Monday, April 22, 2024

Food giants ready to pay for sustainable products

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New Zealand dairy producers and food processors have a great opportunity to benefit from recent emission-reduction pledges by global brands, Synlait Milk said.
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Many major food makers, including the likes of Nestle – the world’s largest, have made pledges this year to cut greenhouse gas emissions.

Nestle, which in September announced a plan to halve its emissions by 2030 and to be net-zero by 2050, said earlier this month it would invest US$3.6 billion in the next five years to repower many of its plants.

Synlait’s director of sustainability and brand Hamish Reid says the firm’s global customers often talked about providing more sustainable products.

In the past, getting customers to pay more for those attributes was “a battle,” he said. But those conversations had really “ramped up” in recent months and firms were now willing to pay a premium.

“They are now in a global procurement hunt for the least-carbon intensive products that they can buy to support inputs into the brands that they market to consumers,” Reid told delegates at the Decarbonising Heat conference in Auckland.

“That is a massive opportunity for NZ and for our company and for all companies who serve the needs of those big multinational companies.

“They are now saying that they are prepared to pay more for, for example, low greenhouse gas milk and ingredients.

“We are expecting to convert that, before long, into really good economic opportunities for us,” he said.

“We think that is all about to kick off.”

Synlait, which last year opened its second processing plant at Pokeno south of Auckland, processes about 4% of the country’s milk.

It is aiming to make all its operations more sustainable to meet the demands of consumers and staff.

Synlait is aiming to halve emissions per kilogram of production by 2028. Reid says its on-farm emissions are down about 7% the past two years, while its non-farm emissions – mostly from coal and gas – are down 16%.

A big part of the firm’s plan to reduce off-farm emissions is to end coal use at its Dunsandel plant in Canterbury by the end of the decade. Coal currently accounts for about 59% of the firm’s non-farm emissions and 11% of all its emissions.

Early last year, Synlait was the first dairy company to commission an electrode boiler at a new liquid milk plant the firm built at Dunsandel.

Reid says the unit is “really expensive to run” but the investment was made on a 10-year business case and stacks up. As well as being free of emissions, it takes only five minutes to warm-up, against 18 hours for the coal boiler. It also avoids additional truck deliveries of coal.

Reid says the company was fortunate this year to be tendering for its power supply when Rio Tinto announced its intention to shut the Tiwai Point smelter.

That meant it could negotiate “a very good deal” on its electricity price. This is enabling the firm to use the electrode boiler more effectively to provide steam to the rest of the site beyond just the liquid milk plant.

“That gives us a really great decarbonisation opportunity with a minimum of opex that comes with that,” he said.

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