What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The company says Fonterra’s target supports its own ambition to reduce greenhouse gas emissions throughout its value chain.
Fonterra is targeting a 30% intensity reduction in on-farm emissions by 2030 – from a 2018 baseline which will see it further reduce the emissions profile of its products.
Of Fonterra’s emissions, 86% come from on-farm, and the new target is seeking to reduce emissions intensity by tonne of FPCM (fat and protein corrected milk) collected by Fonterra. The target is co-operative wide and not based on individual farms.
Fonterra has claimed that major consumers like Nestlé are pushing the co-operative to reduce its emissions footprint. Farmers are being told that customers like Nestlé could turn to other processors if Fonterra doesn’t come to the party.
Nestlé New Zealand chief executive Jennifer Chappell says that as a major buyer of New Zealand dairy ingredients, Nestlé continues to work with processors such as Fonterra to support farmers in adopting regenerative agriculture practices that help reduce emissions.
“This move by Fonterra will encourage even greater action by farmers, researchers and policy makers in support of a just transition for the dairy industry, which in turn, will help the industry and dairy farmers make the most of the economic opportunities presented by the shift to lower emissions,” says Chappell.
“Nestlé has sourced dairy from New Zealand for well over a hundred years. We will continue supporting farmers alongside our partners to develop new economic opportunities and reduce their greenhouse gas emissions. We do this by prioritising our sourcing from farmers engaged in lowering emissions, by providing technical support, and by paying a premium for their products.”
Nestlé released its Science Based Targets initiative-aligned Net Zero Roadmap in 2020, committing the company to reduce its absolute emissions by 20% by 2025 and 50% by 2030 on the way to net zero by 2050, even as the company grows.
“Climate change is one of society’s greatest challenges, and requires all of us to act with urgency. As dairy is our single biggest source of greenhouse gas emissions we must work with dairy farmers and their communities towards our goal while supporting a just transition. For this reason, we have over 100 pilot projects with partners around the world, including in New Zealand,” says Chappell.
