The dairy co-op could offer incentives to its farmer suppliers to meet new intensity targets for greenhouse gas emissions reductions
Analysis: Fonterra has set a 2030 goal of a 30 percent cut in on-farm greenhouse gas emissions from 2018 levels, it announced at its annual general meeting in Methven this morning.
But it's delaying public release of some key information, such as the role methane cuts will play in it, until its farmer-suppliers have had a chance to consider the co-op's plans.
Newsroom was supplied an advance copy of its Climate Roadmap. That describes only modest incremental improvements in existing New Zealand farming practices over coming years.
The co-operative's biggest customers, global food and agricultural leaders such as Nestlé, are pursuing system changes in the sector elsewhere in the world. Their goal is to transform agriculture from a major cause of the co-crises of climate change, ecosystem degradation and biodiversity loss into a key solution to them.
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This revolution will be central to the food and farming stream of COP28, the next round of the UN’s global climate negotiations beginning in Dubai November 30. Likewise, agricultural methane will have a higher priority than past COPs in the overall drive for reductions in methane emissions, given it’s a far more potent climate warming gas than carbon dioxide.
A much higher level of ambition by Fonterra and its farmer-suppliers is crucial to New Zealand since they generate some 21 percent of our greenhouse gases, making them the country's largest emitters.
Full evaluation of Fonterra’s plan will have to await until it releases its targets for each greenhouse gas. So far it has only expressed its 30 percent target on a carbon-dioxide equivalent for all gases.
Thus, every tonne of methane, because of its warming potency, is counted as 28 tonnes of CO2. So, if farmers make only modest methane cuts, they will have to make far larger cuts in the other gases, which might not be possible.
The co-op has been consulting with its farmers for the past year. Whereas Synlait Milk, for example, one of its NZ rivals, announced its on-farm climate goals in June 2018.
Fonterra, like Synlait, is targeting on-farm cuts based on an intensity measure – emissions per tonne of milk solids – rather than aiming for an absolute cut in emissions. Thus, if the co-op's milk supply increases then emissions would too.
Yet, as a country, our international climate commitments are based on absolute reductions. If, say, the dairy sector failed to meet its targets, then other sectors would have to make up the shortfall or the government would have to buy carbon offsets at home or abroad.
The co-op said the intensity approach was approved for commodity producers by the Science Based Target initiative, the international partnership that sets rules for emission reductions by organisations and monitors their progress. Fonterra said its plans align with the SBTi's guidelines on limiting global warming to 1.5C.
“There is a lot of activity to reduce emissions across other markets, and the Co-op needs to keep making progress to make sure it doesn’t fall behind," Miles Hurrell, the co-op's chief executive, told farmer-shareholders at the annual general meeting.
“As a dairy partner to many of the world’s leading food companies, we’re responding to growing sustainability ambitions from our customers and financial institutions, along with increasing market access, legal and reporting obligations."
Nestlé, the world's largest food producer, which is also Fonterra's largest customer, welcomes the co-op's targets.
“This move by Fonterra 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 Jennifer Chappell, chief executive of Nestlé New Zealand.
However, Nestlé's climate targets are far more ambitious than Fonterra's. Its emissions are already below its 2018 baseline, with targets for an absolute cut of 20 percent by 2025, 50 percent by 2030 and for net zero emissions by 2050.
The two businesses are working together on some projects here. One example is partnering with Dairy Trust Taranaki to test solutions on a Fonterra-owned farm in Taranaki to see if, in the next five to 10 years, it can become the first commercially viable net zero carbon dairy farm in New Zealand.
Federated Farmers says farmers had been nervous about where Fonterra might go with these targets for some time.
"Now that I’ve seen them, I’m cautiously optimistic about where they have landed," says its president, Wayne Langford, a Golden Bay dairy farmer who supplies Fonterra. "It’s really positive that Fonterra have chosen to set an efficiency target that focuses on the amount of methane produced per kilogram of milk solids. This means that it won’t push farmers to reduce production."
DairyNZ, the farmer-funded research organisation, also welcomed the co-op's climate targets. "Fonterra’s on-farm emissions reduction target further underscores the importance of supporting New Zealand dairy farmers with being increasingly efficient and the value of world-leading research and science to help deliver that," says Campbell Parker, its chief executive.
Fonterra emphasises the targets for greenhouse gas emissions apply to the co-op and its suppliers collectively. They are not targets for individual farms because the scope for cuts varies from farm to farm.
The co-op believes it and its farmers will meet the targets through a combination of actions: a 7 percent reduction by supporting farmers to continue to adopt best practices; a 7 percent cut by scaling up commercially viable novel technologies such as methane inhibitors as they emerge; an 8 percent increase in carbon sequestration by existing and new vegetation; and an 8 percent cut in emissions attributed to past changes in land use to dairy because those emissions are written-off in accounting terms over a 20-year period.
Moreover, the co-op is committing to no further deforestation to make way for more dairying from 2025, which is one of the standards set by SBTi.
