The annual incentive of eight cents per kilogram of milk solids would be paid to farmers who met on-farm sustainability targets and produced palm kernel-free milk, milk supply manager David Williams said at the company’s annual conference in Christchurch on Thursday.
A farmer with a herd of 400 cows, each producing 350kg/MS, could expect a premium of $11,200.
Williams said 28 per cent of Synlait’s suppliers were already certified under its Lead With Pride programme, which rewards farmers for meeting best practice in environment, animal health and welfare, social responsibility and milk quality, and more were working towards it.
The palm kernel-free premium would be paid to certified farmers who supplied milk that was 100 per cent free of the feed.
Palm kernel expeller (PKE) is a waste product of the palm oil industry which has been linked to the destruction of rainforests and blamed for destroying the habitats of endangered orangutans.
In milk production, it changes milk fat composition, causing problems in manufacturing and in meeting customers’ specifications. From September 1, Fonterra suppliers who don’t meet the co-op’s PKE limits will be penalised.
Williams believed Synlait’s financial incentive would lead to reduced PKE use on New Zealand’s dairy farms over time.
“PKE use doesn’t impact our footprint in New Zealand, but PKE use indirectly supports clear-felling of native forests in Indonesia,” he said.
“That results in reduced carbon sequestration, degraded soil health, harmed waterways, and dramatically changed biodiversity. It’s an international problem we can help solve through our 100 per cent PKE-free incentive”.
Other sustainability commitments outlined at the conference included reducing greenhouse gas production by 35 per cent per kg/MS on-farm and 50 per cent per kg/MS off-farm by 2028, reducing water consumption, moving away from coal-fired boilers and commissioning New Zealand’s first large-scale electrode boiler.
Climate Change Minister James Shaw welcomed Synlait’s environmental commitments.
“The fact that Synlait believes it can reduce greenhouse gas emissions on its farms by more than a third in just 10 years using existing technology and best practice demonstrates what is possible for the dairy sector as a whole,” he said.
“Its commitment to building no new coal-fired boilers and reducing existing coal use is also very encouraging.”
By: ESTHER TAUNTON