Divestment means Fonterra can focus on its strengths
OPINION: Fonterra's board has certainly presented us, as shareholders, with a major issue to consider.
The co-op is recommending PKE guidelines to its farmers of a maximum of 3kg/per cow/per day and says this will future-proof its position as a supplier of high-quality pasture-based milk products.
PKE is a by-product of the palm oil industry in South East Asia; it is derived from the nut of the palm fruit after the oil is mechanically extracted.
PKE is a dry, gritty meal with a soapy smell and has low palatability until cows get a taste for it. However, PKE has reasonable levels of energy (ME) and protein, and is relatively easy to introduce to cows over a range of farm systems.
Fonterra group director cooperative affairs Miles Hurrell says that consumers globally are driving a trend towards dairy products that are sourced from pasture-based milk.
"More than ever consumers want to know what is in their food and where it comes from.
"We are in a unique position to make the most of this trend to enhance returns to our farmers who are already renowned for producing the best milk in the world. This recognition is a direct result of our farmers' pasture-based farming model.
"This gives us a key competitive advantage globally. Our milk products have an excellent reputation and we want to maintain that, and stay ahead of increasing consumer expectations. Already on GDT a premium is often paid for products made from New Zealand milk compared to products made from milk sourced in other countries."
This commitment has seen Fonterra advsing its farmers that it is establishing guidelines for the use of PKE) as a supplementary feed for dairy cows. Hurrell says going forward the cooperative is recommending PKE guidelines to its farmers of a maximum of 3kg/per cow/per day.
"After pasture, PKE is one of the cheapest supplementary feed options for farmers, and our data shows that use of PKE is increasing. We recommend our farmers follow these guidelines in order to future-proof the cooperative's position, while upholding our high standards of animal welfare.
"The recommended maximum of 3kg/per day/per cow is a voluntary guideline and we will be working with our farmers to help them maximise on-farm profitability while ensuring the health of their herd," says Hurrell.
