Cow farts stink – especially for Fonterra.

Can you really control flatulence?

Dairy cows and the environment are going punch for punch in a battle for supremacy. Fonterra, one of New Zealand’s largest companies and the world’s largest exporter of dairy products (including milk and butter), has to delicately navigate this battleground to, in a cruel twist of fate, adapt to the very climate change it has itself been instrumental in creating.

Round 1 – Cows 1 : Environment 0

Livestock are responsible for 18% of the greenhouse gases (“GHG”) that cause global warming and climate change. Dairy farming, Fonterra’s primary business, is directly responsible for 4%[1] of GHG emissions by impacting:

  • Land: Natural land and forests are increasingly converted for agricultural purposes to produce feed or maintain livestock. Overgrazing is turning a fifth of all pastures into deserts, and soil impaction from hooves lead to loss of natural soil that take decades to replace[2].
  • Energy: Burning fuel to produce fertilizer, grow feed, process milk solids, and transport products emits carbon dioxide, the most common GHG.
  • Air: Cow’s flatulence is largely ammonia (CH4) and contains particulate matter that directly affects air quality and the atmosphere[3].

image1

Round 2 – Cows 1 : Environment 1

The tragic irony is that Fonterra’s business of farming dairy cows to produce milk relies heavily on the very environment it’s destroying. Therefore, as the climate changes, so too does Fonterra’s operations. These changes include:

  • Land quality: Climate change – specifically global warming – directly affects the quality of the grazing pasture required to by cows to produce milk. When temperatures climb, weather and rainfall patterns change, which consequently affects soil fertility, availability of preferred vegetation, and accelerates pasture degradation and desertification of the pasture itself. Ultimately, this reduces the grazing and milk production ability of dairy cows[4].
  • Livestock productivity: Dairy cows are especially vulnerable to increases in the ambient temperature because of their high metabolic rate and poor water retention in their kidneys and gastrointestinal tract. Therefore, high temperatures make dairy cows susceptible to disease and thermal stress – both of which are detrimental to milk quality, reproduction, and general health[5].
  • Emission costs: The New Zealand government has strong environmental commitments, partially influenced by their need to support tourism – their second largest export. In 2008, New Zealand introduced an Emissions Trading Scheme (“ETS”) that essentially required companies to purchase emission units equal to their total reported emissions each year. As a result, Fonterra experienced increased prices for electricity, petrol, diesel, and a new charge on agricultural emissions[6].

image2

Increasing ‘fart yield’

To respond to environmental concerns, Fonterra has focused on reducing emissions at manufacturing sites and in transportation, and on investing in research to increase milk production per unit of cow emission – what I term ‘fart yield’.

  • Manufacturing: Fonterra monitors carbon dioxide emissions at all manufacturing sites which allows them to apply an internal emissions cost and raise awareness about energy use and emissions. Furthermore, energy efficiency programs have reduced energy use by 15% per unit of production since 2003.
  • Transportation: Fonterra signed an agreement with Toll New Zealand to make rail transportation the primary form in four major regions of New Zealand. This reduced carbon emission by 9,000 tonnes.
  • Logistics: New technology has allowed Fonterra to pre-concentrate milk, and enable real-time scheduling and dispatch for their tanker fleet, thus lowering fuel consumption.
  • Livestock: Fonterra chairs the Pastoral Greenhouse Gas Research Consortium (“PGgRc”) that has invested NZ$27.5m to find ways to reduce agricultural-based emissions of methane and nitrous oxide. Additionally, Fonterra is working with the Ministry of Agriculture and Forestry, DairyNZ, the PGgRc, and the fertilizer industry to gain formal recognition for nitrogen inhibitors – a way to prevent the oxidation of ammonium to nitrate, thus lowering nitrous oxide emissions while keeping production steady. If successful, this will be the first approved mitigation technique for agricultural emissions [6].

MOOre must be done!

Besides the environmental pressure on Fonterra to lower costs and increase yields, the economic pressure is even greater. Plunging demand for dairy goods in China and the Middle East in conjunction with the removal of dairy output quotas in the European Union has resulted in major oversupply, sending dairy prices into free fall[7]. From a high of 280 in 2013/14, the FAO dairy price index has plummeted to 130, a 54% drop, in February 2016, recovering now to 180 following reduced supply in New Zealand and Europe[8]. The impetus for change is strong. But given significant changes in Fonterra’s manufacturing facilities, how much should Fonterra interfere with the natural process of animal digestion to reduce natural, biological emissions? Ultimately, any solution must also pass the “natural product” smell test.

image3

Word count: 778

[1] Greenhouse Gas Emissions from the Dairy Sector, 2010, A Life Cycle Assessment, [http://www.fao.org/docrep/012/k7930e/k7930e00.pdf], accessed November 2016

[2] Independent, 2006, Cow ‘emissions’ more damaging than cars [http://www.independent.co.uk/environment/climate-change/cow-emissions-more-damaging-to-planet-than-co2-from-cars-427843.html], accessed November 2016

[3] World Wildlife Fund, Dairy Overview [http://www.worldwildlife.org/industries/dairy], accessed November 2016

[4] Soil-Net, Climate Impacts on Soil, [http://www.soil-net.com/dev/page.cfm?pageid=secondary_functions_climate_c&loginas=anon_secondary], accessed November 2016

[5] Food and Environment, 2012, Impacts of Climate Change on Dairy Cattle, [http://www.foodandenvironment.com/2012/10/impacts-of-climate-change-on-dairy.html], accessed November 2016

[6] Fonterra, 2010, A Fonterra Guide to Climate Change, [http://www.fonterra.com/wps/wcm/connect/4bea120043a32f5fa7eaa77b57946b65/2010%2BClimate%2BChange%2BETS%2Band%2BFonterra.pdf?MOD=AJPERES], accessed November 2016

[7] Wall Street Journal, 2016, World’s Dairy Farmers Squeezed by Oversupply, [http://www.wsj.com/articles/worlds-dairy-farmers-squeezed-by-oversupply-1457606234], accessed November 2016

[8] FAO, 2016, Milk Prices, [http://www.fao.org/economic/est/est-commodities/dairy/en/], accessed November 2016

Previous:

Coca-Cola: Global Sustainability, Local Controversy

Next:

Could Insurance Companies be the Solution for Climate Change?

6 thoughts on “Cow farts stink – especially for Fonterra.

  1. Dear JJCW, I agree with you that cow farting is an ongoing concern that should be analyzed. Despite the efforts taken by Fonterra to reduce gas emission, I would like to point out some additional actions that could be of great help and should be considered. The first one is to adjust the cow’s diet in order to increase animal performance and reduce methane emissions. As mentioned by the Institute of Agriculture and Natural Resources of the University of Nebraska, cow diet can be used to alter microbial populations in the rumen and in turn increase animal performance and reduce methane emissions. Dietary factors such as type of carbohydrate, fat inclusion, processing of forages and level of feed intake has been shown to influence methane emission in cow populations. Additionally, there are some innovative studies that have been developed in order to genetically understand and improve cow characteristics that may result in lower gas emissions . By relying in such studies, Fonterra could undergo innovative practices that may change the way the industry deals with farming cows.

  2. I found it very interesting that livestock is responsible for such an important proportion of GHG’s. The methods Fronterra has used to reduce its emissions are very creative. However, there are some questions that are left unanswered: what is the breakdown of GHG’s emitted by Fronterra in the form of land, energy and air? Identifying the main culprit of emissions would be very helpful in assessing the impact of Fronterra’s efforts to reduce emissions. What is the result of Fronterra’s current efforts? Have they resulted in a significant reduction of GHG’s or will Fronterra have to make more – costly – changes to meet its targets? It seems that with lower prices and higher costs, the company’s future doesn’t look too bright (at least in New Zaeland).

  3. JJCW – this is a fascinating article with really cool insights into the energy produced/wasted due to livestock cultivation.
    By reading the article, I felt that a lot of the measures taken by Fonterra (and the like) are more reactive in nature. I’d love to understand that what are the proactive measures being undertaken by firms to: a) standardize processes in management of biological live resources, b) biotechnological advancements to improve cow-yield, and c) are other major players doing anything similar?

  4. JJCW, this is a great (and hilarious!) take on a serious issue that Fonterra seems to be facing. In fact New Zealand as a country that is heavily relying on agriculture and tourism is bound to be greatly affected by climate change, despite making every effort possible to protect themselves against it. This is the paradox of climate change- you are not necessarily ‘reaping’ what you ‘sow’ , and while other countries such as China and the US are one of the greatest contributors to the worsening environmental conditions, they will not necessarily be affected by their own (mis)actions. Luckily the global community is not keeping quiet about this and there has been a lot of effort especially by world organizations such as United Nations to come up with a few key Global Goals, where 7 of 17 goals are related to Environment and Sustainability – http://www.globalgoals.org/. By defining these goals and by putting aggressive targets against them, I am hopeful that we will be able to rally global support to combat the effects of climate change.

  5. Thanks for a great read JJCW. It was great to learn of livestock’s contributions to global warming, and the bitter irony of climate change’s effect on Fonterra. In light of current prices, the steaks have indeed never been higher. In addition to Fonterra’s great efforts to avoid an early expiration date mentioned above, the company is New Zealand’s largest producer of biofuel, reducing local industr’y’s reliance on fossil fuels. While I do not condone crying over spilled milk, the company has fallen foul of contributing to a major cause of water pollution, as its dairy stock seeps into waterways. Is this an equally pressing issue and if so, should Fonterra explore udder ways to support New Zealand’s environment?

    1. Lol

Leave a comment