Fonterra Cautious on ETS Recommendations

Fonterra says it is committed to emissions reductions and will continue to work within the business and on-farm to see them achieved.

Sep 15 2011 --- Group Director Supplier and External Relations, Kelvin Wickham said: “Fonterra remains concerned that applying carbon costs on agriculture in New Zealand, when they are not applied elsewhere in the world, would shift dairy production to far less emission-efficient countries. The net result would be no reduction in global emissions.”

Mr Wickham said the agricultural sector would worry about agricultural emissions attracting a carbon cost from 2015, despite the ‘two for one’ recommended for the period between 2015 and 2017.

“These new costs, that will average over $4,000 a farm from 2017, come on top of the $7,500 in carbon costs on farm fuel and energy and will impact on competitiveness.

“The current research into agricultural emissions mitigation is promising but there are no ready made, game breaking solutions. Our farmers are already among the most emissions-efficient in the world. Investing in research is the most practical path if farmers are to have a serious chance of reducing emissions and the associated carbon costs.

“It would make sense if the carbon costs placed on agriculture were to be invested to accelerate the research into on-farm mitigation tools.”

Fonterra shareholders had already put up 23% of the $43 million being invested in emissions mitigation research, so were not seeking a free ride, said Mr Wickham.

“Our farmers have reduced emissions per litre by around 8.5 per cent since 2003 and in the business initiatives such as our energy efficiency programme have delivered a 13.9 per cent reduction in the same period.

“What we have done to date makes us confident that we can do more and we believe it is realistic to achieve at least a 30 per cent reduction by 2030 in the emissions intensity of each litre of milk sourced and processed in New Zealand. Achieving this would mean a 4.9 million tonne reduction in per annum global emissions,” said Mr Wickham.