Nestlé to offer cash payments to Fonterra dairy farmers under net-zero carbon partnership

By Teodora Lyubomirova

- Last updated on GMT


Related tags Dairy Net zero Carbon emissions farming Sustainability Milk

A new agreement will see Nestlé fund an additional payment to farmers who achieve one of the three levels of Fonterra’s The Co-operative Difference framework during the 2023/24 season.

Depending on the number of farmers that meet these levels, Fonterra expects the additional payment to farmers to be about 1-2c per kilogram of milk solids (kgMs).

Nestlé and Fonterra joined forces in 2022​ to develop a ‘commercially viable net zero carbon emissions dairy farm’. Under the five-year project, the two companies would examine all aspects of farm operations to reduce carbon, with the aim of cutting emissions by 30% by mid-2027 and reach net-zero carbon emissions in a decade. The project will contribute to Nestlé meeting its net-zero emissions goal, including reducing emissions by 20% by 2025 and 50% by 2030. The pilot was set to start with around 50 farms and be scaled up over the next three years.

The first level under Fonterra’s The Co-operative Difference framework requires farmers to meet four ‘achievements’ – have and implement and Animal Wellbeing Plan; have a Farm Environment Plan in place; complete a Food Safety Practices and Procedures assessment, and complete the DairyNZ Workplace 360 Assessment. In return, farmers would receive 7c (NZ$) per kgMS on all milk supplied.

The next two levels revolve around improving milk quality – the first one requires farmers to meet a certain milk quality excellence standard for at least 30 days per season (for a payment of 3c per kgMs on all qualifying milk). The third level is about achieving this excellence standard for at least 90% of the days supplied in the season. More information about the framework can be found here​.

Fonterra CEO Miles Hurrell welcomed Nestlé’s continued support of farmers. “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,” he commented. “By working in partnership, we can grow sustainably together as we aim to produce lower carbon milk into the future.”

Nestlé New Zealand CEO Jennifer Chappell added: “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 news comes shortly after Nestlé, alongside five other dairy industry giants​ including Lactalis USA And Danone, recently committed to publicly disclose its methane emissions at COP28. Fonterra on the other hand drew criticism from non-profit organization The Changing Markets Foundation for not joining the alliance. Nevertheless, the New Zealand dairy co-op recently unveiled its scope 3 target – albeit measured in intensity terms as we reported​ in November 2023 – and has committed to reporting its absolute emissions reductions annually.

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