Fonterra’s new incentives for farmers to reduce on-farm emissions

Photo / Christine Cornege

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The Country Sport Breakfast catches up with the team at Fonterra. Today, host Brian Kelly is joined by Charlotte Rutherford, Director of Sustainability.

Kelly said earlier this week Fonterra announced new incentives for farmers to reduce on-farm emissions - could you tell us more about these incentives?

“We can break these incentives into three parts,” Rutherford said.

“From next season, we’re introducing a 1-5 cent per kgMS Emissions Excellence payment for farms that meet a new emissions achievement in our existing Co-operative Difference framework.

“We’ve also announced two new incentives that are customer-funded, and these will be split between on-farm solutions to improve emissions efficiency on-farm and an Emissions Incentive payment of between 10-25 cents per kgMS for farms with the lowest emissions footprints in the co-op.

“That emission incentive will go to about 300 -350 farmers, whereas the on-farm solutions will stretch much more widely to up to 6000 to 7000 farmers.”

To be eligible for the 1-5 cent Emissions Excellence payment, farmers need to achieve the Co-operative Difference and their emissions from farming activities need to be lower than the co-op’s 2017/18 baseline year.

Farmers who achieve the Co-operative Difference will also be eligible for access to on-farm tools or services.

The extra 10-25 cents Emissions Incentive payment will go to farmers who achieve the Co-operative Difference and have one of the lowest emissions footprints in the co-op, around 30% lower than the average farm.

“Why has the co-op introduced funding from customers?” Kelly asked.

“Customers have strong ambitions themselves in this area, and they have set targets for 2030 that they need to achieve,” Rutherford said.

“We have built strong relationships with our strategic customers, Mars and Nestlé, who value the hard work farmers put into producing sustainable, high-quality milk.”

The new incentives on offer are a direct acknowledgement of the progress farmers are making to improve emissions efficiencies on-farm and will support further gains in this area.

At the same time, these customers want access to higher volumes of low-emissions milk, which helps them progress towards their own sustainability targets.

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“It is great that farmers are getting recognised for the hard work they are doing to reduce their on-farm emissions and I reckon this will help Fonterra reach its on-farm emissions target too,” Kelly said.

“These incentives help us progress towards achieving our on-farm emissions target and at the same time, deliver the highest returns for our farmer shareholders’ milk,” Rutherford said.

“They are a great example of our strategy in action, delivering the strongest farmer offering and building on our sustainability position.”