The partnership combines Superbrewed’s biomass protein platform with Fonterra’s dairy processing, ingredients, and applications expertise to develop additional nutrient-rich, functional biomass protein. The collaboration addresses the rising global demand for protein, reflecting both companies’ commitment to delivering sustainably sourced, functional proteins that meet customer and consumer needs worldwide.

The collaboration builds upon Superbrewed’s commercial launch of its patented biomass protein, called Postbiotic Cultured Protein. Postbiotic Cultured Protein is a non-GMO, allergen-free, nutrient-dense bacteria biomass protein that recently received US market green light from the FDA. In ingredient evaluations, Fonterra determined that the function and nutrition of Postbiotic Cultured Protein complement dairy ingredients in food applications with growing consumer demand.

As Superbrewed demonstrated that its non-GMO, fermentation platform could be adapted to ferment other inputs, the multi-year joint effort seeks to develop new biomass protein solutions based on the fermentation of multi-feedstocks, including Fonterra’s lactose permeate, which is produced during dairy processing. The objective is to add value to Fonterra’s lactose by converting it into high-quality, sustainable protein with Superbrewed’s technology.

Bryan Tracy, CEO of Superbrewed Food, stated: “We are excited to be partnering with a company of Fonterra’s stature, as it recognises the value in bringing Postbiotic Cultured Protein to market, and is a pivotal step towards expanding our offerings of biomass ingredients that further contribute to sustainable food production.”

Chris Ireland, GM innovation partnerships commented: “Partnering with Superbrewed Foods is a fantastic opportunity. Their cutting-edge technology aligns with our mission to provide sustainable nutritional solutions to the world and respond to the global demand for protein solutions thereby creating more value from milk for our farmers.”

The post Fonterra-Superbrewed collaboration meets global protein demand appeared first on Dairy Industries International.

The study, carried out by the New Zealand Exchange (NZX) and based on project data provided by Fonterra® and Levno®, also found a 62% reduction in milk reaching critical scores and a 45% drop in insurance claims – highly contributed to by the 85% lower likelihood to claim insurance for refrigeration, agitation, or power related failures – by adapting the technology.

The technology could bring about the same improvements in the UK, dairy experts claim.

The rollout of MVM was launched by Fonterra in part to drive up milk quality, along with other on-farm and transport related benefits, and the study was supported by Fonterra to help quantify the improvement in milk quality.

Fonterra is a New Zealand dairy Co-operative owned by thousands of dairy farmers. The study involved introducing monitoring telemetry to the milk vats or tanks of Fonterra’s farmer owners and comparing the data, from a subset of almost 1200 farms, to the year prior to the technology being introduced.

The most popular MVM platforms used in the study were Levno’s Trim and Full Cream solutions, with the latter providing a 24-7-365 escalated human response service. This alerts farmers to potential problems with their milk within 10 minutes of detection and continues to monitor the data until the situation is resolved.

The study data was independently analysed by New Zealand Exchange (NZX).

It revealed that Levno’s Full Cream product reduced total bacteria counts by 69% compared to storing milk without MVM technology. Coliforms were down 42% as a result of installing MVM technology and insurance claims dropped by 45% in total.

Milk temperature was on average 12% lower using Full Cream, with 19% fewer collections made above 12^oC and almost none above 14^oC.

Milk quality was also assessed against Fonterra’s Milk Quality Index (MQI) which uses multiple data points to plot the degradation of the milk.

The measure is used to plan logistics and downstream processing of the milk, and to drive efficiencies in collection.

The study found that by implementing Levno’s Full Cream, farms achieved 22% fewer medium MQI scores, 26% fewer high MQI scores, and 62% fewer critical MQI scores.

According to NZX, the average value of ‘milk saved’ as a result of implementing MVM technology equated to NZD$12,863 per farm.

The objective of the study was to confirm that the introduction of MVM, technology, and Levno’s Full Cream solution, would drive material and sustainable improvements in milk quality.

Results found that after analysing the data provided, it is clear that the introduction of MVM technology improved the on-farm milk storage process and reduced the risk of degraded milk being supplied to Fonterra.

Multiple measures helped to corroborate this outcome – from the MQI measure during storage, milk temperatures at the time of collection, bacteria and coliform results, and the number of insurance claims by farmers. Importantly, there was also a significant reduction in the upper quartile of those measures with fewer outliers.

Additionally, the Full Cream solution further improves the quality of milk stored on farm and reduces the amount that may require disposal due to poor storage practices. The advance in technology has changed the way on-farm raw milk is monitored, and therefore protected.

The end result is better quality milk with significantly fewer instances of milk being registered as ‘critical’ on Fonterra’s MQI score.

James McCreery, national planning & dispatch manager at Fonterra, said: “We are providing tools to our farmer owners to continue to help them be the best dairy farmers in the world, and Levno is a tool for them to ensure they are supplying the best quality milk possible.”

He added one of the greatest strengths of Fonterra’s partnership with Levno has been the people.

“They brought in a lot of experience working with New Zealand farmers,” James said.

“They also have got the 24/7 support team. The people at Levno make a big difference.”

Matt Lynch, Levno’s country manager for UK and Ireland, said the study demonstrated how Full Cream brought major financial benefits to Fonterra’s farm suppliers.

For example, Levno’s Full Cream has saved almost 2.3 million litres across Fonterra farms during the latest 2023-24 milking season, averaging 6,800 litres per farm.

He said: “Full Cream helped the farmers who took part in the study produce higher quality milk and avoid the significant revenue loss associated with milk degradation and wastage.

“It also helped them avoid costly incidents where milk was not fit for collection and where an insurance claim was required for the loss. With each claim attracting an average excess of $500, that’s a huge saving.

“With dairy farmers in the UK facing a reduction in support payments, technologies like MVM offer new ways to bring efficiencies to dairy enterprises which will help drive the long-term sustainability of the industry.

“The ability to monitor milk quality in real time and resolve issues quickly means less degradation, less wastage and ultimately, a better return for producers.”

To read the full detail and explanation of findings click here.

The post Milk Monitoring ‘key to driving quality and efficiency’, study finds appeared first on Dairy Industries International.

In the same year, Fonterra opened its first-ever application centre in Shanghai, with the centres playing an important role in the co-op’s foodservice business by enabling Fonterra to partner with local customers and develop product applications designed to meet local consumer tastes and trends.

Fonterra will open its sixth application centre in China later this year, located in Wuhan, with construction now underway. This application centre will add to those in Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen.

CEO Miles Hurrell says Fonterra’s Greater China Foodservice business is a key part of the co-op’s value-add strategy, using the cream products produced at Waitoa UHT.

“The formula for our foodservice whipping cream was developed by our team at Fonterra’s research and development centre in Palmerston North and is an example of how we use innovation to add value to farmers’ milk.

“This product alone is used in approximately 400 million beverages and 260 million cakes in Chinese bakery stores each year and we’ve seen a continued increase in demand since 2014.

“Our application centres play a pivotal role in driving innovation and tailoring Fonterra’sfoodservice offerings to the tastes, culture and trends of the area in which they’re located. They include different spaces and equipment to enable technical experts and experienced chefs to test and develop new products, often in collaboration with customers.

“The addition of a new application centre in China signals the continued growth we expect to see from our Greater China foodservice business, and this will likely lead to further growth in demand for our foodservice cream products, which we are set up to cater for,” says Hurrell.

In FY23, Fonterra’s Greater China Foodservice business reported NZ$2.2 billion in revenue with gross margins of 17.9%.

Fonterra’s CEO of Greater China Teh-han Chow says the high-quality product coupled with the local expertise the application centres provide gives Fonterra a competitive edge in China.

“While we already have a strong Foodservice business in China, we’re looking to continue to grow. By working closely with customers to create product applications that help their businesses to thrive, we can all benefit from the opportunities the China market presents.”

Fonterra’s foodservice business is also growing in Southeast Asia, particularly in the bakery channel, with the emergence of specialty bakery and lifestyle cafes across the region. Like China, in-market chefs assist the team in developing new local applications based on consumer needs.

Fonterra’s foodservice business sells to businesses that cater for out of home consumption (bakeries, cafes and global quick service restaurant chains). It partners with foodservice customers to test and develop products for their kitchens, using its network of Fonterra application centres (FACs) and professional chefs.

Fonterra considers the needs of each customer and market and work to their needs. There is a strong connection between category, markets, FRDC, technical excellence and operations, that all link together to deliver dairy products, the company says.

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Chairman Peter McBride says this is a significant move for the co-op, which will set it up to grow long-term value for farmer shareholders and unit holders. “We have conducted a strategic review which has reinforced the role of our core business. This is working alongside farmers to collect a sustainable supply of milk and efficiently manufacture products valued by customers, to deliver strong returns to farmer shareholders and unit holders,” says McBride.
CEO Miles Hurrell says, “We believe we can grow further value for the co-op by focusing on being a B2B dairy nutrition provider, working closely with customers through our high-performing ingredients and foodservice channels. This will be enabled by strong relationships with farmers, a flexible manufacturing and supply chain footprint, deeper partnerships with strategic ingredients customers, further investment in our foodservice channel, continued delivery on our sustainability commitments and investment in innovation. In this context, we are exploring divestment options for our global consumer business as well as our integrated businesses Fonterra Oceania and Fonterra Sri Lanka.”
Fonterra’s global consumer business has grown over the years since Fonterra was formed and includes a portfolio of market leading brands such as Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star, Perfect Italiano and others.
Fonterra Oceania is a fully integrated business, recently created through merging Fonterra Brands New Zealand and Fonterra Australia. It comprises Consumer, Foodservice and Ingredients businesses. Fonterra Sri Lanka comprises Consumer and Foodservice businesses.
“While these are great businesses with recent strengthening in performance and potential for more, ownership of these businesses is not required to fulfil Fonterra’s core function of collecting, processing and selling milk. Due to our co-operative structure, we believe prioritising our Ingredients and foodservice channels and releasing capital in our consumer and associated businesses would generate more value,” Hurrell says.
“At the same time, we believe Fonterra is not the highest-value owner of the consumer and associated businesses in the longer term and a divestment could allow a new owner with the right expertise and resources to unlock their full potential.”

As a next step, Fonterra will appoint advisors to assist with assessing divestment options over the next 12 to 18 months.

The post Fonterra to move to B2B from consumer businesses appeared first on Dairy Industries International.

In an effort to continue leading the way and extend transparency with customers, the Carbon Footprinter follows the launch of the Fonterra Climate Roadmap late last year, which outlines Fonterra’s current emissions position and the actions it will take to achieve its emissions reduction targets.

Gillian Munnik, global markets, director sales & marketing, says the new Carbon Footprinter is believed to be the first of its kind and scale in the dairy industry, and makes it quick and easy for customers to access NZMP product emissions data.

“We know that for many of our customers, our NZMP products form a large part of their Scope 3 emissions. We are being open and transparent and making it simple for our customers to understand how our climate plans and actions directly relate to the ingredients they purchase from us,” says Munnik.

“Fonterra’s New Zealand farmers already have one of the world’s lowest on-farm emissions footprints, and this new tool demonstrates that NZMP has the dairy expertise and mindset to support our customers with their own emissions reduction journey.”

Customers can select from NZMP’s major New Zealand sourced dairy product categories, input the volume bought and easily retrieve the emissions data of the products they purchase.

To provide independent assurance of NZMP product-level emissions, Carbon Footprint Certificates will also be available for customers to request free of charge via a New Zealand based and globally recognised sustainability accreditor, Toitū Envirocare.

Fonterra has been taking steps towards reducing its climate impact for many years, with actions including measuring its emissions footprint across its supply chain for more than 15 years and issuing annual sustainability reports since 2018.

To find out more about NZMP and its Carbon Footprinter, visit www.nzmp.com.

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This is another step for the Co-operative as it works to get out of coal by 2037 and reduce Scope 1 and 2 emissions by 50% by 2030 (from 2018 baseline).

The forecast $36 million investment in the electrode boiler will reduce the Edendale site’s emissions by around 20% or 47,500 tonnes of CO_2e per annum – the equivalent of taking almost 20,000 cars off NZ roads – and will reduce Fonterra’s overall carbon emissions from its NZ 2018 baseline by nearly 3% per annum once operational in FY25.

Fonterra chief operating officer (acting) Anna Palairet says the team considered a number of energy options before deciding on the electrode boiler.

“Fonterra has a complex manufacturing operation spanning the country. As technologies develop, it’s important we continually assess which energy source and technology is best for each site.  

“With up to 15 million litres of milk being processed at our Edendale site each day, we need to ensure we have a secure energy supply that can meet processing demands.

“Cost is also an important consideration. Getting out of coal requires significant investment and we need to choose the best option that reduces emissions and operational complexity while also doing what’s best for our farmer shareholders.”   

Fonterra is partnering with Meridian Energy for the electricity supply who generate electricity from 100% renewable resources – wind, water and sun.

“Energy contributes around 40% of Aotearoa’s total gross emissions and process heat makes up a third of this country’s energy use. So, it makes sense for Meridian to work with big industry to switch energy sources to clean energy alternatives,” says Meridian Chief Executive Neal Barclay.

“We congratulate Fonterra for taking this step given the significance and scale of their operations. Partnerships like these are critical to helping this country meet the target of net zero carbon emissions by 2050.”

Further details on the Co-op’s work to reduce emissions associated with manufacturing:

• The Electric Boiler Project is being co-funded as part of a previously announced EECA (Energy Efficiency and Conservation Authority) partnership. The partnership involves Fonterra achieving approximately 2.1 million tonnes of earlier CO₂ₑ reductions by undertaking a range of decarbonisation projects at its manufacturing sites.
• Fonterra expects to further reduce its emissions through a combination of energy efficiency initiatives and switching fuels at its six manufacturing sites that will still be using coal in 2024, and ultimately stop using coal by 2037. 
• Fonterra’s Waitoa manufacturing site is now using around 50% less coal as its new wood biomass boiler is operational. This makes it the third Fonterra manufacturing site to reduce coal use in 2023. The biomass boiler will reduce the site’s annual emissions by at least 48,000 tonnes of CO₂ₑ, the equivalent of taking 20,000 cars off New Zealand’s roads.
• Fonterra is in the process of converting the coal boilers at its Hautapu site to wood pellets. Once complete this year, the Hautapu site will reduce its carbon emissions by a forecast 15,785 tonnes per annum – the equivalent of taking about 6,500 cars off New Zealand’s roads.
• The Stirling wood biomass boiler now has fully renewable thermal energy for its process heat. Changing to this boiler will reduce the annual carbon emissions by 18,500 tonnes – the equivalent of taking approximately 7,700 cars off New Zealand’s roads.
• In 2020, the Te Awamutu manufacturing site converted its coal boiler to wood pellets, reducing the Co-op’s national coal consumption by 9%, reducing more than 84,000 tonnes of carbon emissions per year – the same as taking 32,000 cars off the road.
• In 2018, the Brightwater site near Nelson switched to co-firing biomass, helping reduce CO_2eemissions by 25%, or the equivalent of taking 530 cars off the road. For more information, read here.
• Fonterra also released its climate roadmap last year – to learn more please click here.

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This is despite significant hopes having been pinned on the agreement being able to liberalise and facilitate investment as well as trade: “Bilateral trade is expected to grow by up to 30 per cent within a decade,” said a European Commission note, adding that “EU investment into New Zealand has a potential to grow by up to 80 per cent” over current levels (1).

The New Zealand ministry of foreign affairs and trade has also tried to accentuate the positive, pointing out that all New Zealand exports would increase by up to NZ$1.8 billion (€1 billion) annually once the trade deal is fully implemented, with benefits to a range of sectors, including dairy. “New Zealand’s dairy sector will gain meaningful new opportunities for products such as butter and cheese, which will allow trade to flow more freely for the first time in many years,” a spokesperson said.

What the difference is

However, both the EU and the NZ government will struggle to persuade their respective dairy sectors that this deal will make a big positive difference.

Kimberly Crewther, executive director of the Dairy Companies Association of New Zealand (DCANZ), warned, “We need to be pragmatic about the amount of opportunity that this FTA offers for the New Zealand dairy industry.” Her organisation argues that the EU dairy market will overall remain largely closed to New Zealand exports of cheese, butter and milk powder, even after the agreement comes into force, expected in the first half of 2024 (2).

Under its tariff liberalisation terms, after seven years, additional limited tariff quotas for EU milk powder sales will grow by just 1.3 per cent; for milkfat (butter and anhydrous milk fats), just 1.7 per cent; and for cheese, a paltry 0.3 per cent, DCANZ has concluded. Crewther views the FTA as “a missed opportunity for Europe and New Zealand” as tariff liberalisation has been identified as one of the key actions to achieve UN Sustainable Development Goal 2: “Creating a world free of hunger by 2030” (3).

European Dairy Association (EDA) director trade and economics Laurens van Delft challenged this narrative, however, saying this was an “extremely favourable deal for the small island country…[which] will increase pressure on the European dairy sector.”

Small but strong

For sure, New Zealand joins this agreement in a strong position. In 2022, NZ dairy industry exports globally valued at around NZ$20 billion (€11.1 billion) according to Stats NZ, New Zealand’s official data agency. The country’s dairy exports to the EU were worth NZ$4.5 billion (€2.5 billion) in 2022, while the EU only exported dairy goods valued around NZ$33 million (€18.3 million) to New Zealand.

And while NZ has agreed to scrap a range of import tariffs on EU dairy exports, they will not compensate its “unilateral advantage” and “very generous market access”, due to the limited New Zealand home market (5.1 million people, compared to the EU’s 448 million), said van Delft. He argued import tariffs on EU dairy exports to New Zealand were “currently bearable,” and banning them should not incentivise significant exports, although, “there might be some opportunities under the geographical indication (GI) agreement for specialist cheese.”

EU dairy trade association Eucolait secretary general Jukka Likitalo agreed there were “opportunities for speciality cheeses as well as other high value products and whey derivatives.” He said, “The EU exports a lot of lactose to New Zealand, used for protein standardisation.”

But, agreeing with the EDA line, he noted, “The agreement will not offer much additional advantage as most duties are already at zero. However, remaining tariffs (eg, five per cent on lactose and whey powder) will be abolished.”

EU dairy sales to New Zealand would not increase significantly following the agreement, he predicted, “as NZ tariffs are either at zero or a maximum five per cent.”

Indeed, EU cheese exports to NZ have already been “very strong this year (6,000 tonnes in January to August), around double the usual amount (taking the average of last year’s).”

GI concessions

Here, the GI concessions made by New Zealand may make a difference. Indeed, they have not been welcomed by NZ dairy producers. New Zealand cheese makers wanted to retain the right to continue using the terms Feta and Gorgonzola for NZ cheeses, reflecting these styles. After strong lobbying from Greece and Italy, the trade deal will prevent NZ cheese makers using these terms for products sold to the EU, within New Zealand and exported elsewhere after a transition period of nine years. According to DCANZ, this will impact New Zealand cheese manufacturers’ business in both New Zealand and overseas, “while providing an open

door for European producers to further monopolise naming rights at the expense of large and small New Zealand cheese makers.” Lighter restrictions (4) will apply for Parmesan and Gruyère, allowing previous NZ users of these terms “to continue that use, provided if they used these terms in good faith for at least five years before the FTA comes into force.

Nonetheless, Crewther said these restrictions may limit future innovation in cheese making for large and small New Zealand cheese producers, she fears. “After decades of investment to grow markets for these cheeses, this has been a very disappointing outcome for New Zealand producers,” Crewther concluded.

In Europe, dairy experts and the European Commission welcomed New Zealand’s granting of GI protection for some 1,967 EU GIs, including Asiago, Comté, Feta and Queso Manchego cheeses, which could boost sales. “There might be some potential here, but the market of five million New Zealanders is rather limited,” van Delft argued.

Likitalo, whose association promotes dairy imports as well as exports, said, “Almost all dairy products were considered sensitive by the EU in these negotiations thus limiting liberalisation.” Full EU liberalisation, or zero tariffs, was only given to milk protein concentrates, casein, caseinates and certain other protein ingredients, but for all these products EU tariffs are already low. “All other dairy products will be subject to tariff rate quotas (TRQs) and the most sensitive product groups (milk powders and butter) even have an in-quota tariff,” he added.

Under the deal, most expanded EU TRQs (cheese, butter, milk powders) will be phased in over a seven-year period, with quota volumes gradually increasing. They will be subject to an import licensing regime, with licences issued on a first come, first served basis. A certificate of eligibility from the exporting party will also be required, Likitalo said.

He doubted Europe’s dairy prices would reduce through this FTA, although “at times, when the New Zealand product is considerably cheaper, there might be some downward pressure from imports.”

Fonterra speaks

Simon Tucker, director global sustainability, stakeholder affairs and trade at Auckland-based Fonterra, the major global dairy co-operative owned by 9,000 farmers, called the outcomes for the sector “very disappointing.” He said this reflects the protectionism that continues to afflict the dairy trade worldwide and particularly the EU dairy industry. “The agreement provides some small pockets of access for certain products over time, but overall commercial opportunities for products such as butter, cheese, milk powder and key proteins are constrained relative to the size of the EU market by a combination of small permanent quotas, in-quota tariff rates, and quota administration requirements.” He also commented on the issue of the GIs, which mean that Fonterra, alongside other New Zealand cheese producers, will no longer be able to use the term, Feta, after a transition period of nine years. Fonterra, however, was happy it has been able to retain the ability to use the terms Parmesan and Gruyère. (5)

According to Crewther, it is difficult to predict how the market will respond to the outcome of the FTA. Given the limited TRQ volumes, it is unlikely that a significant shift in New Zealand dairy exports to the EU will emerge, she said. “The government will promote opportunities for implementation of the FTA, but we do not expect any particular incentives to encourage uptake.”

She said the agreement largely maintains a status quo for New Zealand while placing significant additional costs on dairy trading and denying New Zealand exporters the ability to offer what they say are high-quality and lower carbon dairy products to European consumers. Fonterra stresses that NZ cows are 96 per cent grass-fed, with high standards of animal health and welfare, and with NZ soils having low nitrous oxide emissions.

For Ksenija Simović, senior policy advisor for trade, international advocacy and external communication at EU food producers’ association Copa-Cogeca, “the agreement is in its

infancy, so the real evolution will only come when we see how the flows are changing and how the sector is impacted.”

But she indicated that significant changes in EU/NZ dairy trade were unlikely. Today, around 90 per cent of the EU’s milk production is consumed domestically, while New Zealand exports around 90 per cent of its production, said Simović.

1 – https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3715

2 – https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/new-zealand-european-union-free-trade-agreement/nz-eu-fta-overview; https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/new-zealand-european-union-free-trade-agreement/resources/

3 – https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/new-zealand/eu-new-zealand-agreement/text-agreement_en

4 – https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/new-zealand-european-union-free-trade-agreement/geographical-indications/nz-eu-fta-implementation-making-a-statutory-declaration/

5 – https://www.fonterra.com/nz/en/our-stories/media/fonterra-acknowledges-the-outcome-of-the-nz-eu-fta.html

6 – https://www.nzmp.com/global/en/about-nzmp/sustainability/low-carbon-dairying.html

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The Co-operative is targeting a 30% intensity reduction in on-farm emissions by 2030* (from a 2018 baseline) which will see it further reduce the emissions profile of its products.

86% of Fonterra’s emissions come from on-farm, and the new target is seeking to reduce emissions intensity by tonne of FPCM (fat and protein corrected milk) collected by Fonterra.

In making the announcement at the Co-operative’s Annual Meeting, Fonterra CEO Miles Hurrell said New Zealand farmers are some of the most emissions-efficient suppliers of dairy at scale, but work needs to continue to maintain this position.

“There is a lot of activity to reduce emissions across other markets, and the Co-op needs to keep making progress to make sure it doesn’t fall behind.

“As a dairy partner to many of the world’s leading food companies, we’re responding to growing sustainability ambitions from our customers and financial institutions, along with increasing market access, legal and reporting obligations.

“Our collective efforts to reduce emissions – from on farm, across our operations and by our R&D teams – will help future proof Fonterra, supporting our ambition to be a long-term sustainable Co-op for generations to come,” says Mr Hurrell.

“At the other end of the supply chain, as a large part of our customers’ Scope 3 emissions, today’s announcement further demonstrates to them that we are committed to being their sustainable dairy partner of choice both now, and into the future.”

Fonterra expects this new target will be achieved through a number of ways:

• 7% reduction through farming best practice such as feed quality and improving herd performance
• 7% reduction through novel technologies that we’re developing through AgriZeroNZ, the joint venture between agribusiness and Government working to find a solution to methane, and other partnerships
• 8% reduction through carbon removals from existing and new vegetation
• 8% from historical land-use change conversions to dairy.

Fonterra chairman Peter McBride says that the Co-op’s overall on-farm emissions reduction target would affect each farm differently.

“There is significant variation within and across farming systems when it comes to emissions intensity. We are confident that we can make solid progress towards our target by working together and sharing information farmer-to-farmer.

“There’s no one solution to reducing on-farm emissions. It will require a combination of sharing best farming practices and technology to reduce emissions – it’s both our biggest opportunity and our biggest challenge,” says Mr McBride.

“We have deep empathy for the challenges our farmers are already dealing with. The Co-op’s approach will be to work alongside farmers, not against them, as we collectively make progress towards our target, including investing in methane reduction technologies.”

Fonterra says the target comes after close to a year of discussions with farmers about why it is needed and how the Co-op will work with them to achieve it. It says the methodology will continue to evolve alongside the science that supports the changes.

Fonterra also launched its Climate Roadmap. The roadmap is a plan that outlines the actions the Co-op will take towards its 2030 targets and ambition to be net zero by 2050.

Earlier this year, Fonterra lifted its emissions reduction targets for its manufacturing and operations. This new target completes the package.

Mr Hurrell says having a full suite of targets and a plan to achieve them will provide high-value customers with the confidence to continue buying dairy from Fonterra, as well as protect its reputation as being one of the most emissions-efficient suppliers of dairy at scale.

In addition to this, the Co-operative has voluntarily released its first Climate-related Disclosure report. This report identifies risks and opportunities related to climate and helps the Co-operative plan for the future.

New Zealand is the first country in the world to pass a law introducing mandatory climate-related risk reporting, with it becoming mandatory next year for around 200 New Zealand companies, including Fonterra.

Mr Hurrell says he’s proud of the steps the Co-op is taking to address the challenges it faces when it comes to climate.

“Today’s announcements are not just important for Fonterra. They will also help the country achieve its 2030 targets set under the Zero Carbon Act. We know we play a significant part in New Zealand’s emissions profile, and it’s up to all of us to work towards helping New Zealand achieve its climate targets,” says Mr Hurrell.

The post Fonterra announces climate plans for the future appeared first on Dairy Industries International.

Fonterra CEO Miles Hurrell says when the Co-op announced the sale in December 2022, it noted the sale was subject to regulatory approvals. These approvals have now been received.

“With our decision to focus on our New Zealand milk pool, the sale of DPA Brazil means we can prioritise our resources to the businesses that are core to our strategy,” says Mr Hurrell. 

Fonterra and Nestlé sold the JV for BRL 700 million, which is approximately NZD 240 million at current exchange rates. These proceeds offset debt related to that business, which means there will be little cash impact on Fonterra’s earnings.

There is a negative foreign currency translation reserve (FCTR) balance of approximately $70 million related to Fonterra’s ownership of the DPA Brazil asset, which will be reflected as a non-cash accounting reclassification in Fonterra’s profit and loss statement.

Final transaction proceeds remain subject to customary post-completion adjustments. 

As with previous one-off transactions, Fonterra’s FY24 announced forecast earnings range of 45-60 cents per share will continue to reflect only the underlying performance of the business.

*The Dairy Partners Americas (DPA) Brazil joint venture was owned 51% by Fonterra and 49% by Nestlé.

The post Fonterra and Nestlé complete sale of DPA Brazil appeared first on Dairy Industries International.

Simon Till, who has most recently held the role of Fonterra’s director capital markets, will take up the position of acting chief financial officer while recruitment for a permanent CFO is underway.

Neil joined the Co-operative in February 2023 and his last day will be 3 November.

The post Fonterra CFO Neil Beaumont to leave the co-op appeared first on Dairy Industries International.

Fonterra CEO Miles Hurrell says the co-op has delivered strong earnings and made progress against key strategic initiatives in FY23. However, this has been against the backdrop of a farmgate milk price that has dropped across the season.

“Our 2022/23 season farmgate milk price was impacted by reduced demand for whole milk powder from key importing regions. As the financial year progressed, we saw Global Dairy Trade prices drop, with the average whole milk powder price down 16% compared to last season.

“We recognise the impact the reduced farmgate milk price has on farmers’ businesses and have utilised our strong balance sheet to introduce a new advance rate schedule guideline to assist on-farm cash flow.

“However, we’re pleased to be announcing a strong full year dividend of 50 cents per share – comprising an interim dividend of 10 cents per share and a final dividend of 40 cents per share.

“In addition, the co-op returned tax free 50 cents per share to shareholders and unit holders in August, following the divestment of Soprole, giving a final cash pay-out to farmers of $9.22 per share backed kgMS.

“Our FY23 performance demonstrates that we are focusing on the right strategic priorities. This said, we are aware that there are challenging conditions on the ground for many of our farmers,” says Hurrell.

Fonterra’s reported profit after tax of $1.5bn was up $994 million. Excluding the net gain from divestments of $248 million, normalised profit after tax was $1.3bn, up $738 million compared to the same time last year. This includes the impact of impairments and is equivalent to 80 cents per share.

The co-op also reported a return on capital for the last 12 months of 12.4%, up from 6.8% in the comparable period.

Hurrell notes, “There were a number of key drivers that helped us deliver this result, including favourable margins in our Ingredients channel, in particular the cheese and protein portfolios.

“We also saw improved performance in our foodservice channel due to increased product pricing and higher demand as Greater China’s lockdown restrictions started to ease from the start of calendar year 2023.

“Further, across the second half, the operating performance of our consumer channel strengthened due to improved pricing. However, we adjusted the long-term outlook for our Asia Brands and Fonterra Brands New Zealand business, resulting in full year impairments of $101 million and $121 million respectively.

“We also recognised a gain on sale from our Chilean Soprole business of $260 million during the year.

“Looking at our reportable segments, core operations reported profit after tax increased $532 million to $572 million, due to higher ingredient margins.

“On the supply side, full year milk collections ended the season at 1,480 million kgMS. This is in spite of significant challenges that many farmers faced across New Zealand including

rising input costs and adverse weather events in the North Island early in calendar year 2023,” says Hurrell.

Fonterra released its long-term strategy in September 2021 and since then has made good progress towards its 2030 goals, he says. “Across FY23, we completed the divestment of China Farms and Soprole as part of our strategic choice to focus on New Zealand milk,” Hurrell adds.

“As we work towards our ambition to be a leader in sustainability, we have stepped up our emissions reduction goal for the operational side of our business, introducing a target of a 50% absolute reduction in Scope 1&2 emissions by 2030, from a 2018 baseline, an increase on our previous target of a 30% reduction by 2030. We have held discussions with our farmers on why we need to introduce a Scope 3, or on-farm emissions target, and plan to announce our target before the end of calendar year 2023.

“We’re also progressing work in our innovation portfolio, including establishing our joint venture with Royal DSM, Vivici, which is exploring commercial opportunities in fermentation derived ingredients, and launching our corporate ventures arm Nutrition Science Solution (NSS), which made its first strategic investment in the form of a minority stake in Pendulum Inc, a biotech company specialising in metabolic health.

“We are watching market dynamics closely and there are indications demand for New Zealand milk powders will start to return from early 2024. Demand for other products, including foodservice and our value-added ingredients, continues to be robust.

“We acknowledge that across the year, farmers will continue to feel the pressure from high input costs and a reduced farmgate milk price. We’ll continue to do all that we can to support farmers through this challenging period,” concludes Hurrell.

The post Fonterra announces FY23 annual results appeared first on Dairy Industries International.

Evolution-wise, being able to digest the sugar in milk was probably the biggest benefit to human populations over the last 10,000 years, the recent webinar from Dairy UK discussed, and milk has only evolved to be nutritious. And probably why so many people enjoy it, whether it’s liquid, cheese, yogurt or ice cream. It’s in our biology to like milk. 

In other news, I point you to the Sunday Times magazine, which had on its cover a story about tramplings in the British countryside by cows being on the rise. Featuring a cow with a skull and crossbones on its flank. Hmm.  

Now here’s the interesting paragraph: “Statistics only go back to 2010, when six people were killed by cattle, but in the five years between April 2017 and March 2022 there were 32 such deaths, according to the Health and Safety Executive (HSE), the national regulator for workplace health and safety. Of these, 23 were farm workers — the majority of whom died from crushing injuries — and 9 were members of the public. In the year 2020-21, 11 people were killed by cows, 5 of them members of the public. In the same year 31 people sustained non-fatal injuries.” 

I do feel that every death and injury is a tragedy, but it also does show that the issue of increased rambling of the public across farms is one that has to be properly managed. The freedom to walk anywhere in the UK is a responsibility for both the public and farmers. Agriculture on its own is one of the most lethal of professions, but this is often not taken into account by the public. And no-one wants to be wandering into a place where large animals are milling without knowing how to handle it. As they used to say on Hill Street Blues (a US police show), “Let’s be careful out there.”  

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Animal-free dairy proteins derived from fermentation have benefited from over $5 billion in investment backing the development of the technology. Over 40 companies are striving to bring this process to market. For regulatory reasons, the consumer market tests are happening in US. Foods based on fermented protein are not yet allowed in Europe.

However, whatever sums are invested, no-matter how clever the technology, the final decision always rests with the consumer. And while it’s clear that animal-free dairy has a place, it’s going to be a smaller place than its backers think.

Image: Fairlife
In the US, sales of lactose-free dairy are growing faster than plant milks, led by the Fairlife brand.

Here are some factors to consider in thinking about the commercialisation of animal-free dairy technology:

1. Taste & texture

The single most important success factor. Whatever else consumers may be thinking about, they want to choose foods that taste good. So far, and unlike plant-based cheeses and meats, the few products based on animal-free proteins seem to score well, with tastes and texture comparable with the original.

2. What’s the benefit for the consumer?

Once you look at what benefits these products could bring to the consumer, it becomes more challenging.

Animal-free. Contrary to everything you read in the media, most people are still happily eating foods that contain animal ingredients, and they love dairy protein, as testified by growing supermarket sales for dairy protein. Just 3%-4% of the European population are practising vegans, and their numbers are not increasing. And while 25% of the population say they are reducing their meat consumption, that’s meat, not dairy. Consumers who want animal-free already have choices, such as plant-based products. But even these, despite 15 years of marketing, have only niche status. Measured by volume, plant milks (the most successful category) have a 9% share of the US liquid milk market. Plant-based cheese has just a 1% share and in many markets sales fell in 2022.

More sustainable. Sustainability means different things to different groups of consumers. Most people want to go on enjoying animal proteins and dairy producers are working to make that possible, whether that’s moving to regenerative agriculture, reducing carbon emissions, improving animal welfare or using recyclable packaging. And this what people want.

Dairy industry sustainability actions create ‘permission to indulge’, enabling people to go on enjoying their favourite dairy foods with a clear conscience. An example is the surge in demand for products labelled ‘grass-fed’. It’s a message that is read by consumers as: “better for animal welfare, better for the planet, better for my health.”

For example, Hu Kitchen, the world’s most-successful vegan chocolate brand and part of Mondelez, has dropped being vegan and added milk chocolate to its range, using dairy from grass-fed cows. This widens the appeal of the brand to the majority of consumers who enjoy dairy. It reveals the reality of consumer preferences. The ‘animal-free dairy’ message is not the competitive advantage they it might have been five years ago.

Lactose-free. Animal-free dairy is again late to the party. Consumers who want lactose-free are already well-served by plant milks, some which, such as oat, exceed people’s taste expectations. Real dairy has also done a good job of catching up and offering the lactose-free benefit. In Spain, for example, lactose-free dairy outsells plant milks. In the US, sales of lactose-free dairy are growing faster than plant milks, led by the Fairlife brand, and will overtake plant milks in two to three years. Clearly many consumers want animal milk if it doesn’t give any of them any digestive issues, and many prefer it over plant milks because they perceive it as a simpler and more natural product.

And just to really make life difficult, non-animal dairy must carry a dairy allergy warning in the US, so similar are its proteins to those of real dairy. If someone had decided to find a way to deliberately make things difficult, they could not have found a better way.

3. People don’t eat technology

Technology is vital. It is what makes our industry possible. But it does this while being invisible to the consumer. That makes sense. Humans do not eat technology. Painful as it is for many scientists, consumers do not care about your technology, only about “what am I getting?” In fact, the lesson of food history of the last 25 years is that talking about technology in food is a turn-off for most people. The functional food frenzy 20 years ago of adding cholesterol-lowering plant sterols to everything and the GMO debacle remind us that people prefer not to be confronted with added science in their foods.

New markets are most often created by reinventing traditional foods. It is the skill of new product development teams in re-making old foods – adapting taste or texture or making them more convenient for new consumers – which has driven the biggest successes in our industry. The dairy industry excels at this. The successes of Greek yogurt, skyr and others, are all about making traditional dairy products available in a convenient way.

4. Food culture & provenance

Food culture trumps technology. It connects to identity and family and cannot be shifted easily. A picture of a Jersey cow can motivate people to like dairy. But there are no stories and images of animal-free dairy, and marketers will be hard-pressed to match the positive emotional associations that many people have with such an image.

5. Competitive landscape

Animal-free dairy is competing for the attention of the animal-free consumer with plant-based. Two concepts will be fighting for same segment of the market.

In that fight, some consumers will be drawn to animal-free message, others will be put off by the allergen label and the ‘techie’ nature of the product. Animal-free will also be competing with real dairy, which is getting its sustainability act together and giving consumers what they want to hear.

If the plan is for fermented dairy proteins to succeed on a niche basis, say 5% market share of a few categories by 2030 (which is way, way better than plant-based has managed after seven years of vigorous marketing and NPD), that seems credible and possible.

Animal-free proteins could become a niche business in parts of the US and in the Netherlands and Germany, which have a poor food culture and, like the US, have a high percentage of ultra-processed foods in their diet. In much of the rest of Europe these products will be rejected, just as GMOs were, because they run counter to food culture.

If animal-free dairy is to be transformative it must be able to:

• supply all those fractions of dairy that create value, such as lactoferrin for immunity, and also demonstrate scientifically that they work as well as the fractions from real dairy
• or compete with commodity proteins in applications such as cream cheese and ice cream.

In both of the above cases, animal-free dairy will need to do so at lower cost than animal dairy. If anyone thinks that being more sustainable and animal-free is enough to take this technology beyond niche status, they are in for a surprise.

The post The many challenges of commercialising ‘animal-free’ dairy appeared first on Dairy Industries International.

Anna joined Fonterra in October 2022 as director of Global Supply Chain and has extensive experience across operations, customer and safety.

CEO Miles Hurrell says Anna has spent more than a decade in senior leadership roles at Air New Zealand, including head of sustainability and leading the global cargo business, and is the current chair of Kotahi GP Limited.

“Anna has a strong people and relationship focus and will provide leadership to a critical part of our business,” says Mr Hurrell. 

Anna will transition into the COO position from today, working alongside Fraser. She will remain in the acting role until a permanent appointment is made.

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Participants will listen to Alexander Anton, secretary general of the European Dairy Association, along with Mark Casey of Fonterra and Janusz Wojciechowski, the EU Commissioner for Agriculture, detail topics such as whether sustainability is an opportunity or threat to the dairy sector, and the directions of change in the dairy sector. The two-event promises to be full of discussions and insight. For more information visit https://www.2023.forum-mleczarskie.org.

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CEO Miles Hurrell says he’s pleased to confirm approval from the competition authority, Fiscalía Nacional Económica (FNE), has now been received.

“Completion of the sale remains subject to satisfaction of other conditions previously announced, including commencement of an irrevocable public tender offer process in Chile for the outstanding shares in Soprole not already owned by Fonterra.

“Receipt of FNE approval is a significant milestone for the transaction and we remain on track in the sale process. We will update the market on expected timing for completion of the sale as the remaining conditions are progressed,” Hurrell says.

The Fonterra board intends to make a final decision on the amount and timing of any capital return once the sale agreement is unconditional, cash proceeds are received in New Zealand and having regard to other relevant factors including Fonterra’s debt and earnings outlook at such time.

The post Fonterra updates on business sale in Chile appeared first on Dairy Industries International.

“Fraser has set the co-operative ambitious goals for decarbonisation and the management of water, and his enterprise leadership helped shape our new strategy and 2030 targets. He will leave our operations business unit in great shape with a longer-term outlook and a sharp focus on efficiency,” Hurrell says. “He has indicated he intends to embark on a new career path and is looking to become more involved in venture capital as an investor and governor. I wish him well with this endeavour.

“Fraser will stay on until the end of July and is committed to helping with finding a successor and ensuring a smooth handover,” says Hurrell.

The post Fonterra’s COO Whineray to leave co-operative appeared first on Dairy Industries International.

To submit a news item for inclusion, please contact Suzanne Christiansen at suzanne@bellpublishing.com or Maddy Barron at maddy@bellpublishing.com.

• Dairy Industries Expo to launch in 2023
• MoistTech debuts new equipment
• Fonterra announces divestment of Chile business
• Tetra Pak announces collaboration with food processing technology incubator

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Fonterra CEO, Miles Hurrell, says that the divestment process for the Soprole business formally commenced in April 2022, following the launch of Fonterra’s strategy to 2030.

“A key pillar of our strategy is to focus on New Zealand milk. Soprole is a very good business but does not rely on New Zealand milk or expertise. We are now at the end of the divestment process and have agreed to sell Soprole to Gloria Foods – JORB S.A. (Gloria Foods).”

Gloria Foods is a consumer dairy market leader in Peru, with operations in Bolivia, Puerto Rico, Argentina, Colombia and Uruguay.  Fonterra and Gloria Foods have a long-standing commercial relationship in South America.

The divestment comprises the sale of shares in a Fonterra owned holding company. Proceeds received by Fonterra at completion from the sale of shares will be subject to relevant adjustments including capital gains tax, working capital and net debt adjustments at closing, foreign exchange hedging costs, and other transaction related costs. The aggregate consideration also includes the receipt by Fonterra, prior to completion, of dividends from Soprole and intercompany debt owing to Fonterra, which will be repaid at completion.

The divestment is subject to a number of conditions. The material conditions are receipt of regulatory approvals (including from the competition authority in Chile) and commencement of an irrevocable public tender offer process in Chile for the outstanding shares in Soprole not already owned by Fonterra. Satisfaction of conditions is expected to take approximately six months.

Mr Hurrell says that Fonterra has a long history in Chile and is pleased to have reached agreement with Gloria Foods, which also has a proud dairy history in South America. Fonterra is delighted to pass on the Soprole business to a committed new owner with a strong regional focus on growth. Soprole’s success over many years and its market-leading position across a number of dairy categories in Chile, has been built on the dedicated focus of Soprole’s management team and staff, and the support of its supplying farmers.

Fonterra remains committed to targeting a significant capital return to our shareholders and unitholders. The Fonterra Board intends to make a final decision on the amount and timing of any capital return once the sale agreement is unconditional, cash proceeds are received in New Zealand and having regard to other relevant factors including Fonterra’s debt and earnings outlook at such time.

Fonterra’s previously announced FY23 earnings guidance will continue to reflect only the underlying performance of the Soprole business during the pre-completion period. Fonterra will provide an update on the overall impact of its divestment programme as part of its FY23 financial reporting.

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Neil is an accomplished Group CFO, experienced in operating at the most senior levels of global and in complex business environments. Most recently he was senior managing director, chief financial and risk officer at Canada Pension Plan Investment Board (CPPIB), with responsibility for leading the operations, finance and risk functions for the CAD $500 bn investment fund.

Speaking about the appointment, Fonterra CEO Miles Hurrell says, “We’re delighted to welcome Neil to the team. He’s an experienced global finance leader whose expertise in strategic implementation will be a real asset to our management team.”

Neil has held senior roles at BHP Billiton in Chile and Australia and at KPMG. He is a Chartered Accountant with the Canadian Institute of Chartered Accountants and holds a Bachelor of Commerce from the University of Saskatchewan.

Mr Hurrell thanked the acting CFO Chris Rowe for his contribution covering the position following the resignation of previous CFO Marc Rivers. Chris will continue in the acting role until Neil joins the Co-op early next year.

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