PKE penalties could cost farmers thousands


New Delhi, June 23, 2018: Farmers feeding their cows too much palm kernel could be penalised thousands of dollars a week when Fonterra’s new grading system comes into effect on September 1.

Imported palm kernel extract (PKE) changes milk fat composition, causing problems in manufacturing and in meeting customers’ specifications.

In 2015 Fonterra announced a voluntary guideline of a maximum of 3 kilograms per cow per day.

The co-operative introduced a fat evaluation index (FEI) test last year and farmers have been able to view their FEI results for the past 12 months.

Taranaki farmer Matthew Grayling milks 500 cows near Okato and said he had been “mixing up” his feed options to understand the impact on his cows’ milk.

He was shocked to receive an FEI grade of ‘D’ after feeding his stock a small amount of PKE as supplement at the end of April.

“It was just two to three kilograms [per cow] of PKE, which was a little concerning,” Grayling said.

“A ‘D’ is a 20 per cent penalty, and I felt we couldn’t afford to be in that range.”

At that time of year, it would have cost $700 a day, Grayling estimated, “and even more at the peak of the season”.

“Dealing with the FEI grading system is going to be a challenge and difficult for some farmers,” he said.

“To keep producing quality milk we need to manage our input feed carefully. If we want to add supplement feed we have to be smarter in how we do it.”

Federated Farmers dairy vice-chairman Wayne Langford said the grading system could have a significant impact on farmers who had relied on PKE as their main supplement.

“We will probably see farmers lowering stock numbers rather than changing feeds,” he said according to

“It’s the cheapest supplement and not everyone has access or the budget for alternatives.

“PKE is the main source of supplement on my farm and I’ll be looking at reducing the stocking rate by 15 to 20 per cent.”

Fonterra had been working with farmers to resolve any issues but sharemilkers should discuss supplementary feed options and the potential for penalties with their farm owners, Langford said.

New Federated Farmers contracts split FEI demerits and penalties between sharemilker and farm owner in line with the percentage share of milk revenue.

Farm owners and sharemilkers working under older agreements should seek to add a clause to address the new risk.

At Fieldays last week, Fonterra chairman John Wilson said farmers had had a year to adjust.

“Some will have to make further adjustments to their systems, but Fonterra’s ability to efficiently process dairy fats into cream products is so important,” he said.

“For the first time ever dairy fats are worth more than dairy proteins and to ensure we can manufacture efficiently we need milk of a certain profile.”


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