Andrew Kempson, Fonterra’s General Manager of Global Climate Policy discusses the common opportunities and challenges faced by dairy companies around the world.
It doesn’t matter if you’re in New Zealand, Western Europe, the US, or other parts of Oceania – the entire dairy industry is thinking about how to get the best deal for their ingredients.
I’ve had the pleasure of talking to farmers from around the world, as well as their dairy processors, and it’s uncanny how familiar some of their challenges and opportunities seem, especially when it comes to sustainability. If you step back and look at the global picture – it’s things like societal pressure, access to finance and markets, and protecting relationships with some of the biggest and most valuable customers in the world. Fonterra isn’t unique in that way.
For all of us, the sustainability credentials of our milk are increasingly as important as the safety and quality of it.
A lot of times, when we talk about markets and customers, it’s more about retaining existing relationships and meeting their requirements, than creating new relationships.
It’s also interesting to hear about how international colleagues, like Arla or FrieslandCampina (our “frenemies”) are responding to these challenges. We all have different farming systems and opportunities on the ground – for example, a farmer in the US has different options than a New Zealand farmer for managing methane from cows, because their cows are housed in barns rather than grass-fed.
But we’ve got to find ways that are right for us in our unique grass-fed system, and it’s positive to see a real deliberate approach to work together and see climate as a shared challenge. It’s not just our problem or a farmer problem, its customers, consumers, and suppliers. It’s encouraging that everyone sees they have a part to play.
In Europe, Arla has its Climate Check programme and FrieslandCampina has the Foqus Planet programme. Both connect farmers to customers through customer funding for sustainable activity on-farm.
In the US, large co-operatives like Dairy Farmers of America and Land O’Lakes have been really innovative with customer partnerships and their funding of low-carbon farming initiatives to support farmers through changes. Certainly, there is likely to be some change at a national level after the recent change in administration, but ultimately it comes down to what the market wants, and so the way dairy companies fund, incentivise and support their farmers through transition is unlikely to shift.
Even for us at Fonterra, we’ve seen incentives like the Nestlé 1-2 cents payment for farmers who achieve The Co-operative Difference, and funding for tools and services like herd improvement tests.
What’s good for farmers to know is that a co-operative is a pretty great place to be in all of this.
Co-ops are fundamentally created to generate wealth for their owners. So, when we’re talking to our customers, it’s about making sure we’re able to secure and build relationships that are going to bring value directly back to the pockets of our farmer-shareholders.
This is also not the only way that farmers are benefitting. Customers like Nestlé and Mars are good friends to have. Yes, they’re the biggest food brands in the world, but they’re also doing a lot of work in agricultural science and sharing those learnings with us, so that we can bring them back to farmers in the Co-op – things like research on mixed species pastures, soil health practices, animal nutrition and on-farm technology. They’re generous about sharing these insights and knowledge and have a genuine interest in learning from our farmers too.