Fonterra has today (Tuesday, February 18) announced new funding designed to grow value for its shareholders through helping farmers reduce on-farm emissions.
For the 2025/26 season beginning on June 1, Fonterra will introduce a payment for farms that achieve certain emissions-related criteria as part of updates to its cooperative difference framework.
Meanwhile, new incentives that benefit farmers will be funded through separate agreements with Mars and Nestlé, who have been working with Fonterra to make progress towards their individual sustainability goals by supporting farmers to reduce emissions.
Fonterra CEO Miles Hurrell said the new incentives help to “deliver the highest returns” for farmer shareholders’ milk.
“Last year we confirmed six strategic choices that we believe will help grow further value in the years ahead and this is an example of how we’re delivering on two of those choices, deliver the strongest farmer offering and build on our sustainability position,” Hurrell said.
Nestlé New Zealand CEO, Jennifer Chappell said that Nestlé globally is a “significant purchaser” of New Zealand dairy ingredients, and dairy remains its largest source of greenhouse gas emissions.
“As we strive towards achieving net zero emissions by 2050, we are committed to reducing our Scope 3 emissions. We will continue to support farmers, in partnership with Fonterra, fostering new economic opportunities and helping them lower their greenhouse gas emissions,” Chappell said.
To date, a total of up to 10c/kg of milk solids (kgMS) has been possible across all achievements within Fonterra’s cooperative difference framework.
A new emissions excellence achievement will offer a further payment of between 1-5c/kgMS for farms that meet certain criteria. Based on last season’s data, it is estimated that approximately 5,000 farms will be eligible for this payment next season, according to Fonterra.
Funding from separate agreements with Mars and Nestlé, will be split between on-farm solutions and an extra 10-25c/kgMS emissions incentive payment.
Under the funding for on-farm solutions, farmers who achieve the co-operative difference will be eligible for access to on-farm tools or services designed to further improve emissions efficiency.
Farmers who achieve the cooperative difference and have one of the lowest emissions footprints in the co-op will receive the extra 10-25c/kgMS emissions incentive payment.
Based on last season’s data it’s estimated that between 300-350 farms will be eligible for this payment next season.
