Fonterra has launched a new on-farm emissions reduction scheme this season, backed by funding from global food companies Mars and Nestlé. The programme provides financial incentives and emissions-reduction tools to dairy farmers who meet set sustainability criteria. Around 6,000 farms, or 87% of Fonterra’s suppliers, are expected to qualify.
Using Co-operative Structures to Deliver Commercial Sustainability Incentives
The programme is structured as a co-operative scheme rather than being driven by regulation, with commercial partners directly funding incentives for farmers.
Fonterra’s “Co-operative Difference” scheme serves as the platform for delivering the incentives. Farmers are rewarded not just for production, but for environmental performance and climate-conscious practices.
The dairy co-operative confirmed that Mars and Nestlé would help separately fund “two new incentives for farmers towards the production of low-emissions milk.” One includes a $1500 reimbursement for eligible on-farm tools designed to cut emissions.
Deploying Emissions Reduction Frameworks Across Supplier Operations
The initiative is expected to reach about 87% of Fonterra’s 8,000 farmer suppliers — approximately 6,000 farms. Its broad reach and accessibility are key components of the programme’s design, with a focus on scalability across New Zealand’s diverse farming regions.
Chris Appleby, director of On-Farm Excellence within Farm Source, said the tools were chosen after consulting farmers nationwide. “There’s been really good engagement with our farmers across the country on what was in behind that.”
“Then, it’s about making sure that those solutions [are] scalable, available right across the country, and really importantly, [tools that] actually help and we know will make a difference in terms of increasing or supporting that emissions intensity reduction as well,” he added.
Incentives with Emissions Performance Benchmarks
Farms must demonstrate emissions below Fonterra’s 2017/2018 baseline to qualify for the financial support. The benchmark includes emissions from livestock, fertiliser use, feed inputs, and drained peat soils, while also factoring in carbon offsets.
Building Emissions Reductions Into Commercial Supply Chains
The emissions scheme is supported by companies that source dairy from New Zealand and does not rely on regulation. Fonterra’s approach involves using business links to support emissions reduction.
The scheme is set to reach 6,000 farms this season, making it a significant private-sector initiative within New Zealand’s primary industries. It combines financial support from international companies with farm-level climate measures.