Maintaining Aotearoa New Zealand’s Competitive Advantage in Providing Sustainable Nutrition

Miles Hurrell - CEO, Fonterra

Recently I travelled offshore for the first time in nearly two years. It was great to get out and meet with employees, customers and some of my industry peers. What was clear in these discussions is sustainability is top of everyone’s agenda.

We’re all striving for a better future than the one we have today, all heading towards the same destination, but taking different roads at different speeds.

We know New Zealand is unique in many ways. This includes its emissions profile, which is heavily influenced by our country’s ability to produce and export high quality dairy, meat, fruit and vegetables.

New Zealand’s climate is perfectly suited for sustainable food production. We have a relatively warm climate, rich soils and a healthy dose of rain and sun and these are perfect conditions for growing grass.

It’s because of this that New Zealand dairy farmers are some of the most carbon efficient in the world. When you combine this with our Co-op’s animal welfare standards, scale and efficiency, we’re in a strong position to provide some of the most sustainable nutrition in the world.

But we know our Co-op’s operations in New Zealand, from our farmer owners’ farms right through to the point at which our products are put on container ships for export, are responsible for 20% of New Zealand’s emissions. We need to do more for New Zealand and by doing so play our role in helping address change.

We recently launched the next phase of our strategy, looking out to 2030. Our strategy puts sustainability front and centre along with an aspiration to be net zero by 2050.

We’ve made a good start in our manufacturing operations where we are exiting coal by 2037. We reduced our emissions from coal by 11% last year, largely through the conversion of our Te Awamutu site to wood pellets. In Otago, we’re currently converting our Stirling cheese plant to wood biomass to make it our first 100% renewable thermal energy site.

We will then have just eight out of our 29 sites using coal and over the next eight years we will carry out the majority of the work required to transition these sites. This work is very important to achieve our 30% off-farm reduction in emissions by 2030. At which point our off-farm emissions will be equivalent to less than 15% of New Zealand’s light vehicle fleet.

A farmer’s livelihood depends on producing good quality milk and that relies on a stable climate and healthy ecosystem. We need to work with farmers to help ensure their family businesses are sustainable and resilient well into the future.

More and more customers are looking at their supply chain and how they can make changes which help them achieve their sustainability goals, which are not limited to decarbonisation. They’re willing to invest in solutions and collaborate with others to help make necessary changes. Last year we partnered with Nestlé and DairyNZ to expand a promising trial that looks at a type of herb, plantain, to improve waterways and reduce on-farm greenhouse gas emissions. This study was further expanded this year with additional funding from MPI.

Partnerships with customers, industry peers, farmers and Government are all important to help us make progress. He Waka Eke Noa, a primary sector climate action partnership, sees industry and Government working together to help farmers with practical solutions to reduce emissions. Together the group will be introducing an emissions pricing system for the agriculture sector by 2025.

When it comes to dairy, and indeed New Zealand as a whole, methane is a huge challenge.

At COP26 the Methane Pledge was launched. New Zealand, along with 105 other countries, signed up to reduce methane globally by 30% by 2030. Game changing, a quick fix and low-hanging fruit have all been used to describe this pledge. What some may not recognise is much of the methane reductions other signatories are talking about will come from oil and gas and can indeed be a quick fix.

In New Zealand it isn’t quite so straight forward as biogenic methane is much more difficult to reduce. But this doesn’t mean we’re not focused on solving the methane puzzle.

Over the past 18 months it’s been amazing to see how quickly the science world has been able to find a vaccine to COVID-19. Imagine if we had the same kind of focus and resources going into finding a way to reduce emissions – I’m convinced we’d have a significant proportion of the methane solved in no time.

At Fonterra we’re upping our investment in sustainability initiatives and R&D. We know we will achieve more by partnering with others, and we’re already starting to see some promising results.

For example, KowbuchaTM, one of our probiotic strains, has shown to reduce methane by up to 50 percent in lab trials and we’re now seeing whether we can get similar results once it is being used on farm.

We’re also working with Australian organisation Sea Forest to understand if we can reduce emissions by incorporating seaweed into a cows’ feed.

With Royal DSM, a global science-based company, we’re testing whether DSM’s feed additive product Bovaer®, which reduces methane emissions from cows by over 30% in non-pasture-based farming systems, can do the same in New Zealand’s pasture-based farming system.

These are exciting developments, but as a Co-op and a country we need to keep moving at pace to find the solutions which will allow us to maintain our relative carbon footprint advantage against the northern hemisphere farming system.

The New Zealand provenance story is a strong one and gives many Kiwi companies a competitive advantage. We need to make sure we hold onto it.

We all have a role to play in creating a sustainable future and helping Aotearoa meet its goals. At Fonterra, it’s about supporting the good work farmers do on farm by ensuring our operations are as efficient as possible while also helping them to embrace the challenges ahead. By doing this we can continue to be world leaders in the production of sustainable dairy.

We’ve got a phenomenal foundation to build from. New Zealand’s ability to produce highly nutritious food sustainably will be good not just for New Zealand, but also many countries around the world and will ensure we’re creating goodness for generations to come.