Fonterra has set its sights on a 30% intensity reduction in on-farm emissions for the co-operative's dairy farmers.

The new target comes after a 10-month consultation with the 9000 dairy farmers who are part of Fonterra.

Mid Canterbury Federated Farmers dairy chair Nick Giera said the new targets would affect each farm differently.

Mid Canterbury farmers who had access to irrigation water and good soils for growing grass would be less impacted than regions that relied on imported feed.

While he felt no-one would be "happy" with the targets the good thing was the focus on emissions intensity.

"That is a proxy for efficiency - and New Zealand's dairy farmer were one of the most emissions efficient produces in the world."

Giera said if the target was to reduce total emissions, then milk production would fall and the gap in the global market would be filled by less efficient milk from other producers.

Dorie dairy farmer and Fonterra Co-operative Councillor Mark Cressey said the announcement did not come as a surprise.

He said Fonterra had announced plans to introduce an emissions target 12 months ago and had been talking to farmers all year explaining what competitors were doing.

The 30% was similar to competitor's targets but would be a challenge.

"Most of it comes down to on-farm efficiencies and new and novel technology."

If a farmer got rid of the poorest performing 10% of the herd they would come close to the on-farm emission target.

Farmers had achieved 2% of the required 7% reduction in on-farm emissions since 2018 through normal efficiency gains - when there wasn't a target.

Now farmers would need to make changes a bit faster, he said.

Cressey said the reductions from new techology was the biggest grey area.

"Novel technology has to come in at an affordable price."

Cressey said the emissions target was a consequence of asking Fonterra to sell New Zealand milk at top prices.

"If we want that we have to supply what the customers are demanding," he said.

Shareholders were told at a general meeting in Methven on Thursday that the emissions target was needed to future proof the business as customers - and lenders - were increasingly interested in sustainability and carbon emissions.

Fonterra chief executive Miles Hurrell told shareholders that "sustainability was the top concern for customers overseas" and Fonterra's emissions target would help "future proof the co-operative and your business".

Fonterra's 30% reduction was co-operative-wide and would not be measured on a farm by farm basis. However, every member had a part to play.

Hurrell said every farm would be expected to have an action plan and the plan would look different for each farm.

The co-op hopes to reduce emission intensity per ton of fat and protein corrected milk collected by Fonterra.

The emissions target was from a 2018 baseline through to 2030, and progress made since 2018 would be taken into account.

Hurrell said there Fonterra had already seen a 2% on-farm emissions savings across the co-operative since 2018.

"The good work already done by farmers does count," said Fonterra chairman Peter McBride.

He promised that the co-operative would work alongside farmers, not against them, to achieve the target.

McBride said the need for an on-farm emissions target did not change with the election - it was driven by Fonterra's key customers.

"Sustainability and emissions are the new trade barriers," he said.

The future access to funding and capital from banks could also depend on farm emissions.

"Many banks have already set emission reduction targets"

McBride said a focus on sustainability and emissions was the "commercial reality of doing business" and would "catch up with everyone eventually".

In response to a shareholder question whether the emissions target was based on science or market politics, Hurrell said the target was "driven by what our customers are seeking".

McBride said it was science-based but definitely driven by customers and the future need to source capital.

Achieving the target would require a combination of sharing best farming practices and technology to reduce emissions, he said.

Chair of Fonterra's Co-operative Council, John Stevenson, said there had been an increase in tension as the focus on sustainability had encourage a look "behind the farm gate".

Fonterra had met all but one of the 10 performance measures - the farmgate milk price - in the last year.

Stevenson said there was a drop in shareholder confidence in both Fonterra and the future of the dairy industry. However, some he noted some of the causes of that would be out of Fonterra's scope of influence.

Fonterra expects to reduce emissions by about 22% through improved farm practices, new technology and offsetting emissions with planting.

The remaining 8% would come from no longer needing to account for emissions created by land use change to dairy farms earlier this century, by the time 2030 rolls around.

Greenpeace Aotearoa has labelled Fonterra's plans as "woefully insufficient" saying there are no real measures to reduce emissions.

Greenpeace campaigner Christine Rose said the NZX Carbon Insights report released this week showed that Fonterra produced 34% of New Zealand’s total greenhouse gas emissions.

"It’s one thing to announce on-farm emissions reduction targets in response to market demands, but without concrete action, targets are meaningless."

Rose said carbon capture from grass and trees was just creative accounting and the target failed to address the broader impacts of intensive dairying such as nitrate-contaminated water.

Federated Farmers president Wayne Langford said Greenpeace had shown they were nothing but an anti-farming lobby group with their criticism.

"Kiwi farmers are already the most carbon-friendly farmers in the world, and Fonterra’s new target is asking them to go even further.

"True environmentalists should be welcoming such strong leadership from New Zealand farmers who are doing their best...

"Nothing Fonterra could have announced would have been good enough for Greenpeace because they’re anti-farmer and anti-science -they’re totally fixated on an impractical plan to half the herd and to ban fertiliser, but that’s completely out of touch with what most Kiwis want," Langford said.

Nestlé, one of Fonterra's biggest customers, has welcomed Fonterra's announcement as a positive signal.

Chief executive Jennifer Chappell said it would "encourage even greater action by farmers, researchers and policymakers in support of a just transition for the dairy industry".

Fonterra and Emissions

86% of Fonterra’s emissions are generated on-farm

Earlier this year Fonterra increased its emissions reduction target across its manufacturing and supply chain from 30% to 50% by 2030 - also from a 2018 baseline.

The co-operative has also committed to end coal use for industrial heat by 2037 as part of its ambition to be net zero by 2050.

One of Fonterra's rivals, Synlait Milk, announced its on-farm climate goals in mid-2018.

by Sharon Davis