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Farmers and sharemilkers are reminded to update existing business agreements as they face joint liability for meeting upcoming changes in respect of their using palm kernel (PKE) as feed.
Federated Farmers says extensive consulation has resulted in a “fair resolution” for both parties.
Farm owners and sharemilkers in current agreements should seek to add a clause to address this new (joint liability) risk.
New agreements will also have an additional clause under milk grading and feed to direct the parties.
“We conclude this is the fairest way to allocate these new ‘demerits’ as per the revenue share of milk production,” says Feds sharemilker farm owners’ section chair, Tony Wilding. “We intend to update federation contracts to acknowledge these changes.”
Fonterra will introduce a grading system next September to measure milk fat composition, which changes with excessive use of PKE affecting manufacturing capability and seasonal customer preferences.
Fonterra farmers who don’t comply with new recommended levels for cows’ PKE intake will be penalised.
Lisa Payne, regional head of Fonterra Farm Source, explained that the fat evaluation index (FEI) grading system will help farmers supply milk with the right fat composition, to enable the co-op to continue making products that meet customer specifications and provide the best return to farmers.
“The co-op has a responsibility to constantly evolve to meet customers’ needs, and provide the highest value return for milk,” Payne said.
Most farmers’ milk has the correct fat composition, and the FEI grading system will help others meet this requirement.
Walking around the Fieldays this year, expected most of the conversations to be about machinery purchases and farm infrastructure upgrades. Instead, one topic seemed to keep cropping up more frequently with farmers – the price of PKE.
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