he says farmers have to take responsibility too. "The greenhouse gas issues associated with its [PKE] co-production need to be embedded in its end use."

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