Since the Climate Change Commission released its report, I've been asked a number of times what this means for Fonterra. It's about ensuring we're doing what's needed to be a strong New Zealand co-operative, from one generation to the next. Our farmer owners know this and we're also hearing it from our customers all around the world.
Here in New Zealand, it's easy to lose sight of how hard we need to keep working. Given the scale of Fonterra in New Zealand terms — with our 10,000 farmer owners, 20,000 employees, a network of manufacturing sites and a global supply chain — anyone could be forgiven for thinking we're a massive global player, but we're pretty small on the world stage. At just 3 per cent of the total global milk supply — it's a real case of Kiwi farming families taking on the world.
The benefits to the New Zealand economy are significant.
Our milk price alone will inject around $11 billion into rural communities this year. As a proud Kiwi, and now CEO of Fonterra, it's something I feel a personal responsibility to protect. And to protect that, we have to keep protecting the environment.
From a business perspective, I look at climate change in a couple of ways.
We're in the business of intergenerational agriculture. One of the things that makes our milk so special, so sought after, is what we've been given by nature. We have a relatively warm climate, a good amount of rain and a healthy dose of sun. Thanks to New Zealand's unique climate, we have a natural, pasture-based farming system, which makes for the best milk in the world.
And if we want to be around for many generations to come, we have to keep on with the steps to safeguard the environment. The health of the land is the health of our industry.
Our customers expect it. When I was in sales in the Middle East during the mid-2000s, it was about getting the best product functionality for the best price. So much has changed. Our customers are expecting not just a product that performs well, but a product that's got the right, end-to-end sustainability. I'm often asked: Are all your customers really that interested in sustainability? The short answer is "yes". The challenge is on them too, and they need our help to meet it.
For us, it's about value, not volume. To maximise value, we have to meet the needs of our increasingly sustainability focused customers. We're more than halfway there with what we've got naturally. New Zealand farmers already have the lowest carbon footprint in the world. But we have to keep strengthening our performance in this space to credibly differentiate ourselves on sustainability, to get that premium for New Zealand.
For me, the Climate Change Commission Report has been a catalyst for a broader discussion about how we can continue to increase the value we receive from the hard work of our agricultural families in New Zealand. As a co-op, and as part of the NZ dairy industry, our farmer owners have been committed to the environment for a long time now and have made some significant progress in leaving it in a better state for the next generation.
And while there is more work to be done, our path towards reducing emissions is in line with the Commission's recommendations as we focus on ways to reduce our impact.
Reducing on-farm emissions is by far our biggest opportunity. There won't be one silver bullet, but rather many different approaches needed to make a difference. It's why we're continuing to invest in R&D and partnering with scientists and innovators to find solutions.
And while a lot of the focus is on-farm, we're also making changes within our operations, such as transitioning all our manufacturing sites off coal by 2037 and converting our vehicle fleet to EVs.
I recently caught up with a farmer from the Bay of Plenty, whose whānau has been farming the land for generations.
Their vision is Manaakitia te Taiao — Toitū te whenua — Toitū te tangata. Care for the environment — retain the land — promote the health and wellbeing for all.
Over the years they've been driven by both a global view of what customers are looking for and a local view about reducing the farm's overall footprint.
There are many examples like this but this story sums up for me the challenges we all face and just as important, the reasons to believe in being part of a co-operative that has been bringing the best of dairy to the world for the past 150 years and why that can and will continue for generations to come.
● Miles Hurrell is CEO of Fonterra.