By Alexandria Winning-Browne, NZX dairy analyst
Fonterra’s October milk collections fell 3.1% year on year. Collections were down 5.7% in the North Island, but South Island collections eked out a 0.8% gain. Season to date, Fonterra’s collections are 3.6% behind. The co-op noted that there was cold, wet weather at the start of the month, though pasture growth conditions improved in the second-half of the month. Strong conditions in the lower South Island offset periods of cold weather in central SI.
NZX’s Pasture Growth Index shows that conditions have improved rapidly over the past week or so. A late peak, similar to that seen in 2020, but well above historical averages, is forecast. Wet weather and warm temperatures have contributed. Soil moisture in the North Island is well above normal for this time of year, over field capacity. However, while this quick change means plenty of grass about, it’s likely that quality is not so favourable.
The rain in the North Island looks to have had some effect on crops; however, it appears that growers won’t need to replant too much. Some sunny weather certainly wouldn’t go astray.
October was a large month for palm kernel imports. There were 287,529 tonnes of palm kernel imported, the largest import volume in a month since February 2018, when 291,597t was imported. The October volume was slightly higher than November 2020; the last time there was a relatively large import month. Palm kernel prices have come down off their highs of over $500/t, with the spot price currently averaging $399/t at a national level.
What else happened last week in dairy?
Sequestration to be recognised in the ETS
The Government has agreed to amend the Emissions Trading Scheme (ETS) to recognise more classes of carbon-sequestering vegetation. From 2025 “all scientifically robust forms of sequestration” will be brought into the ETS at full value.
He Waka Eke Noa recommended that the ETS recognise more vegetation categories for sequestering greenhouse gases and that eligible vegetation types be transitioned into the scheme as it is expanded. The government noted that the submission process on the pricing of agricultural greenhouse gas emissions showed the importance of sequestration to farmers. Climate Change MinisterJames Shaw said “what we are proposing represents a significant shift in the way the ETS works. “It means farmers will get full recognition for scientifically proven sequestration on their farms.”
Partnership on net-zero carbon dairy farm
Fonterra and Nestlé have partnered to develop New Zealand’s first commercially viable net-zero carbon emissions dairy farm in Taranaki. The project is to be based at a 290-hectare farm surrounding Fonterra’s Whareroa site. It aims to cut emissions 30% by mid-2027, and reach net zero in 10 years. Fonterra will work with Dairy Trust Taranaki to reduce total emissions on-farm, including methane, with successful solutions also being good for the farm, good for the cow and good for the milk.
Fonterra chief executive Miles Hurrell said the collaboration with Nestlé would help accelerate progress towards their greenhouse gas emission goals, with both companies aiming for net zero emissions by 2050.
“We know we will make bigger gains, for both the co-op and country, by partnering with others,” Hurrell said. “Working with partners such as Nestle is our best opportunity to create innovative solutions to local and global industry challenges.”
Another fall at Pulse
The tenth auction for Global Dairy Trade’s Pulse occurred last week. The price achieved for C2 regular grade whole milk powder (WMP) was US$3280/t, down 0.8% from the previous week’s auction. The December WMP futures contract trading on the SGX-NZX Dairy Derivatives market settled at US$3300/t, slightly higher than the Pulse result, but lower than the US$3340/t achieved for C2 regular grade WMP at the last GDT Event.
Fonterra making more lactose
Fonterra has converted its Tirau plant into a high-value lactose production hub. The co-operative has invested $40 million to concentrate whey permeate, improving efficiency for transport to other sites to produce lactose. Tirau was previously used to produce ethanol. Ongoing costs and onerous Worksafe requirements were some of the reasons for the conversion.
Fonterra also noted there are large cost savings in energy and water use, less wastewater and reduced waste to landfill. It aligns with the co-op’s focus on reducing greenhouse gases and environmental sustainability. The resulting lactose is mainly pharmaceutical grade for use in tablets and medicines, but is also used for infant formula and beer brewing.
