Emissions and Profitability: What the data tells us

Customers buying products directly from New Zealand milk processing companies are setting targets to reduce their greenhouse gas emissions, focusing on emissions per unit of product. This metric, also known as ‘emissions intensity’, is important because it is the basis customers use for comparing different sources of milk when purchasing our dairy products.

Some New Zealand dairy companies are now offering incentives to farmers for low emissions intensity milk. However, emissions intensity is only one of several important considerations for farmers.

Pasture-based farm systems are complex and dynamic. There is a risk that pursuing a single goal, such as reducing emissions intensity, could come at the expense of other important objectives if not carefully considered.

The Emissions and Profitability Project, a collaborative effort between DairyNZ, DairyBase by DairyNZ, Fonterra, and LIC, acknowledges the need to balance multiple goals, including total GHG emissions, profit, and other sustainability metrics like purchased nitrogen surplus.

What the study aimed to do

• Understand the relationship between farm emissions and profitability.
• Identify what distinguishes high-profit farms with lower emissions intensity.
• Highlight farm system opportunities that can be applied more broadly.

Key findings

1. We found no significant relationship between profit and emissions intensity, which included LCA* emissions. High profit can be generated in systems with either low or high emissions intensity.
2. The key to high profit and low emission intensity is using low footprint feed to achieve good, but not exceptional, milk production per kg liveweight.
3. Low footprint feed is homegrown, using nitrogen efficiently, and supplements with lower embedded CO₂ emissions.
4. Aiming for low emissions intensity through increasing production per cow, without focusing on the footprint of the feed, is likely to have undesirable consequences on other key outputs e.g., profitability, total emissions, PNS.
5. High profit farms with low emissions intensity can be found anywhere within each region.
6. All farms have opportunities to lower emission intensity, without compromising other outputs.

_{*Life Cycle Analysis is used to calculate emissions across the full dairy production chain, including on-farm inputs like feed, fertiliser and fuel, as well as emissions associated with milk processing.}

Farm systems opportunities

The key farm system opportunities to increase profitability and reduce emission intensity that align with this study are:

1. Know your data, and where your next opportunity is on farm. See how at DairyBase.
2. Drive more homegrown feed eaten per ha, from growing more, improving feed quality and utilising what is grown. Learn more about how.
3. Optimise cow performance and planning for constant gains in reproductive success and calving pattern, cow quality and herd structure, and hitting BCS targets and managing cow health. Learn more with our reproduction and mating resources.
4. Ensure any imported feed is used to drive additional farm production, and is not leading to substitution, wastage, or system and cost increases.

What’s next

This research is the first phase of an ongoing effort. A second phase is planned for 2025/26 to refine liveweight estimates and deepen the insights using more advanced statistical methods. DairyNZ, Fonterra, and LIC are continuing to work together to support evidence-based progress.