The NZ dairy industry faces climate change hurdles beyond the levies the Ardern government has indicated it will impose on farms. Fonterra CEO Miles Hurrell drew attention to them when he told an interviewer at the Fieldays at Mystery Creek the giant dairy co-op and its farmers risk not being able to access debt funding in the future if they don’t meet banks’ sustainability expectations.
Banks are wanting to set Scope 3 carbon emissions targets, which includes emissions they are indirectly responsible for, and not meeting their expectations could result in less favourable funding rates or ultimately not being able to access funding in the future.
“That’s something that we need to be aware of but it’s not a conversation we’re having with our banks at this moment,” Hurrell said.
Over the past four years, Solagri has worked with farmers and engineers to build and refine a solar solution optimised for dairy farm operations. Solagri Energy’s capital-free solution means farmers can have an innovative state-of-the-art grid-connected solar generation system without the significant upfront cost.
“The technology is advanced, but the model is pretty simple,” says managing director Peter Saunders.
“Farmers provide us with a small parcel of land, about a quarter of a hectare, where we build the solar array.
“In return, they receive solar electricity generated on their own farm at a fixed price for 20 years. There is zero capital cost to the farmer, any unused power will supply the local grid.”
Solagri are currently working on the development of their battery energy management system. Having recently received Callaghan Innovation funding, they expect to have batteries as a standard part of the offering within the next 12-18 months.
“The inclusion of batteries will improve the efficiency of solar and enable us to store electricity from the grid for use in the shed during the morning milking. They will also make the farm far more energy resilient with the shed being able to continue milking when the power goes down,” says Saunders.
Point of Order
sees a link between the message Hurrell was delivering an the progress Solagri is making.
At its annual meeting, Fonterra told farmer shareholders
that the dairy co-operative was likely to set a target for its own Scope 3 carbon emissions, which would include its farmers as 91% of its emissions were behind the farm gate.
Fonterra also warned farmers
that it risks losing customers and facing trade barriers in its overseas markets if it doesn’t meet sustainability expectations.
Hurrell said the co-operative’s customers were setting Scope 3 targets, and putting pressure on Fonterra to come up with its own targets.
“We’ve done a lot of work on Scope 1 and 2 at our own supply chain and now the focus needs to shift to say, what do we need to do in Scope 3,” he said.
“The risks from a customers and consumer perspective is that we may be in a situation where those customers don’t work with us, they purchase from other countries, and there are other countries that do have Scope 3 emissions targets in place in various sectors.
“Of course, there may be markets that still are open to us. But our job is to extract the best value we can and we believe that those customers and consumers that are prepared to pay will be seeking Scope 3 versus those markets that may not pay the same level of return.”
While pressure was being put on Fonterra, Hurrell said the company believed that becoming more sustainable was “the right thing to do.”
“Our job is to paint a picture of what the future looks like, from a market perspective,” he said. “We feel obliged to let them know that’s what our customers and consumers are seeking.”