Saturday, December 2, 2023

‘Cautiously optimistic’ on Fonterra targets

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Although a 30% reduction in the next seven years will undoubtedly be challenging, Federated Farmers says it’s really important to look at how that target is broken down and how Fonterra plan to work with farmers to achieve it.
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By Wayne Langford, Feds president

Fonterra announced their long-awaited on farm emission reduction target on Thursday, putting to bed months of speculation in dairy circles about what their methane targets might look like. 

Farmers have been nervous about where Fonterra might go with these targets, but now that I’ve seen them, I have to confess I’m cautiously optimistic about where they have landed.

Fonterra have chosen to set an efficiency target that focuses on the amount of methane produced per kilogram of milksolids. This means it won’t push farmers to reduce production. 

That’s very different to an absolute reduction target, like ones set by the government that would require farmers to reduce emissions even if it meant less milk through the vat, less money in our back pockets, and an increase in global emissions.

Federated Farmers have been consistent in our message that the government’s methane reduction targets are too high, and that regulation should only be used to set the minimum standard when it comes to emission reductions. 

We’ve argued that the ambition should be left to individual farmers, and the companies they supply, to be led by market signals and the expectations of their customers. Fonterra are saying they need these targets to retain high-value customers like Nestlè, open up new markets, and secure access to capital. 

Although a 30% reduction in the next seven years will undoubtedly be challenging, it’s really important to look at how that target is broken down and how Fonterra plan to work with farmers to achieve it.

Around 7% is set to come from ‘best practice’ farming and efficiency improvements behind the farmgate. This is where a lot of the hard work will need to be done by farmers through things like breeding, feed conversion, and refining our systems. 

The good news is we’ve already achieved a 2% reduction in the last few years, so we’re on our way. The challenge is that because Kiwi farmers are already the world’s most emission-efficient producers of milk, we have less levers to pull to help us achieve another 5% by 2030. 

A further 7% reduction is expected to come from new technologies like methane inhibitors. This is where things get a little bit more uncertain for farmers. We’ve been investing in the development of these tools for a long time now and we’re always told they’re just a few years away from a breakthrough – but a solution is yet to eventuate. 

We all need to be asking some tough questions about where these tools are, what they’ll cost, and whether they will be able to be used in New Zealand’s predominantly pasture-based farming system. 

The next 8% is proposed to come through recognition of existing trees and incentivising new planting on farms to suck in carbon. I know this will be of real interest to a lot of farmers, but we still need to see the detail of how this will work in practice. 

My farm is a great example. The property is 120ha, but it’s only 90ha effective. I have 30ha sitting in regenerating native bush and rough areas that aren’t currently included in the Emissions Trading Scheme. Is that going to be recognised? 

The final 8% is a bit of a tricky one to wrap your head around, but under the current carbon accounting rules, changing land use from forestry to farming means an emission has to be accounted for 20 years.

A lot of land in the central North Island and parts of Canterbury were converted from pine to dairy between 2003 and 2008, so this deforestation will be coming ‘off the books’ in the next few years and will give us a significant emission reduction on paper. 

When you break it down like that, the target does sound much more achievable. Make no mistake, though: it’s still incredibly ambitious and won’t be easy. This can’t simply be a case of setting a goal and telling farmers they have to meet it. 

Fonterra need to remember they’re the ones taking on this challenge and they’ll need to really get in behind farmers, along with the likes of DairyNZ, to help them achieve it.

Federated Farmers, New Zealand’s leading independent rural advocacy organisation, has established a news and insights partnership with AgriHQ, the country’s leading rural publisher, to give the farmers of New Zealand a more informed, united and stronger voice. Feds news and commentary appears each week in its own section of the Farmers Weekly print edition and online.

In Focus:  Fonterra farmers the focus of emissions plan

Fonterra has revealed its plan to reduce on-farm emissions by 30% by 2030. Bryan unpacks the plan with Federated Farmers dairy chair Richard McIntyre (skip to the 20:10 minute mark). 

In this week’s feature interview, MyFarm boss Andrew Watters talks about what he calls the third wave of land-use change and the options available to farmers looking to diversify their income (skip to the 8:50 minute mark).

And Richard Rennie reflects on his day on farm with a Bay of Plenty catchment group and talks about how Sir John might be the key Zespri is looking for as it deals with unlicensed SunGold fruit being grown in China (skip to the 1:20 minute mark).

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