New Zealand dairy cooperative Fonterra said it has adopted a new standard for sourcing palm products as part of its commitment to sustainability.

The standard applies to both palm oil and to palm kernel expeller (PKE) that is used by some farmers as animal feed. 

Carolyn Mortland, Fonterra’s director of social responsibility, said: “The new standard requires us to purchase only segregated supply palm oil by 2018, and to work with suppliers of palm products to ensure that plans are in place for full traceability to plantation by 2018.”

Fonterra said the standard was developed in consultation with “key supply partners” and follows discussions with Greenpeace that began in December 2015 to strengthen Fonterra’s existing sustainable palm products sourcing procedures. 

“We want to ensure that there is no risk of deforestation within our supply chain,” Fonterra said. “This standard aims to ensure the fair and ethical treatment of suppliers and to protecting conservation values.”

In August 2009, Greenpeace slammed Fonterra for using palm kernel expeller, or PKE, to feed cows. The environmental pressure group said Fonterra, through a venture with palm oil trader Wilmar, was helping “destroy” rainforests in Indonesia and Malaysia.

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However, announcing its new standard last week, Fonterra said since 2009 it has belonged to the Round Table for Sustainable Palm Oil (RSPO) and it offsets 100% of palm oil use via RSPO and GreenPalm certification. PKE is a by-product of the palm oil industry and Fonterra already uses a single source provider, Wilmar International, which has a “no-deforestation, no-exploitation” policy, the dairy said.

Through its Farm Source stores, Fonterra sells around one third of the PKE that is used in New Zealand. 

Farm Source chief operating officer Miles Hurrell said: “It’s important to remember imported supplementary feed remains a relatively small part of total cow diet in New Zealand. “For some of our farmers, PKE has a role to play in cow health and milk production, particularly as grass quality declines over a season or during bad weather such as drought.”

Hurrell said: “Our farmers already do an enormous amount of environmental protection work on farm, from fencing waterways through to managing nitrogen efficiently. We want to make sure we’re backing up their hard work with responsible sourcing practices.”

Fonterra said it has a guideline in place recommending the maximum use of PKE per cow per day.

“We know that our pasture-base production gives us a competitive advantage in global markets, and we need to protect that,” Hurrell said. 

Fonterra said it will work now with partners across the wider dairy industry to support the adoption of sustainable palm products sourcing practices in line with the new standard.