Fonterra details how farmers will be paid for sustainable, high value milk

March 1, 2021 - Fonterra has released the details of how it will pay farmers for producing sustainable, high quality milk as part of The Co-operative Difference framework.

From 1 June 2021, up to 10 cents of each farm’s milk payment will be determined by the farm’s sustainability credentials and milk quality.

“Fonterra farmers are already among the world’s best in these areas and we’re really proud of that. The Co-operative Difference payment is another way we can recognise farmers, while also supporting our strategy to grow the value of our New Zealand milk by responding to increasing demand around the world for sustainably produced dairy,” says Richard Allen, Group Director, Farm Source.

“The new payment recognises farmers who are already going above and beyond because they’ve innovated and invested early, and it also offers farmers more encouragement for taking the steps required to meet the changing expectations of customers and communities, both today and into the future.”

“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,” says Richard.

The 10 cent Co-operative Difference payment is made up of:

7 cents per kgMS for achievement under the Environment, Co-op & Prosperity, Animals, and People & Community focus areas.

Once these have been achieved;

3 cents per kgMS for milk that meets the ‘Excellence’ standard under the Milk Quality framework.

While The Co-operative Difference framework was introduced in 2019, the milk payment is new to farmers.

The Co-operative Difference payment details:

7 cents per kgMS for achievement under the Environment, Co-op & Prosperity, Animals, and People & Community focus areas. Once these have been achieved;

3 cents per kgMS where Excellence is achieved for all milk quality parameters under the Milk Quality framework.

Effective from next season, from 1 June 2021.

Current Farm Source Rewards Dollars in The Co-operative Difference will be replaced with The Co-operative Difference payment.

The amount and targets will be set annually by the Fonterra Board.

The total amount available to be paid to farmers does not change, but a proportion of the Farmgate Milk Price will be available to be redistributed between farmers to better reflect individual farm’s achievement against the Co-operative Difference Framework.