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November 2009<br />

<strong>Sustainability</strong><br />

<strong>Indicators</strong>


ForEwOrd<br />

<strong>Sustainability</strong> is one of the defining business, political and social<br />

issues of the 21st century. <strong>Fonterra</strong>’s business is based on<br />

natural resources, so protecting the environment is integral to<br />

our very existence.<br />

While the protection and enhancement of our natural resources<br />

has always been a focus for <strong>Fonterra</strong>, we recognise the need to<br />

apply a more rigorous approach to this work and better direct<br />

our future efforts.<br />

2<br />

Accordingly, we published <strong>Fonterra</strong>’s <strong>Sustainability</strong> Strategy<br />

for the first time this year, setting out clear goals, strands of<br />

work and programmes. An integral part of this strategy is our<br />

<strong>Indicators</strong> Programme, so we can quantify our progress in<br />

sustainability.<br />

We have identified sustainability indicators from the farm through to manufacturing and final product delivery. They<br />

reflect our performance across the whole business and will help us measure our progress and identify the areas where<br />

we need to improve.<br />

The indicators reflect our environmental and social performance. In time, we propose to widen their reach to<br />

encompass the economic and cultural dimensions of sustainability as well. While the scope of the indicators is currently<br />

limited to <strong>Fonterra</strong>’s New Zealand operations, this will be extended across our global operations in subsequent years.<br />

This report is the first publication of the combined suite of indicators in one place. We intend to report the same<br />

measures each year, showing progress from the previous season and initiatives for the coming year so that our<br />

shareholders, customers and consumers can monitor our progress and hold us to account. By doing this, these<br />

sustainability indicators will help us realise our vision to be at the cutting edge of profitable and sustainable dairying.<br />

Barry Harris<br />

Chair, <strong>Fonterra</strong> <strong>Sustainability</strong> Leadership Team<br />

Novemberr 2009


<strong>Fonterra</strong> <strong>Sustainability</strong> <strong>Indicators</strong> - Scoreboard<br />

2008/09 2009/2010 and Beyond<br />

1. Resource Consumption <strong>Fonterra</strong> is committed to sustaining the<br />

current downward trends of resource<br />

consumption through:<br />

a. Water<br />

• 2.3L water withdrawn per L of raw milk processed<br />

• Water withdrawal from natural sources has remained static on a litre of<br />

milk processed basis since 2006<br />

b. Energy<br />

• 20.4 million GJ of electrical and thermal energy consumed on NZ<br />

manufacturing sites<br />

• Energy consumption has reduced by 13% per tonne product produced<br />

since 2004<br />

c. Materials<br />

• 100% of multiply paper milk powder bags are made from sustainable<br />

forestation mixed with recycled corrugated waste<br />

• Chemical use static over last 2 years per product produced<br />

• Establishing site specific targets for<br />

resource reduction<br />

• Investing in research on resource<br />

recovery options<br />

• Implementing a capital replacement<br />

plan using more efficient technology<br />

• Working collaboratively with our<br />

packaging suppliers to ensure our<br />

packaging conforms with design codes<br />

of compliance for minimal<br />

environmental impact<br />

2. By Product Management <strong>Fonterra</strong> is committed to minimising the<br />

impact of waste streams on our global<br />

environment through:<br />

a. Solid Waste<br />

• 90% of total waste produced was either recycled or reused during 2009<br />

b. Waste Water Management<br />

• 87% of sites using irrigation or biological waste water treatment<br />

systems during 2009<br />

c. GHG Emissions<br />

• Robust process developed for measuring GHG emissions across our<br />

product lifecycle and tested against five bulk products<br />

• Establishing site specific targets for<br />

waste reduction<br />

• Driving stability through our<br />

manufacturing process with a<br />

consequential benefit of loss reduction<br />

• Investing in research and technology to<br />

improve waste treatment capabilities<br />

1<br />

3. Governance <strong>Fonterra</strong> will:<br />

a. <strong>Sustainability</strong> Strategy<br />

• <strong>Fonterra</strong> <strong>Sustainability</strong> Strategy developed and published during 2009<br />

b. Management Systems<br />

• All qualifying <strong>Fonterra</strong> NZ Manufacturing sites are ISO14001 certified<br />

c. Compliance<br />

• 1.6% non complying conditions during 2009<br />

4. On Farm Performance<br />

• Implement its new <strong>Sustainability</strong><br />

Strategy<br />

• Conduct regular internal and external<br />

audits to confirm certification<br />

• Drive reduction in environmental noncompliance<br />

through effective closeout,<br />

staff awareness and training, and<br />

investing in control plants.<br />

a. Clean Streams Accord<br />

• Four of the five Clean Streams Accord targets met (see page 10)<br />

b. Resource Use<br />

Development of programmes to monitor and improve resource<br />

consumption on farms:<br />

• Primary Sector Water Partnership targets<br />

• Irrigation and farm water use efficiency initiatives<br />

• Investigation of on-farm water footprinting options<br />

c. Solid Waste<br />

• Supporting <strong>Fonterra</strong> suppliers to rec ycle agrichemical containers and<br />

silage wrap on farm<br />

Programmes will be introduced or<br />

supported further during the coming year<br />

to further improve on-farm environmental<br />

performance, including:<br />

• Effluent Improvement Programme to<br />

benefit suppliers who comply and assist<br />

non-compliant suppliers<br />

• Dairy Electricity Action Programme<br />

• Water Use Programme<br />

5. Community <strong>Fonterra</strong> is committed to supporting the<br />

• 300 NZ schools (involving 12,000 children) participating in KickStart Breakfast<br />

communities where we live and work via<br />

programmes such as:<br />

• 90 NZ communities visited by the <strong>Fonterra</strong> Science Roadshow in 2009 • Launching the Catchment Care<br />

inspiring 45,000 children to take an interest in science<br />

Waterways for Tomorrow programme<br />

• Support for more than 100 community-based projects in NZ<br />

• Expanding KickStart Breakfast<br />

programme to 500 schools


Resource Consumption<br />

Water<br />

KEY FIGURES<br />

• 2.3 litres of water withdrawn per litre of<br />

raw milk processed<br />

• Fresh water withdrawal has remained static<br />

since 2006 on a litre of milk processed basis<br />

Water Withdrawal<br />

2<br />

<strong>Fonterra</strong>’s New Zealand manufacturing sites withdrew more<br />

than 34 million cubic metres of fresh water during the 2009<br />

season. This equates to 2.3 litres of fresh water per litre<br />

of raw milk processed. The majority of water comes from<br />

rivers and ground water with additional inputs from district<br />

councils.<br />

The fresh water usage per litre of raw milk processed<br />

has remained static since 2006 (as a ratio of raw milk<br />

processed). This result is depressed in real terms as a result<br />

of the change in product mix towards a higher proportion<br />

of specialty milk products. There has been a consequential<br />

change in resource use including more frequent cleaning<br />

relative to the tonnage manufactured, requiring more<br />

water usage.<br />

Water Recycling<br />

While New Zealand is in the fortuitous position of having an<br />

abundant water source, <strong>Fonterra</strong> maintains a healthy respect<br />

for our water sources and uses water recycling technology<br />

wherever it is practical. The quantity of water recycled<br />

within <strong>Fonterra</strong>’s New Zealand manufacturing sites during<br />

the 2009 season is estimated at 2.34 million cubic metres –<br />

this is mostly made up from reverse osmosis and evaporator<br />

condensate.<br />

average water wuthdrawn (L water/L raw milk collected)<br />

5.00<br />

4.50<br />

4.00<br />

3.50<br />

3.00<br />

2.50<br />

2.00<br />

1.50<br />

1.00<br />

0.50<br />

static<br />

For example, up to 2800 cubic metres per day of reverse<br />

osmosis polisher water is reused in manufacturing<br />

operations at the whey plant at our Lichfield site. This<br />

reduces the volume of water required for processing and<br />

also reduces the wastewater volume. The Lichfield site is<br />

working towards self-sufficiency for water consumption in<br />

its whey products plant. Reuse of reverse osmosis polisher<br />

water is currently being investigated at other <strong>Fonterra</strong> sites,<br />

such as Hautapu.<br />

Water is also reused at a number of sites in non-critical<br />

applications. At the Hautapu site, for instance, reuse water<br />

is used for casein washing, in the Milk Protein Concentrate<br />

plant and in cheese manufacturing.<br />

<strong>Fonterra</strong> has a research programme underway to investigate<br />

the reuse of condensates in processing plants. This project is<br />

evaluating advanced oxidation technologies to increase the<br />

range of areas where water can be reused.<br />

0.00<br />

06 07 08 09


Energy<br />

KEY FIGURES<br />

•➢ 20.4 million gigajoules of electrical and thermal energy consumed on New Zealand<br />

manufacturing sites<br />

• 13 per cent reduction in gigajoules per tonne of product since 2004<br />

• Greenhouse emissions reduced by 265,000 tonnes of carbon dioxide equivalent since 2004<br />

(due to energy efficiency gains in processing)<br />

Energy Consumption<br />

The total annual quantity of electrical and thermal energy<br />

consumed by <strong>Fonterra</strong>’s New Zealand manufacturing sites is<br />

20.4 million giga joules. On a per tonne of product basis,<br />

this represents an improvement of 13 per cent since 2004.<br />

GJ Energy/MT produced<br />

12.00<br />

10.00<br />

8.00<br />

6.00<br />

4.00<br />

2.00<br />

13% reduction<br />

assigns a hypothetical dollar value to them and incentivises<br />

their reduction. It is sent out to all managers and energy<br />

efficiency champions at each site for display on staff notice<br />

boards and to encourage friendly competition between sites.<br />

Nine quarterly reports have now been published recording<br />

emissions for each site and for <strong>Fonterra</strong>’s New Zealand<br />

operations as a whole. This proactive approach means we<br />

are going to be in a good position to administer our part of<br />

an emissions trading scheme when it is introduced.<br />

Energy Sources<br />

A quarter of our energy needs is supplied by cogeneration<br />

(sometimes referred to as ‘combined heat and power’),<br />

which is significantly more efficient than obtaining electicity<br />

from the grid and thermal energy from steam generators.<br />

Total energy use is dominated by thermal energy, reflecting<br />

the needs of the evaporation and drying processes involved<br />

with the production of milk powders.<br />

3<br />

0.00<br />

04 05 06 07 08 09<br />

Energy Split 2009<br />

The improved energy use is driven by initiatives such as:<br />

• Systematic analysis of energy needs at each plant<br />

• Installation of heat recovery loops<br />

• Attention to operating practices<br />

• Monitoring and reporting on energy use<br />

Greenhouse Gases<br />

<strong>Fonterra</strong>’s Energy Reduction Project is one of the largest<br />

energy efficiency programmes in the New Zealand industrial<br />

sector. It sets targets for a reduction in energy use per unit<br />

of product, which has resulted in a reduction of 265,000<br />

tonnes of carbon dioxide equivalent since 2004.<br />

<strong>Fonterra</strong>’s Emissions Account compiles data about each<br />

manufacturing site’s carbon dioxide emissions every quarter,<br />

59% Coal, Gas & Oil<br />

9% Grid Electricity<br />

25% Co-gen Steam & Electricity<br />

7% Diesel<br />

Our mix of energy sources has remained in approximately<br />

the same proportion over the last five years.


Materials<br />

KEY FIGURES<br />

• 100 per cent of our multiply paper milk powder bags are made and used in NZ from sustainable<br />

forestation mixed with recycled corrugated waste<br />

• Maintained chemical use over last two years (per product produced basis)<br />

• 15 per cent of our tanker fleet meet Euro 4 emissions standards<br />

4<br />

Ingredients<br />

Milk is, of course, our main ingredient in all our final<br />

products, however we still bring many other ingredients to<br />

our New Zealand manufacturing sites to produce the exact<br />

specifications required by our customers. These ingredients<br />

vary from vitamins, minerals and carbohydrates through to<br />

fats and oils.<br />

The decision making process for procurement of these<br />

ingredients includes an assessment of the sustainability of<br />

different sources of supply.<br />

Packaging<br />

<strong>Fonterra</strong> works closely with our packaging suppliers to<br />

reduce quantities of packaging materials while using a<br />

packaging type that is robust enough to prevent food<br />

spoilage on transit to our customers.<br />

A good example of procurement sustainability in action is<br />

the supply of our multiply paper milk powder bags which<br />

are made and used in New Zealand from sustainable<br />

forestation mixed with recycled corrugated waste.<br />

Various initiatives have led to large savings in packaging<br />

usage including:<br />

Redesign of 20kg<br />

cheese bags<br />

Redesign of 25kg<br />

powder sacks<br />

Redesign of<br />

Anhydrous Milk<br />

Fat pack<br />

115 tonnes plastic/<br />

year reduction<br />

30% reduction in<br />

packaging<br />

Completely<br />

recyclable pack<br />

One example of collaboration between a packaging<br />

company and product manufacture has seen the reduction<br />

of more than 131,000 cheese box bases (per annum) used in<br />

the manufacturing process of cartonless cheese. Previously<br />

an average of 280,000 bases were used per year. With<br />

the introduction of more durable powerply bases we have<br />

reduced the amount of cartons that we have to recycle by<br />

28 tonnes and saved $40,000 and a large amount of labour<br />

throughout the process.<br />

Another successful initiative is that of using a flat pack<br />

carton to deliver cheese bags from our supplier. This carton<br />

does not require taping, which eliminates another waste<br />

stream, and can be reused three times before having to be<br />

recycled, thus reducing cardboard waste by 66 per cent and<br />

saving some 22.5 tonnes of raw material per annum.<br />

Chemicals<br />

Our manufacturing sites carefully monitor every litre of<br />

chemical that is used in the cleaning process. Too much<br />

chemical is not only expensive but it can have negative<br />

impacts on the environment while too little may result in an<br />

unhygienic plant. Ongoing research into maintaining this<br />

fine balance is a key part to our sustainability approach.<br />

<strong>Fonterra</strong>’s New Zealand manufacturing sites used 23,259<br />

million litres of chemical active ingredients for cleaning<br />

during the 2009 season. The chemical consumption has<br />

remained static over the last two years (on a per MT of<br />

product produced basis) despite our product mix moving<br />

towards a higher intensity of nutritional and speciality<br />

products which require a more complex cleaning regime.<br />

<strong>Fonterra</strong> works closely with our suppliers to find chemicals<br />

that have the least impact on the environment while also<br />

being effective cleaners. This includes single stage cleaners,<br />

chemical reuse systems and new cleaning agents.<br />

Fuels<br />

<strong>Fonterra</strong>’s tanker fleet travels over 81 million kilometres to<br />

collect milk for our New Zealand manufacturing sites. Fuel<br />

consumption in our tankers is monitored carefully and plays<br />

an important part in our scheduling – both from a cost<br />

and environmental impact perspective. Recent initiatives to<br />

improve our milk collection efficiency include:<br />

• Pre-concentrating milk prior to transport<br />

• Increasing rail transportation<br />

• Progressively upgrading our tanker fleet to Euro 4<br />

emissions standards (currently 15 per cent meet these<br />

standards)


By-Product Management<br />

KEY FIGURES<br />

• 90 per cent of total solid waste produced on our New Zealand manufacturing sites is recycled<br />

or reused<br />

• Greenhouse gas emissions reduced by 7,450 tonnes over past five years as a result of recycling<br />

• Saved more than $585,000 in landfill costs as result of landfill diversion<br />

• 29.8 million cubic metres of water discharged to rivers and oceans during 2009 season<br />

• 87 per cent of sites with either irrigation or biological wastewater treatment systems<br />

• Carbon footprint methodology formalised: 940g carbon dioxide-equivalent per litre of liquid milk<br />

Waste Management<br />

6<br />

<strong>Fonterra</strong> has an Eco-Efficiency Programme which focuses<br />

on reducing the environmental impact of manufacturing<br />

through redesigning operational systems, re-using<br />

non-recyclable materials and recycling. Each of <strong>Fonterra</strong>’s<br />

New Zealand manufacturing sites has an “Eco-efficiency<br />

Champion”, who runs the programme for their site,<br />

identifying waste streams for potential elimination or<br />

reduction.<br />

During 2009, <strong>Fonterra</strong>’s New Zealand manufacturing sites<br />

reached their target of recycling or reusing 90 per cent<br />

of the total solid waste produced. This resulted in 7,450<br />

tonnes less carbon dioxide emissions than five years ago and<br />

avoided landfill costs of $585,000 for the year.<br />

2009<br />

target<br />

*<br />

Examples of waste reduction initiatives from <strong>Fonterra</strong>’s<br />

Eco-Efficiency Programme include recycling of many types of<br />

plastic that had previously been sent to landfill, such as:<br />

• Petri dishes which are now washed and shredded so that<br />

the expanded polystyrene can be recovered<br />

• Bag house filters and socks containing both stainless<br />

steel and polypropylene, which are now collected,<br />

separated and recycled<br />

• Vacutainer sampling needles, which are shredded and<br />

run through a water bath to separate the outer plastic<br />

container from the inner stainless needle<br />

• Mixed grade sampling bottles that used to be sent to<br />

landfill, which are now collected and reprocessed<br />

• Used powder and cheese bags which are now recovered and<br />

used for a variety of uses such as underground cable covers<br />

This will add to the more than 2000 tonnes of plastic waste<br />

that we are currently diverting from landfill each year.<br />

2008<br />

2007<br />

2006<br />

2005<br />

2004<br />

0% 20% 40% 60% 80% 100%<br />

Proportion of total waste diverted from landfill


<strong>Fonterra</strong> works with a number of community organisations<br />

throughout New Zealand (such as The Abilities Group,<br />

Southland Enterprises, South Waikato Achievement Trust,<br />

Cargill Enterprises and Kilmarnoch Enterprises) which help<br />

facilitate this process, enabling these and other waste<br />

streams to be fully recycled.<br />

As a result of recycling, the amount of waste physically sent<br />

to landfill has reduced significantly since 2005.<br />

Waste Water<br />

Management System<br />

2006 % of<br />

Sites Using<br />

System<br />

2009 % of Sites<br />

Using System<br />

Irrigation to farmland 59% 65%<br />

Biological Treatment 18% 22%<br />

Other System * 23% 13%<br />

Kg landfill/tonne product produced<br />

10.00<br />

9.00<br />

8.00<br />

7.00<br />

6.00<br />

5.00<br />

4.00<br />

3.00<br />

2.00<br />

1.00<br />

0.00<br />

69% reduction<br />

in waste sent<br />

to landfill<br />

05 06 07 08 09<br />

The next step for <strong>Fonterra</strong> is to reduce the total volume of<br />

waste produced from our manufacturing sites recognising<br />

that while recycling/reuse is good, overall reduction is better.<br />

We are doing this by collaborating with our suppliers of<br />

goods and services along with our own manufacturing<br />

teams to identify and eliminate waste wherever possible.<br />

* Other systems include trade waste/municipal treatment<br />

systems and ocean outfalls where <strong>Fonterra</strong> has a formal<br />

agreement with the local council to discharge waste via<br />

these systems.<br />

Greenhouse Gas Emissions<br />

<strong>Fonterra</strong> has recently completed an 18-month long Carbon<br />

Footprint study. This has provided an accurate picture of<br />

the greenhouse gas emissions of our major dairy ingredient<br />

products sourced from New Zealand. Key findings are:<br />

• The carbon footprint is 940 grams of carbon dioxideequivalent<br />

per litre of liquid milk (over five commodity<br />

products measured)<br />

• Approximately 85 per cent of the greenhouse gases are<br />

emitted on the farm<br />

• Milk collection and processing accounts for 10 per cent<br />

of total emissions<br />

• Distribution accounts for 5 per cent of total emissions<br />

7<br />

Waste Water Management<br />

<strong>Fonterra</strong>’s New Zealand manufacturing sites discharged just<br />

under 30 million cubic metres of water to rivers and oceans<br />

during the 2009 season, which equates to 2.0 litres of water<br />

discharged per litre of raw milk processed (this excludes<br />

cooling water discharge).<br />

The water discharged has remained static over the last four<br />

years (on a ratio of litres of milk processed).<br />

All New Zealand manufacturing sites have a continuous<br />

improvement approach to reducing the impacts of<br />

wastewater. All sites continuously monitor their water<br />

discharge and many have expanded or improved their<br />

system of wastewater management over the last four years.<br />

85% Farm emissions<br />

5% Distribution<br />

10% Process & manufacturing<br />

emissions<br />

The study has been an important step towards getting<br />

carbon footprint measuring methodology agreed with key<br />

international dairy organisations and producers so that the<br />

global dairy sector can together contribute to reducing<br />

climate change.


Governance<br />

KEY FIGURES<br />

• ➢<strong>Fonterra</strong> <strong>Sustainability</strong> Strategy developed and published during 2009<br />

• 100 per cent of qualifying sites have ISO14001 accreditation<br />

• 1.6 per cent non complying conditions during 2009 season<br />

Strategic Direction<br />

<strong>Fonterra</strong> published its <strong>Sustainability</strong> Strategy in 2009 to help<br />

realise our vision to be at the leading edge of profitable and<br />

sustainable dairying. The strategy calls for sustainability<br />

principles to be incorporated into <strong>Fonterra</strong> decision making.<br />

It identifies goals and strands of action across all areas of<br />

our business. The four goals are:<br />

• Public support and a confirmed licence to operate our<br />

business model in New Zealand and internationally<br />

• Our record on sustainability adds value to our customers,<br />

consumers and employees<br />

• The same or better opportunities for future generations<br />

of New Zealanders as those enjoyed by current<br />

generations<br />

• Confidence and trust in <strong>Fonterra</strong> as a company<br />

demonstrably committed to sustainability.<br />

The five strands of action are:<br />

• Responding to existing sustainability issues in<br />

New Zealand<br />

• Building an external profile of <strong>Fonterra</strong> as a company<br />

that cares about sustainability<br />

The <strong>Fonterra</strong> <strong>Sustainability</strong> Leadership Team is responsible<br />

for driving sustainable performance across all parts of our<br />

business. It is a cross-business group comprised of senior<br />

members of <strong>Fonterra</strong>’s executive team, and it carries out an<br />

annual stock take on <strong>Fonterra</strong>’s sustainability performance.<br />

Environmental<br />

Management Systems<br />

Environmental management systems provide assurance<br />

that appropriate procedures are in place to minimise<br />

potential adverse environmental or health impacts. All<br />

qualifying <strong>Fonterra</strong> New Zealand manufacturing sites have<br />

comprehensive management systems that cover food safety<br />

(HACCP), product quality management (ISO9000) and<br />

environmental management (ISO14001).<br />

<strong>Fonterra</strong> holds the resource consents and maintains<br />

a comprehensive consent monitoring programme<br />

commensurate with its activities undertaken. While every<br />

intention is made to comply with each and every condition<br />

of these consents, <strong>Fonterra</strong> had 1.6 per cent non complying<br />

conditions during the 2009 season.<br />

10.0%<br />

9.0%<br />

8.0%<br />

9<br />

• Displaying prudent global leadership on issues that<br />

impact the dairy industry’s business model<br />

• Giving priority to those sustainability investments which<br />

make economic sense and positively differentiate the<br />

company<br />

• Growing an internal company culture which recognises<br />

the value of sustainability.<br />

Supporting each strand of action are programmes of work<br />

and indicators, against which our performance can be<br />

measured and reported.<br />

Non complying conditions<br />

7.0%<br />

6.0%<br />

5.0%<br />

4.0%<br />

3.0%<br />

2.0%<br />

1.0%<br />

0.0%<br />

05 06 07 08 09


On-Farm Environmental Impacts 1<br />

2009 KEY FIGURES<br />

• ➢➢80 per cent of farms with waterways excluded all stock<br />

• 98 per cent of regular water crossing points have bridges or culverts<br />

• 99 per cent of farms have nutrient budgets<br />

• 70 per cent of farms fully complied with the management of their farm dairy effluent system<br />

10<br />

Water<br />

A clean water resource is something New Zealanders<br />

take very seriously and <strong>Fonterra</strong> is helping our farmers<br />

keep waterways clean. The Dairying and Clean Streams<br />

Accord (CSA) – a voluntary agreement between <strong>Fonterra</strong>,<br />

regional councils and the Ministries of Agriculture and the<br />

Environment – is our cornerstone initiative in this area.<br />

Five key components of the CSA aim to:<br />

• Exclude all stock from waterways<br />

• Bridge or culvert all regular stock crossings<br />

Regular stock crossing points with Bridges/Culverts<br />

100%<br />

90%<br />

80%<br />

70%<br />

60%<br />

50%<br />

40%<br />

30%<br />

20%<br />

10%<br />

0%<br />

target line<br />

• Eliminate all non-compliant effluent discharge<br />

04 05 06 07 08 09 10 11 12<br />

• Apply nutrients to the land via verified nutrient<br />

management plans<br />

• Protect wetlands.<br />

Farmers totally excluding stock from waterways<br />

100%<br />

90%<br />

80%<br />

70%<br />

60%<br />

50%<br />

40%<br />

30%<br />

20%<br />

10%<br />

0%<br />

target line<br />

Farmers with dairy effluent compliance<br />

100%<br />

90%<br />

80%<br />

70%<br />

60%<br />

50%<br />

40%<br />

30%<br />

20%<br />

10%<br />

0%<br />

target line<br />

04 05 06 07 08 09 11 10 12<br />

04 05 06 07 08 09 10 11 12<br />

1<br />

<strong>Fonterra</strong>, alongside DairyNZ, has some ability to influence the environmental performance of the small independent businesses which make up our supply base<br />

– but there are distinct limits. Our focus is on education and support, as well as investments in research to provide farmers with best practice solutions.<br />

* 07/08 data. 2008/09 data not available at the time of publishing.


Farmers with a nutrient budget<br />

100%<br />

90%<br />

80%<br />

70%<br />

60%<br />

50%<br />

40%<br />

30%<br />

20%<br />

10%<br />

0%<br />

Three of these five components are tracking well against the<br />

target, however the wetland protection component is under<br />

development with councils still identifying the wetlands<br />

concerned. Of more concern is that non compliant farm<br />

dairy effluent discharge is well below optimal.<br />

To address this, <strong>Fonterra</strong> has set up an Effluent Improvement<br />

System (EIS) to encourage non-compliant farms to improve<br />

performance by committing to a management plan or<br />

face a financial deduction and ultimately the possibility of<br />

not having their milk collected. <strong>Fonterra</strong> takes effluent<br />

management very seriously and is working one-on-one with<br />

non-complying farmers to help them improve.<br />

Greenhouse Gases<br />

Generated On-Farm<br />

target line<br />

04 05 06 07 08 09 10 F11 F12<br />

Approximately 85 per cent of the greenhouse gases emitted<br />

for every litre of milk produced come from on-farm activities.<br />

The agricultural sector has already managed to achieve<br />

reductions in greenhouse gas emissions by farming animals<br />

more efficiently. Incremental improvements in the quality<br />

of New Zealand herds have reduced on-farm emissions<br />

by about 1 per cent each year per kilogram of milksolids<br />

produced since 1990.<br />

Possible solutions to further reducing methane production<br />

range from changing the mix of microbes in the rumen<br />

of cattle, to altering diets and selective livestock breeding.<br />

These medium to long term solutions are being investigated<br />

together with a range of research partners.<br />

<strong>Fonterra</strong> is also investing in a research project with other<br />

representatives of the agricultural sector to determine the<br />

effectiveness of nitrification inhibitors in reducing emissions<br />

of the greenhouse gas nitrous oxide.<br />

Other On-Farm Initiatives<br />

<strong>Fonterra</strong> is involved in many other initiatives that assist<br />

New Zealand farmers to protect the environment and run<br />

their businesses more efficiently.<br />

Efficient Water Use<br />

A joint DairyNZ/Environment Waikato/<strong>Fonterra</strong> project<br />

is developing a water use efficiency programme to help<br />

farmers set up and maintain farm water infrastructure to<br />

ensure water is used efficiently with minimal leakage from<br />

the farm system.<br />

In addition, the National Environmental Standard on water<br />

measurement devices will help improve the management of<br />

fresh water by ensuring accurate measure of the extent of<br />

water withdrawal from natural sources.<br />

<strong>Fonterra</strong> and others are working with Standards New<br />

Zealand to investigate the development of an ISO<br />

Water Footprinting Standard. Once a commonly<br />

agreed methodology for water footprinting is identified,<br />

consideration will be given to determining the water<br />

footprint of a number of <strong>Fonterra</strong> products to identify areas<br />

of the production chain that offer an opportunity for water<br />

use reduction.<br />

Recycling of Farm Waste<br />

A <strong>Fonterra</strong> representative currently chairs Agrecovery, a<br />

broad-based organisation that provides nationwide solutions<br />

for container, chemical and wrap recovery and recycling<br />

programmes. Through Agrecovery dairy farmers have access<br />

to recycling programmes that address the difficult task<br />

of disposing of chemical containers and silage wrap in a<br />

sustainable way.<br />

<strong>Fonterra</strong> is expecting to see increased participation<br />

from dairy farmers in Agrecovery’s recycling programme<br />

following the launch of its nationwide silage wrap recycling<br />

programme during 2009 plus the continuation of the Agpac<br />

silage wrap recycling programme. All <strong>Fonterra</strong>-owned farms<br />

have a silage wrap recovery system in place on farm.<br />

An extension to the Agrecovery rural recycling programme<br />

was launched in July 2009, providing a nationwide<br />

system for the collection and disposal of unwanted and<br />

expired chemicals in agriculture. The programme gives all<br />

agrichemical users a safe and effective means to ensure<br />

farm waste is dealt with in a sustainable and fully compliant<br />

manner.<br />

Global Involvement<br />

<strong>Fonterra</strong> has a strong involvement in Sustainable Agriculture<br />

Initiative (SAI), an organisation created by the food industry<br />

to support the development of sustainable agriculture,<br />

involving the different stakeholders of the food chain.<br />

SAI supports agricultural practices and agricultural<br />

production systems that preserve the future availability of<br />

current resources and enhance their efficiency.<br />

SAI is currently establishing a set of indicators that will<br />

become the globally accepted guidelines for measuring<br />

sustainability in agriculture. <strong>Fonterra</strong> is closely involved in<br />

the establishment of these indicators.<br />

11


Community<br />

2009 KEY FIGURES<br />

· 300 New Zealand decile 1-4 schools participating in KickStart Breakfast programme, nourishing<br />

over 12,000 children<br />

· 90 New Zealand communities visited by the <strong>Fonterra</strong> Science Roadshow, inspiring 45,000 children to<br />

take an interest in science<br />

· 20 of our New Zealand sites participated in Keep New Zealand Beautiful week<br />

· Support for more than 100 New Zealand community-based projects, including education,<br />

environment and local emergency response services<br />

Our grass roots and connection with our rural communities has always meant a close relationship between farmers,<br />

factories and the wider community. This relationship is vitally important to <strong>Fonterra</strong> and one we want to maintain and<br />

grow. We support our local communities through a number of initiatives, including:<br />

12<br />

KickStart Breakfast<br />

<strong>Fonterra</strong> is committed to helping people become stronger,<br />

healthier and more active through promoting balanced<br />

health and nutrition with the goodness of dairy. An<br />

example of this is our KickStart Breakfast programme, a<br />

partnership with Sanitarium, schools and communities<br />

around New Zealand.<br />

Studies have found around one in five New Zealand<br />

families are living in poverty and more than 10 per cent of<br />

school children are starting the day on an empty stomach.<br />

Our partnership with Sanitarium is helping 12,000 children<br />

at more than 300 schools across New Zealand kick start<br />

their day with free Weet-Bix and Anchor Mega Milk. That’s<br />

over 24,000 breakfasts a week!<br />

The KickStart Breakfast programme provides breakfast to<br />

breakfast clubs for one or two days a week. The intention<br />

is to educate children about the difference eating breakfast<br />

makes to concentration and energy levels and for kids to<br />

share this learning with their families.<br />

Anchor Mega Milk and Weet-Bix are the perfect<br />

combination for breakfast, being high in protein, calcium,<br />

vitamin D, B vitamins, iron and wholegrains to provide both<br />

strength and energy for maximum learning.<br />

K<br />

breakfast


<strong>Fonterra</strong> Science Roadshow<br />

We foster future technologists, scientists and engineers by<br />

inspiring 45,000 children every year through live science<br />

demonstrations and interactive exhibits at the <strong>Fonterra</strong><br />

Science Roadshow.<br />

partnered with a company which provides each student with<br />

part-time work. Students commit to saving $1200 a year<br />

from their job with their partnering organisation which also<br />

contributes an agreed amount to help meet the student’s<br />

tertiary fees. Students are supported by mentors and their<br />

progress is monitored by the Foundation. <strong>Fonterra</strong> currently<br />

provides three First Foundation scholarships.<br />

Environmental Awareness<br />

<strong>Fonterra</strong> has a programme of events designed to increase<br />

the environmental awareness of our people. The desire<br />

is that “caring for our environment” becomes a natural<br />

part of the way we work, live and play. This starts with<br />

an environmental induction for new employees and is<br />

supplemented by ongoing environmental programmes and<br />

information. Some key initiatives include:<br />

Keep NZ Beautiful<br />

All our New Zealand sites are invited to participate in the<br />

Keep New Zealand Beautiful cleanup week in September<br />

each year where we make a difference by picking up litter<br />

on the roads, parks, reserves and beaches around processing<br />

sites. This year 20 of our 22 sites participated.<br />

Green Matters<br />

Green Matters is a quarterly publication for <strong>Fonterra</strong> staff,<br />

which ensures they are aware of the environmental work we<br />

are engaged in. In addition we encourage staff involvement in<br />

the setting of environmental objectives and targets and all site<br />

meetings have an environmental item included in the agenda.<br />

13<br />

December 2008 research showed that New Zealand primary<br />

school children’s science achievement has declined in recent<br />

years. Science, technology and innovation are fundamental<br />

to <strong>Fonterra</strong>’s business and we are proud to be inspiring<br />

children with hands-on science through our sponsorship of<br />

this valuable education programme.<br />

Every year, the Roadshow is visited by more than 200<br />

schools in 90 communities across New Zealand providing<br />

children aged 8-13 the opportunity to explore science<br />

principles through an exciting collection of hands-on<br />

exhibits, science demonstrations and classroom resources.<br />

Designed to complement the existing education<br />

programme in schools, <strong>Fonterra</strong>'s support is providing<br />

new enhancements to the programme and helping the<br />

Roadshow reach a greater number of communities.<br />

First Foundation<br />

<strong>Fonterra</strong> is a Partnering Organisation with The First<br />

Foundation, an educational trust which provides scholarships<br />

for talented students from low decile schools whose<br />

financial circumstances stand in the way of them pursuing a<br />

university degree.<br />

In a First Foundation Scholarship, students in their final year<br />

of college engage in a four year scheme in which they are<br />

<strong>Fonterra</strong> Catchment Care – Waterways for<br />

Tomorrow<br />

Catchment care was launched in October 2009 in<br />

partnership with non-profit organisation Conservation<br />

Volunteers and our communities. We will be working<br />

in rural communities alongside landowners, councils and<br />

community groups on projects that enhance and protect<br />

waterways and wetlands. This includes planting, weeding,<br />

maintaining and fencing iconic water catchment areas.<br />

Our target is to improve over 1,000,000 square metres of<br />

waterways and wetlands every year in New Zealand.<br />

New Zealand Community Site Relations<br />

Programme<br />

We recognise the importance of supporting the local<br />

communities in which we live and work. Every year we<br />

sponsor a range of community-based projects, focusing<br />

on education, environment and local emergency response<br />

services where our staff and our shareholder farmers live and<br />

work. This includes assisting community groups and schools<br />

in projects such as providing worm farms and recycling<br />

facilities for local schools, donating seedlings and staff<br />

time to riparian planting programmes, sponsoring regional<br />

science fairs and education projects and sponsoring or<br />

donating products for rural events such as calf club days.

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