Up to $9 million on top of the annual payout could flow into Northland's economy if the region's dairy farmers produce milk deemed high quality by Fonterra.
The dairy giant has announced more details, including the criteria, around on-farm sustainability goals that must be met if an additional 10 cents per kg of milk solids is to be paid.
The new payment will replace the current Farm Source Rewards Dollars where each farm gets about $1200 for meeting a number of best practice goals.
Fonterra will pay 7 cents per kg/MS if farmers meet four broad criteria. They need to put in place a Farm Environment Plan with at least three out of four best practices being achieved and implement an Animal Wellbeing Plan developed with their vet.
They must also complete the DairyNZ Workplace 360 Assessment and achieve 100 per cent on the foundation level, and keep full and accurate farm records to be submitted by June 30, 2022.
An additional 3 cents per kg/MS will be paid for achieving milk quality excellence for at least 30 days during the season.
Federated Farmers Northland acting dairy chairman Matt Long said an average dairy farmer with about 300 cows would earn more than $10,000 on top of the milk payout.
He said the additional income could be used in a number of ways, including payout off debt and complying with various government regulations such as extra planting along waterways.
AdvertisementAdvertise with NZME.
Fonterra last month lifted its 2020/21 forecast farmgate milk price from between $6.70 and $7.30 per kgMS to between $6.90 and $7.50.
A payout of $7.50 would earn Northland dairy farmers $675m based on roughly 90 million kg of milk solids they sell to Fonterra each year. Their earnings would drop to $621m if they were paid $6.90 per kgMS.
Fonterra group director Farm Source, Richard Allen, said the new payment recognised farmers who were already went above and beyond because they were innovated and invested early.
It also encouraged farmers to take steps required to meet the changing expectations of customers and communities, he said.
"We want to reward the on-farm efforts that demonstrate our co-op's care for the environment, animals, people and communities. It's these actions which help ensure we're the dairy company of choice for customers around the world and for New Zealand dairy farmers, for generations to come."