Fonterra the major milk processor in New Zealand sent an advisory note to their milk suppliers last week suggesting that they limit the amount of Palm Kernel Expeller (PKE) fed per cow to 3 kilograms per day.

The dairy processor suggests that it can get a premium for grass based milk and it has told farmers that it is developing a tool to test milk for signs of high PKE feed.

Industry experts and farmers feel aggrieved suggesting they were not consulted and that up to now the message from Fonterra was produce, produce, produce but now in recent weeks and months the clear message is stop producing.

Fonterra have replied that they are only voluntary guidelines and not everyone is going to be able to meet them straight away. Fonterra representatives have also said, “Consumers globally are demanding more information about what’s in their food and that in international markets we get a premium for milk because of our pasture-based system. If the large increases in PKE feeding continues it could affect the composition of milk to the point where we can’t process it to meet customer’s requirements.”

PKE is used widely in New Zealand as a feed supplement when grass is short or there is extreme rain. Farmers feed out the dry, dusty by-product in large trailers near parlours or out in fields. Unlike Irish feed systems it is not fed in milking parlours or in TMR feeds.

Guaranteed Milk Price

The Board of Fonterra have also decided to end the Guaranteed Milk Price scheme which started in the 2013/14 season suggesting it had got mixed reaction from farmers and that a new risk management tool was on the way. Fonterra said, “The risk management tool will allow market participants such as brokers and banks to assist farmers with the ability to hedge their milk price in advance.”