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What we can learn about "Buttergate" from New Zealand’s experience with palm kernel

Butter bowl on a blue background
Written by
Meagan Murdoch

Meagan Murdoch

In early February, Calgary-based cookbook author and food columnist Julie Van Rosendall asked on social media whether anyone else had noticed that butter is no longer soft at room temperature. Her question helped to spark a national and international conversation about Canadian butter.

To some it probably seemed like a light-hearted conundrum against the backdrop of a global pandemic. But to dairy farmers, it’s been a fierce judgement of their federally approved use of palm oil in animal feed.

With the dust somewhat settled, it's worth considering New Zealand’s approach in a very similar situation and how it successfully avoided its own Buttergate.

Palm kernel is an accepted feed globally

First, a simple Google-search will tell you that the use of palm products in dairy cow feed is not only permitted but also quite common. Many countries such as New Zealand and Australia use palm kernel expeller (PKE)—a meal left over after the production of palm oil. Palm oil is the most consumed oil in the world and is used in everything from cooking to cosmetics.

Dairy powerhouse New Zealand has earned its top global ranking thanks to its sustainable pasture-based system where cows graze freely on lush green pastures the better part of the year. Nevertheless, the quality and nutrients derived from pasture naturally changes over the course of the season and unexpected floods and droughts mean supplemental feeds, such as PKE, brassicas (turnip and cabbage), molasses, and maize (corn) are needed to ensure cows always get the right amount of energy and protein.

While the debate over the use of palm kernel had been brewing in New Zealand for some time, it was largely driven by Greenpeace and academia over the associated environmental impacts. PKE is primarily sourced from Indonesia and Malaysia, where the lucrative tree and lax regulation has caused vast deforestation that has disrupted the ecosystem and displaced the orangutan. This led to the development of a traceability system by a New Zealand feed company to help source more sustainable palm products, but it has never raised the ire enough to warrant a ban.

It was only in 2015 that Fonterra asked dairy farmers to observe a guideline of three kilograms maximum of PKE per cow per day. Fonterra’s rationale was that they wanted to future-proof the pasture-based brand. This request took the dairy industry by surprise and without a clear rationale and data to back up the request, farmers were not convinced to make changes.

In 2017, Fonterra revised its communications approach. They explained to farmers that PKE was having an impact on the manufacturing process, and instead of a vague guideline, they would introduce a clear, science-based requirement. While farmers weren’t happy about it, the potential impact of their feed practices on the quality of consumer products resonated.

A year later, a rapid on-tanker milk testing program was introduced. Farmers received a daily Fat Evaluation Index (FEI) of their milk—essentially a score reflecting the milk’s fat composition. This enabled farmers to understand the impacts of palm kernel and adapt their practices to ensure they were always producing milk with the right qualities.

Canadian industry couldn’t get ahead of the issue

While it’s still unclear whether palm oil is the sole culprit, many are asking why it took Canadian consumers to notice the change in butter texture before the issue was addressed? Farmers did their best to quell concerns of consumers on social media over the past month speaking authoritatively about animal welfare, feeding practices, and sustainability on-farm, but they needed more immediate reinforcement on the specific issue of product quality.

While New Zealand has roughly the same number of dairy farms, its industry is for all intents and purposes led by Fonterra, a co-operative owned by 10,000 farming families that produce the lion’s share of the country’s milk. Despite our very organized supply management system, the industry remains broken up in many ways—by province, generation, size of farm, and by role within the supply chain.

There is also a long-held respect for and understanding that what happens behind the farmgate is the farmer’s responsibility and prerogative. This is no different in Canada than it is in New Zealand. In both countries, there remains a clear need for information sharing across the supply chain.

Clear, science-based information

So where do we go from here? Farmers need clear science-based information to back changes on farm. Again, we can learn from New Zealand. When farmers were asked to rein in their use of palm kernel, Fonterra teamed up with the national dairy farmer association, feed suppliers and veterinarians to explain the downstream effects of feed and provide mitigation strategies to farmers. Those who have undertaken research in this space should work collaboratively with farmers and the wider industry to find solutions.

And if changes are considered, farmers will need time to adapt. Fonterra gradually introduced a milk testing program, enabling farmers to see how their feed practices impacted milk quality and to adjust before penalties were applied to milk that did not meet the new requirement.

Through a farmer-elected board, cross-country field team, farmer smart-phone app and website, and direct emails from management, Fonterra works in close partnership with farmers on a range of issues to ensure the best outcome for the end consumer.

The structural differences of New Zealand’s dairy industry and Canada’s supply management system bear emphasis when analyzing this situation. It’s not a perfect comparison. But when situations like this arise, clear, early and direct communication across the supply chain is needed.

In Canada, the trust of the consumer, and trust within the supply chain, has been damaged. The question now is, how do we rebuild that trust, learn from Buttergate, and what changes can we make today to avoid the next one?

Contact us to learn more about how we can help you navigate complex supply chains and challenging consumer issues. We have the expertise, experience and reach to help you prepare for potential issues, manage a crisis when it happens, and respond effectively afterwards in order to rebuild trust with your key stakeholders.

——— Meagan Murdoch is a former Director at NATIONAL Public Relations