Fonterra introduced a new premium system for sustainable milk on Thursday 25 February. Member dairy farmers of the New Zealand Dairy Cooperative can earn up to NZ$0,10 per kilo of milk solids in premium by delivering sustainable performance. According to the current exchange rate, this is €0,46 per 100 kilos of milk.
The premiums for more sustainable milk will come into effect on June 1, 2021, the start of the new milking season in New Zealand. The bonus consists of 2 layers: for green performance and for higher milk quality, Fonterra reports in a statement. The total amount paid to member dairy farmers will not change. The money is therefore distributed differently among the members in the new system.
Encouragement for farmers
With sustainable milk, the dairy giant is responding to the increasing demand from the world for sustainably produced dairy products," said Richard Allen, Group Director Farm Souce. "This new payment recognizes the farmers who have already taken a step further, because they have early innovated and invested. In addition, it encourages farmers to take the necessary steps to meet the changing expectations of customers and society. †
Of the premium of NZ $0,10 kilos of milk solids, $0,07 (approximately €0,32 per 100 kilos) is paid out for performance in the field of the environment, animal welfare and social support. The remaining $0,03 kilos of milk solis (approximately €0,14) is paid out if dairy farmers meet milk quality standards.
Difficult to calculate milk prices
Fonterra also announced that it has slightly increased its expected end-of-season payout per share. Due to the favorable export, the cooperative had already raised the expected average milk price. Miles Hurrell, Fonterra's CEO, did indicate that he expects pressure on the dairy group's margins for the second half of the year. It is becoming increasingly difficult for Fonterra to fully pass on the higher milk prices in the product prices to its customers.
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