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% 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.
- 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.
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.
- 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.
- 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.
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 .
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. 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. 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.
Word count: 778
 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
 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
 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
 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
 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
 FAO, 2016, Milk Prices, [http://www.fao.org/economic/est/est-commodities/dairy/en/], accessed November 2016