News and Views

New PKE grading system warrants contractual clause change

Federated Farmers is reminding dairy farmers and sharemilkers to update existing business agreements as they face joint liability to meet upcoming changes for using palm kernel (PKE) as feed.

Dairy co-operative Fonterra is introducing a grading system in September 2018 to measure milk fat composition, which changes with excessive use of PKE impacting on manufacturing capability and seasonal customer preferences.

Fonterra farmers who don’t comply with new recommended levels for cows’ PKE intake will be penalised.

Sharemilker Farm Owners’ Section Chair Tony Wilding says the Federation’s sharemilkers and sharemilker farm owners’ sections had been anticipating the changes since they were announced in June 2017.

“The sharemilkers farm owners section and sharemilkers’ section have been aware of this emerging liability. We consulted with farmers, farm advisors and various farming groups and we believe we’ve come to a fair resolution for both parties.”

Farmers tended to use PKE to assist in the shortfall of pasture.

Farm owners and sharemilkers in current agreements should seek to add a clause to address this new risk. New agreements will also have an additional clause under milk grading and feed to direct the parties.

“Our conclusion is this is the fairest way of allocating these new demerits as per the revenue share of milk production. We intend to update Federation contracts to acknowledge these changes,” says Tony.

Source: Federated Farmers

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