Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
Depending on the number of farmers that meet these levels, Fonterra expects the additional payment to farmers to be about 1-2 cents per kgMS.
The Co-operative Difference framework sets out the farming and business practices that will help farmers to stay at the forefront, such as quality, safety, and sustainability. It has three levels: the start, the mid-point, and the summit. The framework also rewards farmers that meet certain criteria across five focus areas – environment, animals, people & community, milk, and co-op & prosperity.
The agreement between Fonterra and Nestle comes one year on from the unveiling of a partnership designed to help reduce on-farm emissions. Fonterra recently announced an ambition of being net zero by 2050, with 2030 targets including a 30% intensity reduction in on-farm emissions. Some Fonterra farmers have questioned whether the extra work around sustainability will result in premium payment for their milk.
Fonterra chief executive Miles Hurrell welcomes Nestlé’s continued support of farmers who are making continuous improvement with on-farm sustainability.
“We are delighted to work in partnership with Nestlé to recognise the co-op’s farmers who are at the forefront of industry best practice.
“By working in partnership, we can grow sustainably together as we aim to produce lower carbon milk into the future,” says Hurrell.
Globally, Nestlé is investing $2.25 billion by 2025 to advance regenerative agriculture and reduce emissions, aiming to source 50% of their ingredients through regenerative agriculture methods by 2030.
Nestlé New Zealand chief executive Jennifer Chappell says their success relies not just on working with processors, but also farmers who share this vision.
“Nestlé has sourced dairy from New Zealand for well over a hundred years and we will continue supporting farmers, alongside our partners, to develop new economic opportunities and reduce their greenhouse gas emissions.”
The Swiss-based food company has also welcomed Fonterra’s scope three emission targets.
“This move 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.
The partnership between Fonterra and Nestlé involves multiple projects, including NZ’s first net zero farm.
Fonterra and Nestlé are working with co-partner Dairy Trust Taranaki to test solutions on a Fonterra-owned farm in Taranaki to see if, over the next 5-10 years, it can become the first commercially viable net zero carbon dairy farm in New Zealand.
