NEWZEALAND – Nestlé, a global food giant, has agreed to make additional payments to Fonterra farmers who achieve specific sustainability targets.

The partnership, initially outlined a year ago, represents a significant collaboration between Fonterra, the world’s largest dairy exporter, and Nestlé, the world’s leading food business.

The collaboration centers around various projects aligned with sustainability goals, particularly targeting the reduction of on-farm emissions.

Nestlé, the owner of the KitKat chocolate brand, has committed to investing SFr1.2bn (US$1.37bn) by 2025 to promote regenerative agriculture and decrease emissions.

Their ambitious aim is to source 50% of ingredients through regenerative agriculture methods by 2030 on a global scale.

Under the terms of the recent agreement announced on December 14th, Nestlé will provide additional funding to farmers who achieve one of the three levels outlined in Fonterra’s “The Co-operative Difference” framework during the 2023/24 season.

Fonterra’s CEO, Miles Hurrell, expressed delight in working with Nestlé to recognize farmers leading in industry best practices, highlighting the benefits of sustainable growth.

Fonterra’s forecast for the farmgate milk price in fiscal 2024 is estimated to be between NZ$7.00 (US$4.34) and NZ$8.00 per kilogram.

Depending on the number of farmers meeting sustainability criteria, Fonterra expects the additional payment to range from 1-2 New Zealand cents per kilogram of milk solids.

Jennifer Chappell, CEO of Nestlé New Zealand, emphasized Nestlé’s century-long relationship with New Zealand’s dairy industry and reiterated their commitment to supporting farmers in developing economic opportunities while reducing greenhouse gas emissions.

Chappell believes that this move will spur greater action from farmers, researchers, and policymakers, facilitating a just transition for the dairy industry.

Fonterra’s recent sustainability goals include a net-zero target by 2050, with a 30% intensity reduction in on-farm emissions by 2030.

Their “Co-operative Difference” framework acknowledges and rewards farmers across five areas: environment, animals, people and community, milk, and co-op and prosperity.

Prior initiatives between Fonterra and Nestlé involved collaboration with Dairy Trust Taranaki to test solutions for creating the first commercially-viable, net-zero carbon dairy farm in New Zealand over the next five to ten years.

The completion of the sale of their joint venture, Dairy Partners Americas (DPA) Brazil, in October marked the end of a chapter for Fonterra and Nestlé.

The joint venture was sold to French dairy company Lactalis for approximately US$140.5 million, following an agreement reached in December 2022, with regulatory approvals concluding the process.