Fonterra is waking up to the risks of unsustainable dairy feed

It was good news to hear recently that Fonterra has begun to recognise the potential brand damage from dairy farmers moving away from grass-based milk production to rely on unsustainable supplementary feeds such as Palm Kernel Expeller (PKE). Fonterra are establishing and issuing voluntary  guidelines about PKE for farmers to maintain the competitive advantage that New Zealand’s pasture-based systems gives them.

cows_field_animalPasture-based farming is considered a low input farming, in that animals largely eat what is grown on the farm.  It requires significant expertise in pasture and animal management to optimise pasture production and quality, the production of milk solids and the cows’ reproductive health. More intensive farming can sidestep this systems-based approach in favour of importing supplementary feed such as PKE.

The dairy industry’s increasing reliance on PKE highlights the intensification of dairying and a major change in our agricultural systems. In 14 years New Zealand’s dairy herd has increased from  3.8 million in 2000 to 6.7 million dairy cattle in 2014.  In the same time New Zealand has gone from importing 300 tonnes of PKE annually to importing nearly two million tonnes annually to feed more cows on more heavily stocked farms, at a cost of $424.8 million.

Last year New Zealand was the largest importer of PKE in the world , importing 30% of the international supply – showing that we are an outlier in terms of global dairy practice. Nearly two million tonnes was more PKE than New Zealand has ever imported, and highlights the industry’s reliance on this unsustainable feed.

This heavy use of PKE  allows the industry to feed more cows on more heavily stocked farms, with major impacts on our water quality.  It has major environmental impacts offshore too in promoting rainforest destruction through forest clearance to establish industrial palm oil plantations. PKE is a by-product of the palm oil industry, which is causing major destruction of rainforests in Indonesia, threatening orangutans and Sumatran tigers with extinction this decade.

It is disappointing that Fonterra’s proposed guidelines are only voluntary.  To protect our climate, Indonesian rainforests and Fonterra’s brand, there needs to be less reliance on PKE and greater recognition of the value of pasture-based systems.  This can also help encourage a shift of focus to adding value rather than continuing to increase volume in terms of cow numbers and milk supply.

The tables below show the massive increase in PKE imports  in the last 15 years and New Zealand’s role as the biggest global consumer of PKE.

Total for all countries
Oil-cake and other solid residues; whether or not ground or in the form of pellets, resulting from the extraction of palm nuts or kernels oils
Quantity (tonnes) Cost ($000)
2000 366 166
2001 4,232 1,239
2002 24,730 4,412
2003 31,573 5,182
2004 54,425 8,390
2005 126,029 14,891
2006 225,374 26,973
2007 364,469 53,265
2008 809,259 211,530
2009 914,572 227,030
2010 996,888 146,074
2011 1,413,867 321,843
2012 1,411,524 271,830
2013 1,464,219 332,380
2014 1,890,569 454,283
2015 1,949,526 424,829


Global PKE imports
Tonnes PKE imported
Country 2010 2011 2012 2013 2014 2015 (to July) % of global imports in 2014
New Zealand 1,396,315 1,394,448 1,396,601 1,602,828 2,146,484 1,022,683 30.2%
Netherlands 1,102,083 1,435,828 1,563,639 1,364,085 1,201,759 362,915 16.9%
Rep. of Korea 681,447 694,006 797,319 871,082 732,921 0 10.3%
Poland 54,269 37,802 185,885 542,994 600,895 252,247 8.5%
China 397,073 245,701 422,577 599,460 495,746 0 7.0%
United Kingdom 495,897 463,151 494,347 533,657 444,578 186,678 6.3%
Germany 292,731 399,822 544,720 439,492 305,780 107,612 4.3%
Japan 57,886 27,539 26,211 131,224 244,178 175,173 3.4%
Ireland 120,073 114,231 197,658 197,658 196,676 36,234 2.8%
Belgium 147,130 168,087 173,092 197,533 125,378 57,500 1.8%
Turkey 0 69,244 52,222 120,177 111,673 10,000 1.6%
Spain 70,818 78,675 167,475 202,995 108,945 57,449 1.5%
Pakistan 36,852 39,515 53,595 42,299 87,393 33,728 1.2%
Thailand 92,939 134,509 58,506 44,886 65,595 29,233 0.9%
Portugal 85,124 78,866 108,376 94,119 41,844 14,828 0.6%
France 65,652 59,966 91,420 77,863 40,151 28,545 0.6%
South Africa 48,000 12,872 46,297 37,783 39,276 3,082 0.6%
Sweden 39,687 60,474 49,687 43,910 37,094 15,332 0.5%
Philippines 4,510 39,187 8,725 15,150 21,263 6,458 0.3%
Australia 45,545 18,246 13,473 31,746 13,624 15,511 0.2%
Grand Total 5,543,376 5,961,509 6,630,527 7,612,545 7,108,783 3,213,281

5 Comments Posted

  1. My curiousity unsatisfied I went looking….

    It delays the date on which the cows “dry off”.
    and apparently PKE is not as effective as a good autumn pasture.

    Which begs the question why it is used so much, and the likely answer I can think of is that the farmers have overpopulated fields and no longer had decent autumn pasture for the cows??

  2. First thing I thought of was how come we don’t get a cow head count per country so that we can equate and graph the volume versus the number of consumers.

    Now New Zealand has only 2.8% of the dairy herd numbers so on the face the Greens have a valid argument.

    However if we look at the alternative dairy feed available it is not a simple matter to change from one to another as farmers in the worlds largest dairy industry are finding out. With corn prices skyrocketing due to its use in ethanol production, USA farmers are looking for alternatives and may well increase their PKE uptake.

    New Zealand Farmers are already looking for PKE alternatives.

    Interestingly whilst China finds New Zealand dairy cows best suited to their harsh climate, their feed is much different.

    Elephant grass is most important for cattle in Guangdong province because it can produce 8,000–15,000 kg of grass per Mu (1/15 of a hectare). Some of the farms plant a small area of stylo for calves. In the winter and spring season, they supply corn and elephant grass silage, and sometimes they also supply Chinese cabbage and sweet potatoes. Some of the farms supply grass hay the whole year round. In the concentrate, corn makes up about 40–50% and by-product feed ingredients such as wheat meal and soyabean meal make up about 30–50%. They also supply sufficient amounts of minerals, salt and some necessary trace elements. Most of the dairy cattle farms feed their cattle according to the feeding standards provided by the government. Sin-Tun dairy cattle farm uses a complete diet self-feeding system and gets very good results.

    Maybe in New Zealand we need to grow elephant grass (especially in Northland, East Cape, Hakes Bay, Marlborough and Canterbury drought prone areas) instead of the rye grasses currently sown.

    However if you want to be really green and feed cattle (dont know about dairy cows) then sawdust is a very good feed. Plenty of wood around to be ground up and treated as a feed (sheep might even like it)

  3. OK… I’m confused now. No really…

    Why do they supplement the feed?

    Is it the same number of cows per hectare with or without the PKE?
    The increased herd size gives more milk, but how does PKE help this?
    Does the supplement increase milk per cow? Like vitamins or hormones?

    I get that there’s something wrong with the simple way we described it… but didn’t quite get from what you said, how to understand it better. Can you find time to tell me better? My thumb is covered with digital grease… ain’t no green in IT 🙂 (and I know that… So I’m listening pretty hard now) .

  4. Rural Johnny – thanks for comment. Supplementary feed has helped make the industry more intensive and also continued the focus on increasing supply rather than adding value. As Daan Steenkamp, Reserve Bank of New Zealand has said: “In the dairy sector in particular, production processes appear to have become much more input‐intensive (greater use of supplementary feed and irrigation) so that higher gross output (gross dairy output rose 35‐40 per cent in the decade from the 2002/03 season) does not translate to similar growth in real value‐added in that sector.”

  5. Agghh, there is so much wrong with this analysis that I am reluctant to admit to being a Green Party supporter!

    First, your conclusion that “More intensive farming can sidestep this systems-based approach in favour of importing supplementary feed such as PKE.” Is just plain unsubstantiated. There may be some farmers that sidestep cows from grass to PKE but I doubt it. PKE is a feed supplement and not a replacement for pasture – the reason that PKE consumption took off was because it was cheap ($0.22/kg in 2015) compared to other supplements required to keep production levels up.

    Second, the numbers do not substantially justify your statement that “This heavy use of PKE allows the industry to feed more cows on more heavily stocked farms”. More cows yes but not because of the availability of PKE. The increase in the stocking rate has more to do with productivity gains from increasing herd sizes than it does with feeding PKE. From 2000 to 2014, dairy farm stocking rates increased by only 13.4%.

    Third, if in 2014 every cow in NZ (4.9 million) were fed PKE, they would have consumed around 1.2 kg each per day. A lactating cow needs around 18 kg (of dry matter) per day, so the PKE is around 6% of their daily feed requirements.

    Whilst I agree that feeding cows PKE detracts from the comparative advantage our dairy industry enjoys, and so ought be avoided, framing your campaign against dairying in this superficial way is titling at windmills and only serves to make the Greens look evangelical rather than pragmatic doers.

    Considering that NZ dairy production per cow is way down on what other countries achieve (and I in no way argue that we should match Israel for example), banging on in the way you do is counter-productive.

    I for one, prefer that the Greens address the positive things our farmers can do – for example improving the grass productivity so that they do not need to feed supplements.

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