New Zealand dairy co-operative Fonterra announced a new palm oil standard on 12 August that commits the multinational to buy only segregated palm oil by 2018.

“The new standard also requires us to work with suppliers of palm products to ensure that plans are in place for full traceability to plantation by 2018,” said Fonterra’s director of social responsibility, Carolyn Mortland.

Fonterra said it currently offset 100% of the palm oil it used via Roundtable on Sustainable Palm Oil (RSPO) and Green Palm certifications.

Its new standard would apply to both palm oil and to palm kernel expeller (PKE), which is used by some farmers as animal feed.

Fonterra said it sold approximately one-third of the PKE used in New Zealand through its Farm Source stores and that it sourced PKE from only one supplier – Wilmar International.

“It’s important to remember imported supplementary feed remains a relatively small part of total cow diet in New Zealand,” said Farm Source CEO Miles Hurrell. “Our pasture-based production gives us a competitive advantage in global markets and we need to protect that.”

However, PKE had a role to play in cow health and milk production, particularly when grass quality declined over a season or during bad weather such as drought, he said.

Fonterra currently had a guideline in place recommending the maximum use of PKE per cow per day.

Fonterra is New Zealand’s largest company and is responsible for approximately 30% of the world's dairy exports, with revenue exceeding NZ$19.87bn (US$14.5bn).