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Current as of 17/09/14 07:40PM NZST

Fran O'Sullivan

A columnist for the NZ Herald

Milk shakeup push coming from Fonterra

Fonterra chief Theo Spierings wants Government buy-in on a national strategy, reports Fran O'Sullivan

Fonterra's CEO Theo Spierings says the multi-council approach is a killer. Photo / Chris Gorman
Fonterra's CEO Theo Spierings says the multi-council approach is a killer. Photo / Chris Gorman

Fonterra chief executive Theo Spierings wants the Government to buy into a national plan the dairy giant is developing to grow the New Zealand milk pool.

A formal approach to Government will not be made until August. But Spierings has already briefed Prime Minister John Key on the dairy giant's developing strategy.

The Fonterra plan has to balance two objectives: How to add more value to the NZ milk pool - which is expected to grow by a further 2.5 billion litres by 2020 - and make good on a commitment to sustainable dairying.

"We're going to give the plan to the Government in August, "says Spierings.

"We will go in on an area-by-area approach over the country. But it's a national plan and what we really ask Government is that, if we land this plan, we go hand-and-hand with Government on a national approach rather than a multi-council approach.

"Because the multi-council approach is going to kill us and it's going to kill growth because you have different debates all over the country and you need national ownership here."

Fonterra projections based on the 3 per cent compound average growth rate of the NZ milk pool over the past decade - and a projection of 2 per cent annual growth for the next seven years - suggest an extra 2.5 billion litres will be produced annually by 2020.

Spierings is upfront about some big and potentially controversial questions which need to be decided:

How much of the additional milk will come from greater productivity? Where will more land conversions take place? Where there should be higher stocking rates and whether higher stocking should be discouraged in some areas because the environment cannot take it.

He notes the environmental challenge is real, but maintains there is a "big risk" of sub-optimal outcomes from non-strategic local and regional interventions.

The Fonterra plan will spell out that dairy farmers supplying the co-operative have to be on top of effluent management to eliminate discharges to fresh water, ensure 100 per cent stock exclusion from waterways, reduce the nutrient leaching risk and use water more efficiently.

Every farm supplying Fonterra will be assessed every year and environment improvement plans will be agreed where needed. The final sanction is non-collection of the milk.

"We are very open but in order to supply Fonterra you need to step up. The farmers know it is coming," says Spierings.

"We are looking at each and every farm on effluent management. That is happening and at the end of the year we should be over 95 per cent stock exclusions."

- NZ Herald

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