Fonterra farmers are already among the world’s best in these areas and we’re really proud of that. The Co-operative Difference payment is another way we can recognise farmers, while also supporting our strategy to grow the value of our New Zealand milk by responding to increasing demand around the world for sustainably-produced dairy.
The new payment recognises farmers who are already going above and beyond because they’ve innovated or invested early, and it also offers farmers more encouragement for taking the steps required to meet the changing expectations of customers and communities, both today and into the future.
We want to reward the on-farm efforts that demonstrate our co-op’s care for the environment, animals, people and communities. It’s these actions which help ensure we’re the dairy company of choice for customers around the world and for NZ dairy farmers, for generations to come.
While the Co-operative Difference framework was introduced in 2019, the milk payment is new to farmers. It’s the first time Fonterra has recognised sustainable farming in this way. The payment is based on consumer research and customer feedback.
Today, 81% of consumers feel strongly that companies should help improve the environment.
Fonterra’s customers are responding to this by setting some bold goals to reduce their emissions profile over the coming years and there’s an opportunity for farmers to support them. For example, Nestlé has a target for net zero emissions by 2050 and Starbucks aims to reduce carbon emissions by 50% by 2030.
When Fonterra first talked about this payment last year, Nestlé’s Robert Erhard came out in support and said how milk is produced matters.
Now more than ever, people expect farmers to act as good stewards of the land – safeguarding the climate, enhancing animal welfare and carefully managing water and the health of soils.
Understanding the Co-operative Difference payment
The 10c Co-operative Difference payment is made up of:
7c per kg MS for achievement under the Environment, Co-op and Prosperity, Animals, and People and Community focus areas.
Once these have been achieved:
3c per kg MS for milk that meets the “excellence” standard under the Milk Quality framework.
Effective from next season, or June 1.
Current Farm Source Rewards Dollars in the Co-operative Difference will be replaced with the Co-operative Difference payment.
The amount and targets will be set annually by the Fonterra board.
The total amount available to be paid to farmers does not change, but a proportion of the Farmgate Milk Price will be available to be redistributed between farmers to better reflect individual farm’s achievement against the Co-operative Difference framework.
By: Richard Allen, group director of Farm Source
