New Zealand dairy giant Fonterra has said up to NZ$0.10 per kg of milk solids (MS) of its farmgate milk price payout will be directly linked to farmers meeting a number of sustainability targets on their farms from June this year.

Fonterra, the world’s largest dairy exporter, said up to 10c/kg of MS of a farmers annual milk price (less than 0.5c/litre in Irish terms) from the start of the 2021/22 milking season in June this year will be determined by the farm’s sustainability credentials and milk quality.

This 10c/kg of MS sustainability payment will not be paid out from an extra pool of money.

Instead, Fonterra plans to redistribute the total amount of money it has for paying farmers for their milk to reward farmers who are implementing sustainable farming practices on their farms and incentivise other to follow suit.

Standards

In order to achieve the 10c/kg of MS sustainability bonus, Fonterra milk suppliers must be able to demonstrate a number of standards related to the environment, animal welfare and milk quality.

These include:

  • Nitrogen input is equal to or lower than 138kg of nitrogen per hectare.
  • Chemicals and plastics are managed through an approved recycling scheme.

    • No discharge of slurry effluent to water courses.

  • The farm uses at least 80% of feed grown on the farm throughout the year.
  • A completed health and nutrition plan for cows.
  • Annual reporting of farm sustainability statistics.

    • These targets will be updated every year by Fonterra, with maximum nitrogen input levels likely to be cut each year.

    “The new payment recognises farmers who are already going above and beyond because they’ve innovated and invested early, and it also offers farmers more encouragement for taking the steps required to meet the changing expectations of customers and communities, both today and into the future,” said Fonterra’s Richard Allen.