New Zealand dairy business Synlait Milk has partnered with Nestlé to fund new on-farm emissions reduction methods.
The co-investment structure will involve a “unique three-way partnership with Synlait farmers”, according to a joint statement.
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The companies wrote that the deal is “focused on pragmatic on-farm solutions that improve efficiency, such as effluent management systems, emissions-friendly feed options, advanced soil testing, alternative fertilisers, and tree planting”.
Financial terms and investment details were not disclosed.
The NZX-listed dairy company added that the “customer partnership” will help it reach its greenhouse gas emission targets.
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Synlait’s current sustainability target is a 30% reduction in on-farm greenhouse gas emissions per kilogram of milk solids by 2028 from its 2020 base year.
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By GlobalDataSynlait CEO Grant Watson said: “This is a great example of proactive, industry-led solutions driving innovation across the supply chain, serving our customers’ demand for high quality, low-emissions products.
“Synlait’s industry-leading Lead With Pride programme has financially incentivised Synlait farmers to produce some of the most sustainable dairy in the world, and this partnership with Nestlé will help them go further, faster.”
“The partnership aims to reduce the cost of implementation and accelerate farmer adoption of emissions reduction tools. It’s leveraging technologies that are available in market right now and will expand over time to include emerging technologies as they become available.”
The seven-year programme would also result in more business between Synlait and Nestlé, which Watson said would be good for Synlait’s bottom line.
Nestlé global chief procurement officer Patricia Stroup said: “None of us can do this alone. Knowing this drives us to find new ways of working together, and means we need to collaborate with our dairy suppliers to adopt new ways to reduce emissions, and with farmers to create plans for climate, methane, and regenerative agriculture.
“While today’s announcement focuses on what can be delivered now, we are also continuing to develop new ways to reduce emissions through our own research, and external research partnerships. As our investigations continue, the most promising solutions are tested on research farms before being deployed more broadly. We are determined to draw on the best science worldwide, while ensuring that we deliver solutions that are locally relevant for farmers.”
Synlait has been entangled in a recent contract row with A2 Milk, another dairy business in New Zealand.
The dispute – in which Synlait disagrees that A2 Milk had the right to cancel an exclusivity of supply arrangement – has recently entered arbitration. In a stock-exchange announcement in December, Synlait revealed a new area of disagreement between the companies.
Last month, Synlait issued a new profit warning for the first six months of its fiscal 2024 year, predicting a substantial loss.
The business expects to post a net loss after tax of NZ$17m to NZ$21m ($10.4m and $12.9m) for the six-month period.
