More than 5000 dairy farms will be eligible for a bonus next season. File photo. Photo: RNZ / Rebekah Parsons-King
Fonterra dairy farmers will be able to earn cash for their climate efforts starting on 1 June.
The dairy giant has announced it will pay an extra 1-5 cents a kilogram of milk solids to farms that meet climate criteria, and more for some farms.
The co-operative estimates more than 5000 farms will be eligible for a bonus next season based on last season's data.
The criteria take into account emissions from cow feed, fertiliser, animals and drained peat soils, minus any carbon removed by trees and vegetation.
The farm's emissions need to be less than the co-op's 2017/2018 base year, said Fonterra.
An additional 10-25 cents a kilogram is on offer for an estimated 300-350 farms whose planet-heating emissions are around 30 percent lower than average.
The money for the 300-odd highest performers will come from incentives paid by Mars and Nestle as part of those companies' climate commitments.
Those multinationals have been working with Fonterra to meet their targets, because supply-chain emissions from ingredients make up a large part of their footprints.
The company's director of sustainability, Charlotte Rutherford, said around 80 percent of farmers will qualify for a climate bonus.
She said lower-level payments of 1 to 5 cents per kilo of milk solids will hinge on improving efficiency using existing techniques such as feeding and genetics. Rutherford said this will contribute to Fonterra's goal of using efficiency to cut emissions 7 percent by 2030.
"We have known what each individual farmer's emissions are each and year and how they've been tracking and we provide that back to farmers," she said.
"So they will know what they've been doing in previous years and of course what they are doing next season when this incentive will be paid."
Farmers' emissions will need to be lower than they were in 2017/2018 to get a payment, however Rutherford didn't disclose exactly what that number will be.
To earn higher payments of 10-15 cents a kilo, she said farmers may look at using new products such as methane-cutting supplements for cows. Novel technology such as methane inhibitors is expected to cut Fonterra's emissions an additional 7 percent by 2030, on top of effieicny gains, contributing to an overall goal of 30 percent cuts. The rest is mainly from changes in deforestation emissions, as land clearances for dairying recede further into the past.
Around 300-350 farms are expected to qualify for those higher payments, supplied by Mars and Nestle. The multinational is also offering funding via Fonterra to support farms wanting to improve genetics or try new technology, such as methane-cutting additives for animal effluent ponds.
Rutherford said farmers had a lot of questions at a webinar announcing its new climate payments last night, the main ones being what would happen if more than 350 farmers met the top level of emissions cuts, and why Fonterra needed to meet the climate standards of customers such as Mars and Nestle.
"It was well attended, there were a lot of questions and we will be on the road this week doing farmer meetings to get into the nitty-gritty," she said.
The company says farmers can already earn up to 10 cents per kilogram of milk solids extra for meeting other, non climate criteria and these payments will be on top of that.
About 87 percent of Fonterra farmers will also be eligible for help with services such as making herd more efficient with genetics, which can also lower emissions.
The co-operative says it needs to reduce emissions per kilo by 30 percent off 2018 levels by 2030 to remain competitive, meet market access demands and comply with increased legal and reporting obligations.
Dairy is the country's biggest-emitting sector, however the current government does not plan to price farming emissions until as late as 2030.
Pressure from large dairy customers overseas is expected to drive some level of emissions reductions anyway, however the Ministry for Primary Industries has said it can not fully model how much yet.
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