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Fonterra farmers who produce sustainable, high quality milk will be eligible next year for a new payment of up to 10 cents per kg of milksolids.
Farmers would be eligible for Fonterra's new "Co-operative difference" payment if their farms meet its on-farm sustainability and value targets.
"It makes sense to financially reward those farmers who go the extra mile to help our co-op differentiate its milk - not all milk is the same," CEO for Asia Pacific at Fonterra, Judith Swales told The Country Early Edition's Rowena Duncum.
"Every farmer will have the opportunity to earn this payment and we'll keep supporting them through the Farm Source team".
Fonterra announced the new scheme in plenty of time so it could develop the frame work with its farmers over the next few months "to achieve the right balance," Swales said.
"It will give us time to talk to farmers, to get feedback, and to make this something that works for both parties".
Although Fonterra farmers already produced top quality milk, it was important to illustrate that fact through the payment, Swales said.
"Our New Zealand farmers are producing some of the best milk from a grass-fed non-GM source that has the lowest carbon footprint produced anywhere in the world".
The strategy is aimed at adding value to New Zealand milk, due to increasing demand from customers for sustainably produced dairy, Swales said.
"This is really about actions and words. Our strategy is focused on generating maximum value for New Zealand milk. If we want to protect and grow that value we need to be supporting and encouraging farmers to adapt to that changing need for customers and consumers, and also what communities expect".