Onfarm greenhouse gas emissions represent the greatest proportion of dairy’s environmental footprint, Fonterra sustainable value manager Lara Phillips says.
From a glass of milk, 90% of the emissions come from onfarm, 9% is from manufacturing and 1% of the footprint is from international distribution.
While New Zealand dairy farmers have one of the lowest environmental footprints in the world, they can’t rest on their laurels, she says.
There is a lot of innovation globally on emission reduction and some of the new technologies, such as vaccines and inhibitors will likely work well in more-intensive farm systems. So, it’s important NZ dairy farmers can improve emission efficiency and their environmental footprint, she says.
‘The results of this project, and the huge amount of data we are still compiling, reinforce the complexity of the challenge we face as a sector.’
Phillips was speaking at the Owl Farm focus day on Greenhouse gases (GHG). The demonstration dairy farm at St Peter’s School in Cambridge is one of 12 farms in a DairyNZ Partnership Farm Project to model farm systems in relation to NZ’s climate change goals.
There will be a cost involved in reducing emissions on farms, but if farmers do nothing there will be an even bigger cost, DairyNZ chief executive Tim Mackle told the group of farmers.
There is still a lot of potential across NZ dairy farms to reduce emissions, and there is still a lot of learning to come, he says.
What is showing up through the partnership project is that there is no one simple solution for everyone and all farms are different.
“The results of this project, and the huge amount of data we are still compiling, reinforce the complexity of the challenge we face as a sector.
“Mitigation options vary depending on the farm system and the region. To see nationwide reductions in greenhouse gas emissions we need a specifically designed package of changes for each farm.”
Turn risk into opportunity
Companies that buy Fonterra ingredients have set ambitious targets around greenhouse gases that NZ dairy farmers can help them achieve, Lara says.
Companies such as Nestle, MARS and Unilever that buy Fonterra ingredients have an increasing interest in products with a low footprint.
For example, Unilever has a target to be carbon-positive, which is 100% renewable energy, to offset emissions across their supply chain. To do that cost effectively they need to have ingredients that have the lowest footprint in the world.
“They’ve taken very ambitious emission reduction targets. As an ingredient supplier, they rely on us to help them meet their target,” she says.
“From a supplier perspective, that’s an opportunity for us to be the first preference for that customer and to drive incremental value from that to get new customers because we can tell the story about the emissions efficiency of our product and how that compares with the rest of the world.”
Phillips’ role with Fonterra is focused on how to be innovative to meet consumer needs around sustainability.
“Sustainability, climate change, our carbon footprint, is going to become an increasing focus for us and how we tell our story and how we seek to drive value.
“Translating climate change from a risk to actually being an opportunity to us going forward.”
Customers and consumers are more interested in climate change and sustainability than ever, she says.
There is a lot of awareness of the impact on the climate and a focus for consumers on where their food comes from, how it’s produced, and consuming food that is healthy for them and healthy for the world.
For example, 85% of millennials say corporate sustainability is extremely or very important to them, and that is steadily increasing and it’s percolating in markets around the world.
Climate change is particularly of interest in emerging economies and the growing markets for Fonterra. India, China and Indonesia, for example, have amongst the highest rates of consumer interest in sustainability because they see the impact of environment degradation, she says.
They want to buy products from companies that align with their personal values. Brands that are starting to talk about sustainability and ethics to their consumers are driving faster growth.
Clean dairy labels such as grass-fed, non-GMO, certified animal welfare, sustainability sourced etc, is a $26 billion business which is forecast to grow to $30b by 2020. Non-GMO is the fastest growing claim in the natural products industry.
Consumers resonate with these brands because they want to know the carbon footprint of the product, she says.
A lot of questions are circulating about the footprint of dairy and how it compares with plant-based products.
Soya milk for example is held up because it has a lower footprint than dairy, but not on a nutritional density basis – not on a like-for-like basis.
Fonterra is focussed on how it can translate the NZ dairy story to resonate with customers and consumers, Lara says.
The great thing is in NZ, because of the pasture-based systems, NZ has one of the lowest carbon footprint for our product in the world, she says.
“When we go to those customers we can talk about how efficient and low-footprint our ingredients are. However, we can’t rest on our laurels.”
Owl Farm GHG journey
Owl Farm has reduced its GHG emissions by 3% in the last four years, along with a 24% reduction in nitrogen loss, 31% reduction in phosphorous loss and a 50% increase in Farm EFS/ha.
The focus for Owl Farm had been to reduce nitrogen and phosphate loss, which consequently has also seen a reduction in GHG emissions.
A reduction in total feed eaten onfarm has reduced methane emissions over the last four years. Reduced nitrogen surplus onfarm has also reduced nitrous oxide losses and losses of nitrate to waterways. A reduction in imported feed has reduced the total actual carbon dioxide of the farm.
In the last two years alone, Owl Farm has reduced GHG emissions by 8%, reduced nitrogen loss to waterways by 14% and lifted operating profit/ha by 14%.
Two principles were used to achieve this result at Owl Farm, the first being to reduce the whole-farm nitrogen surplus. Owl Farm’s nitrogen surplus has decreased by 20kg N/ha since 2016, from 190 to 170kg N/ha.
This whole-farm nitrogen surplus reduction has been achieved by a reduction in nitrogen fertiliser use (-13kg N/ha), a reduction in nitrogen as an imported supplement (-8kg N/ha) and the nitrogen surplus captured in the effluent system being better spread over the farm effluent area.
DairyNZ data, using Overseer, shows a reduction of nitrogen surplus by 100kg N/ha is expected to decrease total GHG emissions by 1.26 tonnes/ha. This 20kg N/ha reduction on Owl Farm would then suggest a reduction of GHG emissions by 0.85t/GHG CO2 eq/ha.
The second principle to achieve less GHG emissions at Owl Farm has been to reduce the total feed eaten/ha. Imported feed has reduced from 3.6t DM/ha to 2.3t DM/ha. Home grown feed has increased from 12.8t DM/ha to 13.7t DM/ha.
DairyNZ data shoes that 1t reduction in total feed eaten/ha is expected to reduce GHG emissions by 0.73t GHG CO2 equivalent, which suggests Owl Farm has reduced its GHG emissions by 0.292t CO2 eq/ha.
This gain in less leaching and reduced emissions hasn’t been through a financial solution, it’s been a revolution and changing a lot of small things, Owl Farm demonstration manager Louise Cook says.
Over the last three years, the same farm system has been run, with different GHG emissions every year.
“We’ve had the same productivity, we’ve done it with less emissions, and done it with more profit in the bank.”
Farming is a biological system which brings significant variability and things will change every year, she says.
“We cannot succeed if we try and change one output at a time in the dairy industry and inside a farm system. And we can only manage the things that we choose to measure.”
The results do show that farmers don’t necessarily have to trade one thing for another when it comes to being sustainable and profitable.
Many small changes will make an impact and farms all need to have solutions tailored to their goals.
“Do your numbers. Compare them with your neighbour. Seek advice and ask for help and don’t be afraid of trying new things.”
The future of GHG on Owl Farm
The farm system still needs to evolve to meet future requirements and Owl Farm has looked at various different options to remain profitable and sustainable in the future, Louise says.
They produced a wagon wheel to work out which system offered the best chance to meet all of their targets, which includes reducing GHG emissions.
The wheel includes 10 targets; Return on Asset, Profit, Productivity from Homegrown feed, Efficient Milk Production, Animal Welfare and Livestock Performance, Community Perception, Zero Days leave owing, People Performance and Safety, N&P Loss to Waterways, GHG loss/ha.
These targets are a mixture of what they think will be industry requirements and what they want to achieve for a profitable and sustainable business.
Every farm business wheel will look different because it will have different targets that it wants to meet, Louise says.
They found that there are two farm systems that will offer the best ‘sweet spot’ on the wagon wheel. Option A is to de-intensify, reduce the stocking rate to 2.6 cows/ha and a reduction of 330t of feed imported on to the farm. This option reduces N leaching and GHG losses. Farm profit would be improved, however, there would be a reduction in revenue.
Option B would be to build a feed pad onfarm, run 3 cows/ha, allowing for more efficient utilisation of all supplements. This would increase total methane production on the farm, however the large lift in production would mean the efficiency of GHG emissions/kg MS would be less.
There is a positive and a negative for both options, Louise says.
Option A drops everything – all emissions and there is significant total reduction.
With Option B, methane doesn’t go down, but CO2 reduces with less driving over the farm with feed. However, it would cost about $750,000 to build the feed pad.