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Home / Business / Business Reports / Agribusiness report

Agribusiness Report: Cleaning up dairy

By Brierley Penn and Fran O'Sullivan
NZ Herald·
8 Jul, 2014 04:15 PM4 mins to read

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Tatua's Paul McGilvary: finding cost-effective sustainability measures.

Tatua's Paul McGilvary: finding cost-effective sustainability measures.

Growing number of firms out to smash dirty dairying tag pegged on them by critics.

New Zealand's oldest dairy company is proving that sustainability initiatives are not only good for the environment but can also make good business sense.

Tatua -- which has just celebrated its 100th birthday -- is doing deals with other players like dairy giant Fonterra to improve its environmental performance. "We're trying all the time to make our business more and more sustainable," says Tatua chief executive Paul McGilvary. "We really want to leave the environment here better than we found it."

More of that soon. Tatua is just one of a growing number of New Zealand dairy companies which are out to lift their environmental performance and smash the "dirty dairying" image that critics throw at NZ's biggest export performer.

This push is not just confined to the New Zealand players like Fonterra which is taking a tough approach to farmer shareholders who do not comply with the co-operative's push for them to be vigilant about effluent discharges into local waterways.

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For instance, Chinese dairy company Yashili, which has invested in building a $220 million plant state-of-the-art infant formula plant in Pokeno, is looking to reduce energy usage through solar technology. Yashili expects to produce around 52,000 tonnes of infant formula products annually to supply the rapidly growing and increasingly demanding Chinese market and brand itself as a 'green' producer.

KPMG's 2014 Agribusiness Agenda makes the point that the agriculture industry does not operate in a vacuum from the rest of society. KPMG reports that agricultural industry leaders are frustrated by the views held by the majority of the population as they fail to recognise much of the good work being done by businesses across the primary sector.

"The urban population generally do not see the link between a farmer's land assets and their livelihood; or acknowledge that for a farmer to stay in business in the long run, their assets must be managed in a sustainable manner," says KPMG.

The focus is also at the industry level. Tatua's 100-year record proves it is ahead of the curve. So what's it up to on the sustainability front?

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How Tatua treats milk permeate (lactose) is a good example of the sustainability measures the dairy industry is progressing.

Though permeate was formerly irrigated out onto the fields as a waste product, Tatua has now entered into a deal with Fonterra in which its permeate is sold for use in standardising Fonterra's milk products.

McGilvary says the deal is a "win-win" for both companies. Fonterra is able to ensure their final product can carry the "product of New Zealand" label, which has important global market value, rather than having to source their lactose from offshore.

"From our perspective, it stops us irrigating on the land, so it becomes a value-add, and we get paid for it.

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"It's an example of something we've done environmentally, and by doing that deal we've actually really improved the quality of what we're putting out on to the fields."

Wastewater treatment is another area in which Tatua is investing in environmentally sustainable initiatives to reduce their impact on New Zealand soils and waterways.

"Our goal is to try to go to a zero net water take," McGilvary says. "So we can operate here, and do all the things we do, and return the same amount of water as we took and have it cleaner than when we took it."

Due to the higher value, but lower quantity nature of Tatua's products, their machinery is switched on and off more regularly than those of larger scale milk powder operations. This requires more cleaning, and accordingly, more water use. The company currently separates this water into what McGilvary calls "high-strength waste" and "low-strength waste", the latter of which comprises around 20 per cent of total water usage. This 20 per cent is almost of sufficient quality to return to the ground, with minor cleaning.

Tatua is currently looking at initiating measures to clean that water, which McGilvary hopes will be in place by next year.

"The other 80 per cent needs a bit more attention," McGilvary says. "But we're looking at processes where we can actually clean that water up and maybe even generate gas off the solids that are in the water to run our boilers.

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"We'll clean [the gas] up and that water should probably be cleaner than when we took it from the ground."

Gas cost savings generated by this initiative will mean it almost pays for itself, proving once again that sustainability doesn't have to be a costly measure.

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