The co-operative structure of New Zealand’s biggest company enabled the strategy to be implemented seamlessly with plans going forward to accept 1000 further volunteer farmers and ultimately opening the opportunity to all shareholders according to demand and the success of the venture.
The simple strategy involved the farmers immediately retiring flat dairy grazing land beside significant water bodies – rivers and streams and diversifying the land to grow peas, following the complete eradication of the pea weevil.
Cow stocking rates were adjusted downwards to suit – with many farmers glad to milk less cows but maintain profitability.
High tech water quality monitoring systems were installed at various sites prior to the strategy implementation, recording data to quantify any shifts in nitrate, phosphate and e-coli levels in the waterways before and during the changes.
The farmers did not suffer financially from destocking their farms as any negative losses to income and profit margin had been worked out and returns adjusted accordingly.
In other words because Fonterra is a co-operative, the farmers not currently involved in the project adjusted their returns across the board to make the transition to the pea growing fair and equitable for all.
Fonterra contracted pea consultants, growers and harvesters to step in and take over the implementation of the pea crops. The dairy farmers were acknowledged to be specialists in their own field and extra demands on their time were not mandatory, although most were agreeable and interested to become involved in the cropping.
Once the pea crops are ready to be harvested, the contractors were only a phone call away, gates were opened and the crops were taken. The dairy farming side of the operation carried on as normal but with a slightly reduced scale.
Opportunity cost (losses) were covered by the incomes from the peas and or the income smoothing within the cooperative.
When the strategy was first suggested there was an uproar from a sector of farmers who did not think it was very fair. But this was soon silenced by the success of the strategy.
Fonterra processed the peas into ‘pea’ milk, marketed as ‘Green’ (because consumers did not like drinking pea).
Consumers were now given a choice – they could drink 100 per cent Green (pea) milk or opt for ‘half and half’ (pea and cow milk) or for the die-hards, 100 per cent cow milk, because let’s face it cow milk is an amazing unrivalled product.
This strategy enabled Fonterra to continue dominating the world milk markets while maintaining and improving upon a small environmental footprint unrivalled by its competitors.
The Green range of milk products proved very popular with international consumers and demand was high meaning the shareholders of the Fonterra co-operative were able to make the transition to a more diverse range of nutritional products without suffering financially.
Off shoots of Project Green were the ability to harness nutrients from dairy farming to fertilise the pea crop in a controlled and monitored manner.
Pea by-products were made into animal fodder and bio fuel and returned back to the Fonterra farmers at affordable prices. The profits from Project Green were so high methane capturing bio-electricity plants were installed at low cost and maintained on Fonterra dairy farms further reducing the pressure dairy farming placed on the emissions trading scheme.
Because of the co-operative nature of Fonterra all shareholders were able to benefit from the success of Project Green whether directly involved or not.
Project Green co-ordinator, Wyn Lebster said at a recent press conference that the waiting list for farmers wanting to join Project Green was full and within 10-years the co-operative believed almost all Fonterra farmers would be involved.
Lyn Webster is a Northland dairy farmer.