Dairy co-operative, Fonterra, is working towards its sustainability targets through new funding from the company itself, and through separate agreements with Mars and Nestlé, aiming to reduce emissions from its farmers.
Beginning on June 1, Fonterra will introduce a payment for farms that achieve certain emissions-related criteria as part of updates to its Co-operative Difference framework, and new incentives from Mars and Nestlé will benefit farmers meeting their sustainability goals.
Fonterra CEO, Miles Hurrell, said the new incentives demonstrate Fonterra’s strategy in action.
“We’re growing relationships with customers who value the hard work farmers put into producing sustainable, high-quality milk, along with the co-op’s quality of on-farm data and ongoing commitment to improvement,” said Hurrell.
“This helps us make progress towards achieving our on-farm emissions target and deliver the highest returns for our farmer shareholders’ milk.
“Last year we confirmed six strategic choices that we believe will help grow further value in the years ahead and this is an example of how we’re delivering on two of those choices, delivering the strongest farmer offering and building on our sustainability position,” he said.
The funding from Fonterra will support its new Co-operative Difference payment, of 1-5 cents per kgMS. To date, a total of up to 10 cents per kilogram of milk solids (kgMS) has been possible across all achievements within Fonterra’s Co-operative Difference framework.
A new Emissions Excellence achievement will offer a further payment of between 1-5 cents per kgMS for farms that meet certain criteria. Based on last season’s data, it’s estimated that approximately 5000 farms will be eligible for this payment next season.
Mars and Nestlé customer incentives
More than 200,000 cows supply dairy for Mars’ confectionery brands, including M&M'S and Snickers, and dairy is the company’s fourth-largest carbon footprint contributor. The company announced it was investing US$27 million over five years to support the Farmer Forward Program with Fonterra, aiming to cut a projected 150,000 metric tons of its scope 3 emissions from dairy by 2030, against a 2015 baseline.
Approximately half of the investment will be allocated to providing funding for on-farm tools and technology to around 2000 Fonterra dairy farmers, with the remaining funds going toward the farmer sustainability incentive. Mars stated it would be distributed to around 165 farmers annually, who make the most progress towards goals – in amounts of up to US$15,000.
Mars Snacking chief R&D, procurement and sustainability officer, Amanda Davies, said between new equipment and technology, embracing more sustainable practices comes with a price tag for farmers.
“Dairy farmers are on the front line of advancing climate-smart agriculture, which is why we’re putting them first through the launch of our Farmer Forward program,” said Davies.
“That’s why we’re working with partners like Fonterra to help remove this barrier – providing cash, tools, and technology to support farmers in making meaningful, long-term changes. It’s a true win-win, because we know making dairy more sustainable takes real effort and real investment.”
Mars and Nestlé have independently supported Fonterra farmers with their sustainability actions through initiatives introduced over the past couple of seasons.
In 2024, Fonterra farmers were invited to take part in the Mars Tools and Services pilot, which provided access to tools and services, including animal efficiency services and digital tools. Additionally, Mars previously supported the Greener Choices programme, which made it easier for Fonterra farmers to identify and buy products at Farm Source stores that could help them make sustainability improvements on-farm.
In 2022, Fonterra and Nestlé announced a partnership that included the Net Zero Pilot Dairy Farm in Taranaki, designed to help reduce on-farm emissions. It has achieved an approximate 27 per cent reduction in absolute emissions and a 5.5 per cent reduction in emissions intensity since the partnership began.
In 2023, Nestlé also began making an additional payment of between 1-2 cents per kgMS for farms that achieved any level of the Co-operative Difference. This payment has been replaced with the new Emissions Incentive payment from next season.
Nestlé New Zealand CEO, Jennifer Chappell, says Nestlé is a significant purchaser of New Zealand dairy ingredients globally, and dairy remains its largest source of greenhouse gas emissions.
“As we strive towards achieving net zero emissions by 2050, we are committed to reducing our Scope 3 emissions. We will continue to support farmers, in partnership with Fonterra, fostering new economic opportunities and helping them lower their greenhouse gas emissions,” said Chappell.
Fonterra stated the funding from Mars and Nestlé will be split between:
- On-farm solutions – Farmers who achieve the Co-operative Difference will be eligible for access to on-farm tools or services designed to further improve emissions efficiency, for example herd efficiency services from LIC and CRV. Based on last season’s achievements, 87 per cent of farmers would’ve been eligible.
- Extra 10-25 cents per kgMS Emissions Incentive payment – Farmers who achieve the Co-operative Difference and have one of the lowest emissions footprints in the co-op will receive an Emissions Incentive payment of between 10-25 cents per kgMS. Based on last season’s data it’s estimated that between 300-350 farms will be eligible for this payment next season.
Fonterra director of sustainability, Charlotte Rutherford, said the company was grateful to Mars and Nestlé for their shared commitment to protecting the environment.
“Fonterra has clear ambitions when it comes to climate and it’s through partnerships like this that we can support our farmer owners with achieving our targets,” said Rutherford.
“It’s a true testament to the power of partnership and innovation.”
