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Sustainable Development Goals (SDGs) – Fonterra

MANAGING CLIMATE CHANGE AND PRODUCING QUALITY NUTRITION

 

Dr Jeremy Hill, Chief Science and Technology Officer, Fonterra Co-operative Group

Carolyn Mortland, Director, Social Responsibility, Fonterra Co-operative Group 

 

Fonterra Co-operative Group believes managing climate change and producing quality nutrition must go hand-in-hand. In our own right and within the industry, Fonterra is working to achieve both. This is important. Access to healthy, nutritious food is essential for human wellbeing and agriculture is critical to this access. Yet the world’s agricultural production is facing significant disruption. 

Global health challenges such as undernutrition and obesity are matched by impending environmental challenges. Droughts, sea level rise, floods and other consequences of climate change set to challenge the world’s ability to produce nutritious food to feed a growing population.  

The role and importance of dairy in this picture is too great to ignore. Fonterra is a global leader in dairy nutrition. As the world’s largest processor and exporter of dairy products we have the opportunity to apply our expertise, scale and influence to lead the role of the dairy industry in future of sustainable food production. 

Through our leadership within the International Dairy Federation in 2016, Fonterra played a key role in the dairy community’s Dairy Declaration of Rotterdam.  This recognises the UN 2030 Agenda for Sustainable Development as the overarching framework that guides our actions towards sustainable development from a social, environmental, and economic and health perspective.  

This reflects our view that dairy is vital to health and nutrition, plays a major role as countries’ economies, income and employment.  As a co-operative owned by 10,500 farming families in New Zealand, we are reminded daily that dairy supports livelihoods as well as healthy lifestyles.  

The Food and Agricultural Organisation’s Global Dairy Facts remind us that dairy provides 240 million jobs globally and directly supports the livelihoods of close to one billion people.  Among that billion are the multitude of small-scale farmers, who play an important role in agricultural supply chains, but whose incomes are especially vulnerable to climate shocks such as prolonged drought. 

Dairy’s place in healthy diets is not disputed. Most national dietary guidelines recommend two to three servings a day. There is growing evidence to support its place, not only in a healthy diet, but within specialised diets which enable people to manage a range of health problems. These include osteoporosis, type 2 diabetes and cardiovascular disease – all of which take their toll on individuals as well as nations’ healthy budgets. 

This recognition of dairy’s nutritional value is seeing consumption increase, underlining the importance of global trade in dairy so that producer countries, such as New Zealand and the EU, can satisfy demand in countries with a production shortfall.  

We are part of the solution for hunger, but recognise that we are also part of the problem of climate change. Dairy uses seven per cent of the Earth’s habitable land and is responsible for 2.7 per cent of total anthropogenic greenhouse gas emissions.   

But simply slashing production to reduce emissions is clearly not the answer if the end result is a nutritional deficit for a growing global population.  To provide 500 mls of milk a day – the recommended three servings – for a population of 10 billion, people will require 1.8 trillion litres of milk. That is one trillion more litres than total global production today. 

Reducing global agricultural emissions has to be done on a global scale. One solution is to ensure that food is produced in the most emissions-efficient locations possible. This view is supported by the World Economic Forum1, which calculated that if just 10 per cent of agricultural production moved to more efficient locations, 178 million tonnes of carbon dioxide equivalent emissions could be reduced. Increases in global on-farm productivity will also result in mitigation of emissions. 

Fonterra and New Zealand can take a lead in helping this transition.  

The New Zealand pasture grazing farming system is amongst the most emission-efficient in the world.  When we compare New Zealand farms’ nutritional production to other countries, we are more than twice as emissions-efficient as the world average, and more than four times as efficient as the least emissions-efficient producers.   If all dairy producers matched New Zealand’s efficiency, the global footprint from dairy would be more than halved. 

In common with schemes around the world, an absence of mitigation options has meant direct agricultural emissions are excluded from New Zealand’s Emissions Trading Scheme.  However, Fonterra recognises the exclusion does not excuse us from action. 

That is why we operate programmes across our entire supply chain, from farm to market, to reduce the emissions intensity of our products. We share some examples in this publication. 

Climate change is bad for farmers and the consumers who rely on them to produce the 7.5 million tonnes of food the world consumes every day.  Fonterra produces and exports enough dairy to provide the equivalent of a 250ml serve of milk a day to over 200 million people.  We are proud to make this significant contribution and to be sharing our knowledge to improve the efficiency of the global dairy industry so it plays a leading role in the sustainable diets of the future.  

Fonterra farmers have invested heavily in excluding stock from 99 percent of waterways and in the riparian planting which supports carbon sequestration and higher water quality

CASE STUDY 1: THERE IS NO ‘EITHER, OR’ — JUST ACTION    

As New Zealand’s largest company, and the world’s largest dairy processor, Fonterra is playing our part to maintain and improve our emission-efficient dairy while supporting the global dairy industry in the transition to a low-emission, climate-resilient future. 

While New Zealand is one of the world’s most emissions-efficient producers of milk, we continue to work on further reductions at home as well as on sharing our knowledge so the global industry can benefit from our experience and bring overall emissions down. 

Our co-op’s climate plan focuses on three priorities: farms, operations and innovation. It is designed to achieve continuous progress and to support our products as the ‘dairy of choice’ for future customers and consumers seeking emissions-efficient nutrition.   

Our climate plan is also part of a wider philosophy, focused on responsible dairying, which champions responsible use of resources like water, nurturing our environment, the role of nutrition in sustaining healthy communities and the belief that as farmers we are the guardians of the land for coming generations. 

On-farm our aim is to achieve climate-neutral growth to 2030, from a 2015 benchmark, and enable game changing innovations to reduce global dairy emissions.  Our farmers have done well — with the average emissions per kg of milk falling by 19 per cent from 1990 to 2014.    

In 2014/15 emissions for full life cycle to the farm gate were 0.89 kg of carbon dioxide equivalent per kilogram of fat and protein corrected milk.  This is a four per cent decrease on 2008/10. Despite the absence of new tools to achieve climate neutral growth, we believe we can build on our track record through good management practice, efficient use of inputs and offsetting if needed. 

This year Fonterra and DairyNZ which is the industry body representing all dairy companies in New Zealand, released the Dairy for Climate Change Action Plan. It sets out initiatives to train rural professional and farmers on greenhouse gas mitigation, pilots farm level reporting of greenhouse gas emissions, and research further best practice mitigation practices on demonstration farms.  This will enable the industry to contribute to achieving the Paris Climate Agreement.  

Successful best practice strategies include optimising fertiliser use, maximising  pasture production, managing effluent and improving herd health. In the 2016/17 production season, 95 per cent of our farmers recorded their farm’s nitrogen inputs and outputs, including the greenhouse gas nitrous oxide. Our Nitrogen Management Programme enables them to track their N-use efficiency, take action to improve it and contribute to lower emissions and higher water quality.  

Farmers have already completed fencing on farms to exclude stock from 99 per cent, or over 24,000 kms, of waterways. The next step is to undertake riparian planting in these stock-excluded areas. We are working towards all farmers having a riparian management plan, guided by GPS mapping of their farms, by 2020. This will support carbon sequestration and achieve water quality benefits.  We are working towards implementing Farm Environment Plans with 100 per cent of our New Zealand farmers by 2025.   

Innovation is the key to addressing global dairy emissions and farmers are fast adopters of proven technology. Fonterra is a key investor in the Pastoral Greenhouse Gas Research Consortium which is partnering with the NZ Agricultural Greenhouse Gas Research Centre to develop practical, science—based tools and technology.  This research is part of the Global Research Alliance on Agriculture Greenhouse Gases. 

Research is focusing on methane vaccines and inhibitors, as well as low-emission feeds and genetics that produce low-emissions animals. It is a work-in-progress and the time being taken reflects the need for technologies which reduce emissions without any impacts whatsoever on milk quality or safety. 

Across our manufacturing sites Fonterra is aiming for a 30 per cent reduction in absolute greenhouse gas emissions by 2030, and net zero emissions by 2050.  

To help achieve this we are committed to constantly innovating how we use energy and to adopting energy sources which can replace the use of coal at some of our plants. In the next three years, we will be undertaking pilots to test energy sources such as biomass, and trailing disruptive technologies to decrease energy use.    

Our energy efficiency programme, the longest-running in New Zealand, has enabled at 16 per cent reduction in the energy we consume per tonne of production (energy intensity) against a target of 20 per cent by 2030.  

Efficiency gains, techniques such as heat recovery, the use of biodiesel fuel, converting a third of our urban car fleet to electric vehicles and investments in high efficient technology in new plants are all supporting incremental improvements. 

As New Zealand’s largest dairy producer, we also contribute to industry initiatives to reduce greenhouse gas emissions. These includes training and development, continued investment in research and contributing to political policy-making which recognises both the challenges of climate change and ensuring sustainable nutrition for a growing population. 

Dairy Development in Sri Lanka is enabling small farmers’ success

CASE STUDY 2: BETTER PRACTICES, BETTER PRODUCTION, BETTER RETURNS 

Fonterra’s Dairy Development Programme is supporting farmers in emerging markets to lift production, without increasing greenhouse gas emissions, benefitting farmers and their families, the co-operative and local communities.  

Dairy is a nutritional cornerstone for millions of people around the world. In many developing countries, it is also an economic one.  Milk production from one or two cows contributes to household livelihoods, food security and nutrition and often provides women with a means to supplement family income. 

It is an area where significant gains can be achieved simply because current productivity is so often constrained by resources and practices.   Better feed, better genetics and simply sharing knowledge can increase production and farmer incomes without increasing herd numbers or greenhouse gas emissions. 

For Fonterra Co-operative Group, turning potential into production is at the heart of our Dairy Development programme.   We believe than when farmers can produce more and earn more, their health, families and communities are economically stronger and more sustainable.   We tailor programmes to the needs of each country, while incorporating the UN Sustainable Development Goals for dairy development.  

Working alongside farmers in emerging markets, we are enabling them to overcome constraints on production, invest in their animals and ultimately become part of a safe, secure supply chain.  We currently have programmes in Chile, Sri Lanka, Indonesia and Japan where we are using our strengths as dairy expert to build a strong, more productive local industry. We are also contributing to China’s dairy development. 

We use two key criteria to decide when and where we invest in Dairy Development projects. First, the project must make good commercial sense and fit into our local growth strategy, particularly around sourcing additional milk locally to meet consumer demand.  

The investment also needs to help Fonterra to meet the needs of our stakeholders in these countries. By building strong relationships with governments, industry, farmer and consumer groups in key markets, Dairy Development helps to ensure a strong and secure basis for our business to grow.  

Sri Lanka is a prime example. In 40 years in the market, Fonterra has made our Anchor™ brand Sri Lanka’s most recognised and there is growing demand for our fresh dairy products as well as those imported from New Zealand. 

While Sri Lankan farms are typically small, producing around 20 hand-milked  litres per farm per day, Dairy Development is enabling them to be a valued and growing part of our local supply chain, benefitting the co-operative as well as local communities.  

Our demonstration and training farm has trained more than 3,500 farmers in farm management including fodder management, animal nutrition, milk quality, animal welfare and farming economics.  They are also supported by a network of more than 20 supplier relationship officers. Our investment in seven milk chilling centres means we can collect over 35,000 litres from 4,000 local farmers and process it into quality fresh dairy for the local market.  

Fonterra Dairy Development in Indonesia takes the form of an award-winning  scholarship programme, run in partnership with the Directorate General of Livestock and Animal Health Services. Since 2013, it has trained and provided long-term support to 48 dairy farmers and government support officers.  This scholarship has helped participants increase milk production, improve milk quality, drive on-farm efficiencies and improve herd health – all things that help to drive farm profitability and ensure these farming families are producing safe, high quality milk and generating better returns for themselves.  

It is a programme when knowledge gained becomes knowledge shared, with scholarship recipients going on to run farmer-to-farmer training, seminars and workshops.  In 2016, more than 1,200 farmers and industry participants attended training sessions held by last year’s scholarship recipients.  

New Zealand farmers are considered to be among the best in the world. Through Dairy Development, they are passing on their skills to counterparts around the world in volunteer programmes and through hosting in New Zealand.  This combination of formal and volunteer support is a winner for us, our industry and the many farmers who have gained more skills, milk and income. 

 

References  

[1] Doherty, S. and Hoyle, S. (2009). Supply Chain Decarbonization. World Economic Forum. 

 

ABOUT THE AUTHORS  

Dr Jeremy Hill is Fonterra’s Chief Science and Technology Officer, a role he has held for over ten years.  Between 2012-2016 he served as President and Chairman of the Board of the International Dairy Federation (IDF), the peak body for the global dairy sector.  In October 2016 on behalf of the IDF he co-signed the Dairy Declaration of Rotterdam with the Food and Agricultural Organisation of the United Nations recognising the critical role of dairy in sustainable development. 

Dr Hill is a Governor of the Dairy Sustainability Framework and chairs the Framework’s Advisory Board composed of diverse expertise from senior leaders from the Food and Agricultural Organisation of the United Nations, American Human Society, ASDA Walmart, Rabobank, Roundtable for Sustainable Beef, and Solidaridad an international civil society organization focussed on facilitating the development of socially responsible, ecologically sound and profitable supply chains.   

Carolyn Mortland is the Director of Social Responsibility for Fonterra, responsible for setting and ensuring Fonterra’s global commitments across the full spectrum of social responsibility topics, from setting environmental sustainability standards to ensuring the provision of safe products, caring for staff and engaging with communities in an ethical manner.  

Ms Mortland has worked in Sustainability and Social Responsibility teams in Fonterra since 2011, with an initial focus on environmental sustainability issues such as water quality and climate change mitigation.  She is a member of the Living Water Steering Group, a partnership between Fonterra and the New Zealand Department of Conservation and an active participant in the Dairy Sustainability Framework. 

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