Dairy gears up for carbon tax

The dairy cooperative Fonterra – which is behind local brands names such as Mainland, Bega, Western Star, Perfect Italiano and Ski – has launched a guide “What does the carbon tax mean for you?” to help its suppliers manage the impacts of a price on carbon.FOLLOWING the carbon tax legislation’s successful movement through parliament, dairy processors have begun the conversion to a low carbon future.
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Fonterra Australia and New Zealand managing director John Doumani said the company was working towards a “three-pronged” approach to manage the changeover and reduce emissions, both in the factory and on-farm.

“We will continue to be efficient. We will continue to find opportunities to cut costs and to offset the impact of the carbon tax,” he said.

“We will step up to explain to government that it has not understood the specific needs of dairy farmers and the intensity of their energy use.

“We will work with our farmer suppliers, who are concerned about the tax and unclear what it means for them.”

Mr Doumani said the Government had failed to put support programs in place for farmers to lessen the impact of the carbon tax – especially given the intensity of energy usage that dairying requires.

The processor also launched a new guide for its suppliers last week – “What does the Carbon Price mean for you?” – after noting growing concerns among farmers about rising energy costs.

The company estimates the annual cost of the carbon tax will be $3000 a farm, with the publication followed by a trial of on-farm energy assessments.

While most dairy farmers are worried processors will pass costs to the farm gate, Mr Doumani said it was not a realistic expectation to pass these costs on in terms of lower milk prices, because the company operated in a competitive market.

“Our responsibility is to find ways to mitigate those costs in our business,” he said.

“The price for us as an industry and our farmers, if we can help them make the change, is that they will be in a lower-cost farm model than they are today.

“In our business, it is simple. If no milk comes in the back door, nothing is going out the front door.”

Fonterra have already achieved a three per cent reduction in its carbon intensity since signing the Sustainability Covenant with the Environment Protection Authority last year.

It has invested $1.75 million into co-generational technologies at the Wynyard plant, Tasmania, that will save 800 tonnes of carbon dioxide per year, while a switch at their Spreyton factory from coal and gas-fired boilers will cut emissions by 16,000t.

Vehicles are updated every five years with fuel efficient technologies, with drivers receiving a bonus for driving efficiently and saving fuel.

Australia’s largest dairy cooperative Murray Goulburn was also making concerted efforts to manage the carbon tax transition.

Australian Dairy Industry Council director and MG spokesman Robert Poole said the processor would continue to push the Government for assistance for dairy companies and farmers.

“An independent assessment has revealed the cost to farmers will be $5000-$7000, which includes rising electricity bills and indirect costs from the processor,” he said.

MG were also looking at ways to improve efficiencies in the factory, which included pioneering liquid natural gas in heavy transport.

“We’ve already switched over a third of the fleet or 54 trucks, which halves emissions in each vehicle,” Mr Poole said.

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