Greenpeace has welcomed Landcorp's decision to stop using a common palm oil byproduct as cattle feed in New Zealand - and says now it's time for Fonterra to step up.
State-owned Landcorp Farming - New Zealand's largest corporate farmer - announced this morning it would phase out the use of palm kernel expeller (PKE) on its farms after June 2017.
CEO Steven Carden said in a statement it is believed the move will be "virtually cost-neutral".
PKE is used on many New Zealand farms as cheap feed supplement during winter and in seasonal droughts, but it has been criticised by Greenpeace for playing a part in deforestation and habitat destruction in southeast Asia.
New Zealand is a large consumer of the product, with a record 1.95 million tonnes imported in the year to June 2015.
Of that, Landcorp's present use is just 10,700 tonnes per year, down from 15,200 tonnes in 2013-14, and just 4 per cent of an average Landcorp cow's diet is PKE.
Fonterra in November had to ask its farmers to limit the amount of PKE fed to cows to 3kg per day, as some were understood to be feeding up to three times that amount - a significant amount of an average cow's diet - which could impact New Zealand milk's reputation as a grass-fed product.
Fonterra's Miles Hurrell, COO Farm Source, said sustainable-sourced PKE still has a place in "supporting animal health, particularly as grass quality declines over a season or during adverse weather such as drought."
"NZ dairy's pasture-base production gives us a competitive advantage in global markets, and we agree we need to protect that," he said in a statement.
"Fonterra imports approx one third of the PKE that comes into NZ via our Farm Source stores.
"In terms of our sourcing of PKE, we use a single source provider, Wilmar International, to import PKE via our Farm Source stores.
"Wilmar has a "no-deforestation, no-exploitation" policy ... Wilmar has partnered with The Forest Trust, an independent non-government organisation, to implement the policy across the supply chain."
Greenpeace Forest Solutions Team Leader Grant Rosoman said Landcorp phasing it out is a big deal for the New Zealand farming landscape, and says it signals a shift in thinking.
"They're the country's biggest farmer - it's a very significant move," he said.
"It's a growing movement against PKE and Landcorp have really just jumped it ahead.
"We're certainly waiting for a response from Fonterra on this, to see what they're going to do ... I think it sends them a big wake up call.
"It is only a by-product of the industry ... but certainly it does contribute."
Greenpeace last year produced a report suggesting Fonterra may have indirectly sourced PKE from at least two plantations involved in burning forests and destroying orangutan habitats.
Fonterra CEO Theo Spierings responded by agreeing to meet with Greenpeace executive director Russel Norman last December, and Mr Norman described the meeting as being "surprisingly constructive".
The company reiterated its desire to use only PKE sourced sustainably, and to make that a priority, and the dairy giant has been a member of the palm oil watchdog organisation Roundtable on Sustainable Palm Oil (RSPO) since 2009.
However, Greenpeace has said there are still gaps in the PKE supply line and problems with the way the RSPO certifies plantations.