Fonterra has announced new funding designed to build a stronger cooperative and continue to grow value for its shareholders by helping farmers reduce on-farm emissions.
For the 2025/26 season beginning this June, Fonterra will introduce a payment for farms that achieve specific emissions-related criteria as part of its Co-operative Difference framework updates.
Meanwhile, new incentives that benefit farmers will be funded through separate agreements with Mars and Nestlé, who have been working with Fonterra to make progress towards their individual sustainability goals by supporting farmers in reducing emissions.
Fonterra CEO Miles Hurrell said the new incentives demonstrate Fonterra’s strategy in action.
“We’re growing relationships with customers who value the hard work farmers put into producing sustainable, high-quality milk, along with the Co-op’s quality of on-farm data and ongoing commitment to improvement. This helps us make progress towards achieving our on-farm emissions target and deliver the highest returns for our farmer shareholders’ milk,” said Hurrell.
“Last year, we confirmed six strategic choices that we believe will help grow further value in the years ahead and this is an example of how we’re delivering on two of those choices, delivering the strongest farmer offering and building on our sustainability position.”
The new funding includes new cooperative difference payments and new customer incentives.
To date, up to ten cents per kilogram of milk solids (kgMS) has been possible across all achievements within Fonterra’s Co-operative Difference framework. A new Emissions Excellence achievement will offer a further payment of between one to five cents per kgMS for farms that meet certain criteria.
Farmers who achieve the Co-operative Difference will be eligible for access to on-farm tools or services designed to improve emissions efficiency further.
Mars Snacking Chief R&D, Procurement and Sustainability Officer Amanda Davies said that, between new equipment and technology, embracing more sustainable practices comes with a price tag for farmers.
Nestlé New Zealand CEO Jennifer Chappell said Nestlé globally is a significant purchaser of New Zealand dairy ingredients, and dairy has remained its largest source of greenhouse gas emissions.
Mars and Nestlé have independently supported Fonterra farmers with their sustainability actions through initiatives introduced over the past couple of seasons.
In 2024, Fonterra farmers were invited to take part in the Mars Tools and Services pilot, which provided access to tools and services, including animal efficiency services and digital tools.
Additionally, Mars previously supported the Greener Choices programme, which made it easier for Fonterra farmers to identify and buy products at Farm Source stores that could help them make sustainability improvements on farms.
In 2022, Fonterra and Nestlé announced a partnership that included the Net Zero Pilot Dairy Farm in Taranaki, designed to help reduce on-farm emissions.
In 2023, Fonterra announced that Nestlé would make an additional payment of between one to two cents per kgMS for farms that achieved any level of the Co-operative Difference. This payment has been replaced with the new Emissions Incentive payment from next season.
