Politics

Let’s untie Fonterra’s hands, and see what they can do for NZ rivers

The giant dairy co-op says it wants to play a positive role in cleaning up waterways. To test that pledge, the government must urgently change the rules so Fonterra is no longer obliged to pick up milk from new dairy conversions, argues Russel Norman of Greenpeace NZ

This year, amidst all the raucous noise about dirty rivers and intensive dairying, one voice has been strangely subdued. Our largest corporate, Fonterra, has been tip-toeing around like a rhinoceros in a nursery full of screaming babies. Whispering lullabies under its breath about caring for the environment. Meanwhile the $22 billion dairy behemoth just keeps on keeping on. Trucking in the white gold, turning it into powder and shipping it offshore.

As it stands Fonterra collects 18 billion litres of milk every year from 10,500 dairy farmers, without fear or favour, regardless of their contribution great or small, to our rapidly degrading waterways. That puts the co-operative in a powerful position to be a force for good. Imagine the impact if Fonterra refused to pick up milk from areas where intensive dairying is doing the worst damage to our rivers.

“Volume means they want more milk from more cows, which means more pollution” – Russel Norman. Photo: William West/AFP/Getty Images

Though sympathetic, Fonterra’s executives will tell you their hands are tied. The law won’t allow it.

This is partly true. The bigger picture is that Fonterra has had a business strategy since 2012 which they called the three Vs: Volume. Value. Velocity.

  • Volume means they want more milk from more cows, which means more pollution in NZ’s rivers.
  • Value means they want to make more expensive stuff out of that milk, like mozzarella.
  • Velocity is all about increased efficiency.

By pushing for more milk and more cows, one thing Fonterra has helped to speedily deliver the country is a freshwater crisis.

But that’s not to say that Fonterra’s claims about being bound by the law are completely baseless. Should Fonterra choose to change direction and start taking some real action to save NZ’s rivers there is a legal impediment – something called “DIRA” which stands in the way.

Under the Dairy Industry Restructuring Act, Fonterra is required to collect every drop of milk from every dairy farm in the country if that’s what the farm owner wants. It’s a law that’s ripe for change.

Just before the election a massive 83% of New Zealanders in a TVNZ poll believed the government should do more to reduce water pollution. The new government was elected on a platform of protecting rivers. As a first move it should consider rapidly passing amendments that will allow Fonterra to refuse to collect milk from new dairy conversions – for environmental and economic reasons.

Across the country, ecologists are realising that catchment after catchment can’t handle new dairy conversions because of the environmental impact of more cows. But under the DIRA, if a dairy conversion does happen, regardless of whether it thinks that this is good place for a new dairy farm, Fonterra is legally required to collect the milk.

So if there are more crazy dairy conversions on the central plateau of the North Island, Fonterra has to pick up the milk; same in the Mackenzie Country on the way to Wanaka; or in the catchment of the world famous Te Waikoropupu Springs at the top of the South Island.

Each of these new dairy conversions will have significant negative environmental impacts yet Fonterra is compelled to collect and process the milk.

Fonterra says it wants to play a positive role in cleaning up rivers and lakes and is branding itself internationally as clean, green and safe. But currently it is directly making rivers and lakes worse by collecting milk from new conversions in at-risk catchments. It’s time to change the rules so that Fonterra doesn’t have to pick up the milk from new dairy conversions. Then the responsibility falls on Fonterra to live up to its promises and not take milk from new conversions that harm our rivers and lakes.

From the Fonterra Annual Review 2017

There’s another reason to change DIRA – economics. Economic commentators have described a critical tension between Fonterra’s first two Vs, volume and value.

Fonterra may be the second biggest dairy producer in the world for volume, but the co-operative lies 18th in the world for sales volume per kilogram of milk. A key measure of Value. By forcing Fonterra to collect every drop of milk, the current law underpins the least desirable of the Vs – the drive for volume. The simplest way to deal with all this product is for Fonterra to invest in expensive coal burning processing plants turning raw milk into powder.

The law is nudging Fonterra in the direction of mass cheap commodities and milk powder, when as a nation we need it to be investing in the second V – value, which will help bring genuine sustainability.

Changing the Dairy Industry Restructuring Act would be a win/win for all. Fonterra gets a chance to prove it is serious about protecting rivers by refusing to collect milk from new conversions in over-allocated and sensitive catchments. In addition it allows Fonterra to focus on its value add strategy rather than pushing out more cheap milk powder.

If the new government moves quickly to make this change it shows they’re serious about action on water quality. Something which would be widely welcomed after NZ First forced Labour to drop its plans for water royalties on irrigation.

There is already a bill languishing before parliament to amend the DIRA. The new government needs to fast-track it. It’s not a complete fix, but it would give the player with the biggest clout in the sector a chance to prove its mettle.

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