Fonterra has announced a new agreement with Nestlé in terms of which the food giant will fund an additional payment to farmers if they meet the criteria of its Co-operative Difference framework.
To qualify for the payment, the farmer will have to achieve any of the three levels of Fonterra’s Co-operative Difference framework during the 2023-2024 season
That framework has three parts: Te Pūtake, where farmers receive a 7c payment for criteria around animals, environment, people and co-op and prosperity. The second part is Te Puku, where farmers receive an extra 3c. This, and the final level, Te Tihi, are based on criteria for milk quality.
Depending on the number of farmers who meet these levels, Fonterra expects the additional payment to farmers to be about 1-2c per kilogram of milk solids.
Last season, 83% of Fonterra’s farmers met the criteria for Te Pūtake. This new agreement would have pushed that payment to 9c.
Globally, Nestlé is investing 1.2 billion Swiss Francs ($2.25bn) by 2025 to advance regenerative agriculture and reduce emissions, aiming to source 50% of its ingredients through regenerative agriculture methods by 2030.
Nestlé New Zealand CEO Jennifer Chappell said the company’s success relies on working not just with processors, but also farmers who share this vision.
“Nestlé has sourced dairy from New Zealand for well over 100 years and we will continue supporting farmers, alongside our partners, to develop new economic opportunities and reduce their greenhouse gas emissions.”
Fonterra aims to be net zero by 2050, with 2030 targets including a 30% intensity reduction in on-farm emissions, which Nestlé welcomed.
“This move will encourage even greater action by farmers, researchers and policymakers 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,” Chappell said.
Fonterra chief executive Miles Hurrell said he welcomed Nestlé’s continued support of farmers who are making continuous improvement with on-farm sustainability.
“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.
“By working in partnership, we can grow sustainably together as we aim to produce lower carbon milk into the future.”