Fonterra on road to sustainable farming

01-04-2010 | Not Specified

Fonterra needs to be at the leading edge of profitable and sustainable dairying but at a pace and a price that does not disadvantage its competitive position.

At last month's fertiliser and lime conference at Massey University, John Hutchings, general manager Sustainable Production, Fonterra, outlined Fonterra's vision to be at the forefront of sustainable dairying from paddock to plate.

Fonterra is New Zealand's largest company with an operating revenue of US$14 billion generating 7% of the country's GDP. Hutchings says getting the sustainability policy right is important for the company and the country.

Fonterra launched a sustainability strategy in 2009, encompassing programmes such as the dairy clean streams accord, carbon footprinting work and a comprehen­sive energy efficiency programme.

The importance to tourism of New Zealand's "clean green" image is such that Fonterra's approach to sustainability will have effects which extend well beyond the farming sector, Hutchings says.

Domestically, if sufficient progress is not made in resolving issues associated with climate change, nutrient management and water use, negative public attitudes to dairying will grow. The result will be that farmers' licence to operate is increasingly constrained and regulatory costs will increase, with related loss of flexibility on-farm.

There are five strands to action on farm - with effluent compliance the top of the list. While they have started with clean streams and riparian planting, the industry cannot afford to have an 11% rate of non-compliance and have put a programme in place to enforce a reduction in payout for non-compliant suppliers, Hutchings says.

The other strands include water quality, dairy farming in fragile environments, climate change and the carbon footprint of dairy farming.

"Water quality, particularly from urine, is the biggie," he says. "It is a vulnerability which we have got to get right."

At the international level Hutchings says the company is aware their customers are becoming more discerning in regards to the sustainability of food production and that they are exercising that discretion in demanding foods with robust environmental credentials.

"We have to be forever conscious of our international consumers - more often than not if the price of two products is the same but one has better sustainability credentials then they (the customer) select that one from the shelves."

While the environmental footprint of a product may never match price and product quality attributes as the dominant factors affecting purchasing decisions, Hutchings says there is no question the environmentally sustainability credentials of a product will become more and more important.

Fonterra's ambitious ideal is to achieve a premium price for those products which are confirmed as being produced using world-leading sustainability practice at all steps in the supply chain.

The larger challenge, Hutchings says, is to produce enough for an increased world population while lightening the footprint of food production as well as increasing the nutritional quality of that food - and substantially reducing the impact of agriculture on the environment.

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