Sustainability credentials pay off

Mike Borrie says certified grass-fed milk commands premium prices overseas.

Farmers with top “sustainability credentials” can claim a larger share of Fonterra’s milk payments, following the introduction of a new payment framework last month.

Those that qualify will be paid 10 cents more per kilogram of milk solids from Fonterra’s payment pool than farmers who do not qualify.

Fonterra Northland regional head Mike Borrie says the requirements will be a stretch for some farmers, but the new framework is about raising the bar.

There are several “sustainability pillars”, each with their own criteria. For the environmental pillar, farmers must achieve at least four out of five criteria.

To meet criteria, a farm must be in the 75th percentile for nitrogen surplus, participate in a plastic recycling programme, not discharge effluent into waterways and have a farm environment plan.

In addition, 80 per cent of animal feed needs to be farm grown in New Zealand, rather than imported supplements such as soy PKE.

For the other sustainability pillars, a farmer will need to work with a vet to formulate an animal wellbeing plan.

Farm owners will also have to complete a DairyNZ workplace 360 assessment and achieve 100 per cent of the foundation level. It assesses worker welfare, conditions and health and safety practice.

Another requirement is for farmers to complete their annual Farm Dairy Records for treatment and welfare on time. Mike says these records are what Fonterra bases its “trusted goodness” brand campaign on overseas.

The sustainability pillars are worth seven cents of the payment, and unlock a three cent per kg of milk solids payment for producing high quality milk. A farmer must produce “excellent milk quality” for a minimum of 30 days during a season.

Mike hopes that 10 cents will be enough of a motivator for farmers to strive for. He says for a typical farmer producing 100,000kgs of milk solids in a season, it will mean $10,000.

He acknowledges that from a Northland point of view, it might be difficult for some farmers.

“But it hasn’t been dreamed up. It is linked to what consumers are expecting,” he says.

“We want farmers to understand that what was done 20 years ago is no longer appropriate. The option to do nothing is not an option.”

The current Farmgate Milk Price forecast for the 2021/22 season is an average payment of $7.25 to $8.75 per kg of milk solids.

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