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Fonterra Co-operative Group Limited

4 February 2014

Ministry for the Environment PO Box 10362 Wellington

Dear Sir / Madam

Re: Submission on the discussion document “Proposed amendments to the National Policy Statement for Freshwater Management 2011”

Please find attached Fonterra’s submission on the discussion document “Proposed amendments to the National Policy Statement for Freshwater Management 2011”.

Fonterra supports the Government’s objective of ensuring that New Zealand’s resource management system enables growth, is adaptable to changing values, pressures and technology, and provides good environmental outcomes. We see the proposals in this discussion document as another positive step towards achieving this goal.

If you have any queries with the content of this submission, or would like to discuss the proposed changes to the NPS further with Fonterra, please feel free to contact the undersigned.

Yours sincerely

Environmental Policy, Manager

[ withheld ]

[ withheld ]

[ withheld ]

Fonterra Co-operative Group Limited

SUBMISSION ON DISCUSSION DOCUMENT

“PROPOSED AMENDMENTS TO THE NATIONAL POLICY STATEMENT FOR FRESHWATER MANAGEMENT

2011”

To Ministry for the Environment (the Ministry)

1. Name of submitter

Fonterra Co-operative Group Limited (background on the submitter is provided in

Attachment 1)

2. This is a submission on the following

The discussion document titled “Proposed amendments to the National Policy Statement for

Freshwater Management 2011”

3. Fonterra’s water policy position

3.1 Fonterra Co-operative Group is the world’s largest milk processor and dairy exporting

company. Our contribution to New Zealand’s GDP is in the order of 2.8% (see Attachment 1

for further details on the Co-operative).

3.2 To maintain and grow our supply of dairy products, our farmer shareholders and our

processing plants need to be adopting sustainable practices. Sustainable practices involve

using resources responsibly and managing within limits; being a respected and trusted part

of the community; and ensuring long term farmer profitability.

3.3 Accordingly when considering water policy we focus on the following objectives (with no

implied hierarchy):

healthy and resilient ecosystems

sustainable milk and dairy manufacturing growth

farmer and dairy industry profitability.

3.4 We support evidence-based policy development and collaborative decision making

processes; and we promote catchment wide solutions and adoption of good management

practices.

3.5 We support policies that allow returns on existing investments to be achieved; enable

existing dairy farmers and processing plants to continue to operate profitably; enable

growth in the supply of dairy products (while accepting that this should not equate to

increased nutrient discharges in over allocated catchments); provide clarity, certainty,

simplicity, and appropriate transition times for farmers and processors; and maintain or

improve ecosystem resilience.

[ withheld ]

Fonterra Co-operative Group

3.6 These policy objectives and principles underpin our comments in the following sections.

4. Overall support for water reform package

4.1 Fonterra supports the Government’s approach of requiring regional councils to manage

water in an integrated and sustainable way while providing for economic growth within set

water quantity and quality limits. The discussion document acknowledges that “As a nation,

the aspirations we have for our water – both in terms of its quality, and how it supports the

economy – are high”. We agree, and we respect the need to meet both of these

expectations.

4.2 The discussion document identifies a number of outstanding issues with implementation of

the 2011 National Policy Statement for Freshwater Management and broader management

of freshwater resources in New Zealand.

4.3 We concur with the issues identified, particularly those relating to:

recommendations/decisions being made without sound information/evidence being

considered

lack of analysis and understanding of implications of limits and methods (rules etc)

adopted

sizable variation across small geographic areas of planning processes, limits and

methods adopted.

4.4 These issues lead to a large potential for economic and environmental aspirations failing to

be achieved – at both the local and national levels. We are able to provide specific evidence

of the above issues and welcome the opportunity to discuss such issues and solutions

further with the Ministry.

4.5 Development of water accounting systems, a national objectives setting framework, and a

monitoring system will undoubtedly help address these issues.

4.6 Our submission therefore focuses on advancing the robustness, workability, and credibility

of the freshwater management proposals in the discussion document.

5. Accounting for freshwater takes and contaminant loads

Comment

5.1 The discussion document proposes to amend the National Policy Statement for Freshwater

Management 2011 (NPS) to require regional councils to establish and operate a water

quality and quantity accounting system that adopts measurements, modeled results or

estimates. The accounting information is to be available when setting or reviewing limits,

and is to include at least five yearly data for water quality information and annual data for

water quantity information.

5.2 Fonterra supports the intent of the proposal since good information on what is going into or

being taken out of our water bodies is essential for communities setting value expectations

and understanding the implications of those expectations. It is also necessary to monitor

progress towards expectations.


5.3 We note that there is discrepancy in the matters discussed in the discussion document and

the drafting of the changes to the NPS. In the early parts of the document reference is

made to accounting for “all sources of contaminants” but this expectation of the accounting

system being comprehensive in nature is absent in the drafting of section CC. We note our

support for the wording within the changes to the NPS (i.e. without reference to “all

sources”) as it may be unnecessarily onerous on the community to monitor all. Accordingly

a targeted focus on contaminants where there are specific issues is considered appropriate.

5.4 We encourage the government to provide further guidance and support to regional councils

about best practice in the development and implementation of water quality and quantity

accounting systems – particularly the location, form and regularity of data collection and

reporting. Some consistency of approach across the country is encouraged to support

national state of the environment reporting.

Changes sought – availability of information

5.5 Policy CC2, as written, requires regional councils to take reasonable steps to ensure that

gathered information is available only “where freshwater objectives and limits have been

set”. We seek that this be amended to read “where freshwater objectives and limits have

been set, or are to be set”. Our rationale is that communities need access to such

information during the limit setting process, as recognised in bullet 3 on page 14 of the

discussion document i.e. “ensure that accounting information is available when setting (or

reviewing) limits”.

5.6 Policy CC2 requires that the information gathered “is available” but does not go so far as

stating who it must be made available to. We seek that the policy be amended to require

that the information gathered is made available to the public.

5.7 Policy CC2 requires that the freshwater quality information “shall relate to at least five

yearly intervals” (CC2(a)) and the freshwater quantity information “shall relate to at least

one year intervals” (CC2(b)). It is unclear what is meant by these terms, for example would

one sample every five years comply with CC2(a)? We appreciate that various components

of water quality may be best monitored over different timeframes and that this is difficult to

reflect in the NPS. We recommend improving the drafting of CC2(a) and (b) by referring to

“the information shall cover at least the preceding five years” and “the information shall

cover at least the preceding twelve months”, and at the same time providing clear guidance

material on best practice in the development and implementation of water quality and

quantity accounting systems (as noted above).

6. National Objectives Framework (NOF) - Overview

6.1 Fonterra supports the establishment of a National Objectives Framework. We consider that

a bounded set of values (both compulsory and optional) and associated attribute bands

from which a community can select water quality and quantity objectives/limits offer

significant benefits for managing freshwater within New Zealand. It avoids duplicated

efforts and costs in identifying bottom lines at a regional level; provides focus while also

providing local communities the flexibility to adopt the values and associated aspirations

relevant to them; and reduces the potential for repetitive litigation around the country.


6.2 By providing such focus nationally, communities can then direct their attention and analysis

to the implications of the options for their communities.

7. NOF - Interim and unbounded nature of the NOF

Comment

7.1 The discussion document notes that the first version of the NOF will not be complete, but

will be further populated in later versions as the science is progressed. It also leaves room

for local communities to continue to add to the list of values and attributes that can be

adopted.

7.2 We accept the need to push forward with an incomplete NOF at this point in time. The

decision making framework and the components that are currently populated are a helpful

starting point for local communities to work within as they set their water quality and

quantity limits.

7.3 We consider that, in the long term, a predominantly bounded set of values and attributes

that can then be selected from will provide the greatest opportunity for improved certainty

while retaining local autonomy, reduced local costs and potential for ongoing litigation, and

sound environmental bottoms lines being achieved. We consider that the open construct of

the NOF as proposed (i.e. local selection of values and attributes outside the NOF defined

bundle, and local selection of attributes for the national compulsory values) does not go far

enough in achieving these benefits.

7.4 We consider that it is achievable to develop a near full array of NOF values and attributes

that have undeniable validity for potential selection in any region in the country. We accept

that there may be some exceptional circumstances that lead to the need for a unique value

or attribute to apply in a particular region and consider that this should be provided for, but

by exception and with a ‘reasonableness’ test being undertaken centrally.

Change sought

7.5 We seek a commitment to a programme of work that transitions the NOF to being a

predominantly bounded set of values and attributes over time. Once the transition is

completed it should provide for adoption of values outside the bounded set but only by

exception and with approval from the Minister for the Environment.

8. NOF - Maintain or improve overall water quality over time

Comment

8.1 The discussion document proposes to retain the existing requirement to maintain or

improve overall water quality within a region, and the discretion for councils to apply

flexibility in how they achieve this. Fonterra supports this proposal and seeks that it be

retained. This approach provides communities with the flexibility to make decisions about

how and where to best meet environmental, social, cultural and economic expectations.

8.2 Having said this, it is important that the maintenance or improvement relate to the

achievement of sought after values - maintaining or improving attributes that do not relate


to the values sought by the community, or to the compulsory national values, could impose

costs for little benefit.

Change sought

8.3 We seek that Objective A2 be amended to reflect that ‘maintaining or improving overall

water quality’ is focused on attributes that help achieve the compulsory or additional

sought-after values e.g. “The overall quality of value gained from freshwater within a region

is maintained or improved”

9. NOF – Objective A1

9.1 Further to the above, we concur with the concerns raised in the LAWF submission regarding

inclusion of Objective A1(b) that provides for the safeguarding of human health during

secondary contact with freshwater. In addition to safe secondary contact LAWF are seeking

provision for safeguarding the health of people and communities when undertaking primary

freshwater contact where communities value water bodies for swimming or drinking. There

is likely to be a number of possible drafting solutions available to address this concern. In

considering solutions we note the following and recommend a conversation between LAWF

members and officials to discuss possible solutions.

We see Objective A1 as providing for the compulsory fundamentals of ‘life supporting

capacity’, ‘ecosystem processes’ and ‘indigenous species’, and accordingly the two

compulsory national values. We see Objective A2 as providing for achievement of

other broader values that are to be determined by communities. We consider this

hierarchy helpful to prioritization and decision making when implementing the NPS.

We consider that any value to be gained from freshwater must inherently be

achievable without adversely impacting the health of people and communities.

We consider that if swimming was to be added to Objective A1, then arguably so

should many other values – this dilutes the priority that rightly needs to be provided

to the compulsory fundamentals.

9.2 With the above in mind, we consider that Te Mana o te Wai should only be included in

Objective A1 where it is explicitly part of the compulsory values. Other aspects of Te Mana

o te Wai should be achieved through the values provided for in Objective A2.

10. NOF – Ability to set local transition timeframes

10.1 It is proposed that where a freshwater management unit is currently below a bottom line, or

is not meeting identified higher expectations, then the council can set their own timeframes

in their plans by which certain attributes are to be met. Fonterra supports this proposal and

seeks that it be retained. This approach provides communities the ability to balance pace of

change with the implications of change – quick achievement of attribute results may detract

from the value sought actually being realised or from other selected values being realised.


11. NOF - Compulsory national values

Comment

11.1 The proposal adopts “ecosystem health” and “human health (secondary contact

recreation)” as compulsory values that need to be adopted by regional councils. These

relate to managing water quality and quantity for ecosystem resilience and secondary

contact recreation (i.e. where immersion is not likely). Fonterra supports these compulsory

values recognising the undeniable importance of both in all parts of the country.

Change sought

11.2 Currently the proposals provide room for regional councils to add to the attributes that

need to be achieved with respect to these values. As noted earlier we seek a commitment

to a programme of work that transitions the NOF to being a bounded set of values and

attributes over time, with provision for adopting values outside the bounded set but only by

exception and with approval from the Minister for the Environment. This would mean that

the compulsory values would have a bounded set of attributes to be met (with bottom lines

and higher banded expectations defined).

12. NOF - Mahinga Kai value, kai are safe to harvest and eat

Comment

12.1 The description of the mahinga kai value “kai are safe to harvest and eat” includes an

expectation that “knowledge transfer is present”. We consider that this is not something

that the provision of a certain water quality or quantity can in itself achieve. Rather it

requires that a community of interested people is present and willing to share and receive

knowledge – this is not something that the Resource Management Act is able to require.

Change sought

12.2 We seek that the value “Mahinga kai – kai are safe to harvest and eat” be amended to

reflect the importance of the intergenerational presence of certain kai thus ensuring that

intergenerational knowledge transfer is possible.

13. NOF - Mahinga Kai value, fishing

Comment

13.1 The description of the mahinga kai value “fishing” includes an expectation that “the

numbers of fish would be sufficient and suitable for human consumption…”. The presence

and abundance of fish in any particular area will be dependent on a number of factors,

including but not limited to the health of the freshwater environment itself. Management

of fish numbers and whether they are sufficient to support the demand for fishing is outside

the scope of the Resource Management Act.


Change sought

13.2 We seek that the value “Mahinga kai – fishing” be amended to remove reference to “the

numbers of fish would be sufficient and suitable for human consumption” or similar

references.

14. NOF - Other national values

14.1 The proposal includes the value “cultivation” in the set of National Values to be considered

for adoption by regional councils. It is described as relating to “food security” and support

for “rural communities to grow food and fibre”. It acknowledges the essential nature of

such activities and the importance of having access to sufficient and suitable water to

produce a range of foods and fibre.

14.2 We support this proposal and seek that it be retained. We consider security of access to

food, both nationally and internationally, and the ability for our rural communities to meet

these essential needs is a critical consideration in any planning process.

14.3 The proposal includes the value “economic or commercial development” in the set of

National Values to be considered for adoption by regional councils. This includes

recognition of the importance of irrigation in the production of pasture and crops (amongst

other uses). We support this proposal and seek that it be retained. Given New Zealand’s

geography and climate, irrigation is essential to efficient capture, dissemination and use of

water in the production of food and fibre.

14.4 The value “economic or commercial development” also recognises the importance of water

to commercial and industrial activities. We support this proposal and seek that it be

retained. The ability to provide safe food sources and add value to our primary products

through processing is essential to realizing full market potential, both domestically and

internationally. In providing for this value consideration needs to be given to security of

water supply given the perishable nature of agricultural and horticultural products and the

long term investment that is needed to support development of processing facilities.

15. NOF - Attribute states and bottom lines

15.1 Fonterra supports the adoption of bottom lines for each of the attributes associated with a

value. Without this unnecessary uncertainty, technical costs and litigation will continue

across the country.

15.2 We consider that the bottom lines do not need to be single quantifiable attributes but

rather they could be descriptive in nature and have situational context.

15.3 We share some of the concerns raised amongst the primary sector during consultation with

respect to the robustness of the science and economic analysis underpinning the selection

of attributes and attribute states, including the bottom lines. We continue to encourage

sound scientific and economic analysis that involves industry and the broader community,

when identifying attribute states and bottom lines.

15.4 We support Dairy NZ’s “Outcomes sought” in their submission to the discussion document

that relate to attributes and attribute states.


16. NOF - Exceptions to bottom lines

Comment

16.1 The discussion document proposes that regional councils have the discretion to provide for

exceptions to the compulsory bottom lines where:

the existing freshwater quality is already below a national bottom line due to

naturally occurring processes (e.g. the makeup of naturally occurring geothermal

water)

historical activities have caused today’s freshwater quality to be below a national

bottom line and the reversal of these impacts is not reasonably practical either

physically or ecologically.

16.2 Fonterra supports a very narrow exceptions framework and requests that no further

exceptions to the compulsory bottom lines be added. A larger list of exceptions will dilute

the benefits of improved certainty and reduced costs.

16.3 We encourage the government to provide guidance to regional councils about

interpretation of the term “reasonably practical either physically or ecologically” and that

this interpretation be read narrowly rather than widely. With respect to ecological

reasonableness, it is important to ensure that any reversal of a water quality issue does not

result in a new adverse ecological effect.

16.4 In addition to the above, the Government intends to provide for exceptions to bottom lines

to allow for significant existing infrastructure (such as hydroelectricity or drinking water

dams). They intend to do this by populating Appendix 3 to the NPS. Criteria for selecting

such exceptions are defined within the discussion document, and focus on their economic

importance and limited options for efficient or effective management of the infrastructure.

We support these criteria but cannot see them provided for in the drafted Annex 3

Proposed Amendments.

Change sought

16.5 We seek specific inclusion within the NPS of the criteria for significant existing infrastructure

being exempt from bottom lines. Without this there is potential for significant future scope

creep in terms of what may be sought from Annex 3.

16.6 We also seek that any exceptions developed by Regional Councils under Policy CA2(a) and

(b) are listed in an Appendix to the NPS and that the appropriate NPS cost/benefit analysis

and consultation process is applied. We consider that without this rigor there is potential

for loose local decision making.

17. Monitoring plans

Comment

17.1 The discussion document proposes to amend the NPS to require regional councils to

develop a plan to monitor progress towards, and achievement of, freshwater objectives


established under the NPS. The plan must identify monitoring sites and be able to measure

long-term trends.

17.2 Fonterra supports this amendment since it is consistent with taking an evidenced based

approach to policy setting. Good state of the environment reporting is essential to good

decision making, including iterative decisions to adjust policies if objectives are not being

met within acceptable timeframes, or unintended consequences are occurring.

17.3 We encourage the government to provide further support to regional councils about best

practice in the development and implementation of monitoring plans.

18. Interpretation

Changes sought

18.1 The changes made to the definition of “Environmental flows and/or levels” (i.e. using

“freshwater management unit” in place of “body of fresh water”) imply that a freshwater

management unit may have a single environmental flow or level assigned to it. It fails to

reflect that there may be multiple water bodies within a freshwater management unit and

that a single flow may not be appropriate across the various water bodies in the single

management unit. We seek refinement of the definition to provide for the possibility of

multiple water bodies within any one freshwater management unit.

18.2 Within the definition of “Freshwater management unit” the spatial scale for setting

freshwater objectives and limits is rightly identified as being determined by the regional

council. However, we seek some reference to a community collaborative planning process

informing the council’s determination. Community involvement in limiting setting

conversations will be significantly compromised if they have not been involved in the setting

of the freshwater management units.

18.3 With respect to the definition of “Freshwater management unit” we also seek some

reference to the need for the freshwater management unit to be hydrologically or

morphologically coherent. It is not considered appropriate to identify a water management

unit as a group of water bodies that are unconnected in any way.

19. Other changes sought – artificial water courses

19.1 It is our experience that there is still mixed understanding about the implications of the NPS

to artificial watercourses (including an irrigation canal, water supply race, canal for the

supply of water for electricity power generation, and farm drainage canal). This leads to

repeated conversations and investment in legal opinions to resolve disagreements. We seek

that the NPS provide clarification of the relationship of the NPS to artificial water courses.

We seek that this relationship clarifies a default position of artificial water courses not being

subject to the NPS and NOF (except the direct impact of point source discharges from

artificial water courses) unless, by exception, a special value is identified within the artificial

water course that warrants particular regulatory management.


20. Estuaries

20.1 We appreciate the difficulties associated with extending the NOF to address estuary values.

In the absence of this we seek that priority be given to provision of guidance material to

regional councils to assist them in their management of estuaries. Our reasoning is that the

same potential for uncertainties and costs play out in management of estuaries as they do in

rivers and lakes. Many councils are facing significant costs and management challenges with

respect to estuaries.

21. Guidance material

21.1 When discussing the proposed changes to the NPS with various parts of the primary sector

and beyond, it is apparent that there is significant confusion in terminology adopted within

the changes and the interaction between components of the changes.

21.2 Key areas of confusion amongst parties appear to be:

the relationship between and application of values, attributes, objectives and limits

the types of monitoring regimes needed to monitor the various attribute states

the relationship between groups of attributes, when one may deteriorate and others

improve and the resulting assessment of maintaining or improving overall water

quality.

21.3 We recommend full and comprehensive guidance material be developed both for Resource

Management Act professionals and individuals within the community who are trying to

participate in planning or consenting processes.

22. Contact for queries

22.1 If you have any queries with the content of this submission, or would like to discuss the

proposed changes to the NPS further with Fonterra, please feel free to contact the

undersigned.

Environmental Policy, Manager

[ withheld ]

[ withheld ]

[ withheld ]


ATTACHMENT 1: Background on Fonterra Co-operative Group


Fonterra Co-operative Group is the world’s largest milk processor and dairy exporting company

and is 100% owned by 10,668 New Zealand dairy farmers.

Fonterra’s 17,500 staff work across the dairy spectrum, from advising farmers on sustainable

farming and milk production, to unlocking the natural goodness of high quality milk in ways that

add real value to our customers and consumers around the world.

Within New Zealand Fonterra collects around 17 billion litres of milk and sells more than 2.8

million tones of dairy product annually. Globally Fonterra processes more than 22 billion litres of

milk and owns leading dairy brands in Australasia, Asia, the Middle East and Latin America. In the

2013 financial year, Fonterra’s global revenue was just under $18.6 billion.

The dairy sector’s contribution to New Zealand’s economic and social wellbeing

The dairy sector provides 25% of New Zealand’s export returns and directly accounts for 2.8% of

New Zealand’s GDP (a contribution to the economy 40% larger than the combined electricity, gas

and water sectors).

In 2012/13 the dairy sector directly employed 25,717 people on farms, 10,441 in processing and a

further 1,212 in wholesaling. In addition, the dairy sector indirectly supports many more jobs in

supply industries. The average dairy farmer spends well over half of their income on goods and

services to support on-farm operations. Many of these goods and services come from urban

areas.

The dairy sector is a key driver for high quality scientific research and academic institutions, such

as Lincoln University, with Fonterra being the largest investor in food research and development in

New Zealand, contributing around $100 million per annum.

Fonterra is strongly committed to the success of New Zealand dairy farmers and the broader New

Zealand community. An illustration of this was Fonterra tankers transporting water to the

residents of Christchurch following the February 2011 earthquake and Fonterra’s search and

rescue personnel contributing to the emergency efforts. The dairy industry will play a key part in

the Canterbury region’s recovery, supporting economic growth and infrastructure development.

Fonterra’s focus on the environment

Land and water are essential resources to Fonterra and its farmers, and we recognise that

maintaining a healthy and functioning environment, including healthy waterways and water flow,

is important for an enduring and successful dairy industry.

Fonterra also recognises the importance of healthy waterways to all New Zealanders for their

ability to sustain life, ecosystems, communities and livelihoods, and recreational and cultural

values.

Fonterra’s “Supply Fonterra” programme ensures our farmers meet regulatory and market

requirements and continuously improve their practices. Supply Fonterra states minimum


standards and recommended good practices, and accelerates knowledge transfer through on-farm

one-to-one support and access to education and resources.

The ‘environment’ component of Supply Fonterra currently has four parts to it:

a) Effluent management – assisting farmers to have effluent management systems

capable of 365 day compliance with regulatory requirements;

b) Waterway management – establishing the Fonterra requirement for all waterways to

be fenced, together with advice on fencing options, riparian margin management and

reducing overland flow to water - and for stock crossings to be bridged or culverted;

c) Nitrogen management - recording and modeling nutrient management information to

help farmers understand their farm’s nitrogen losses relative to other farms with

similar geographical and climatic conditions; and

d) Water use management - promoting responsible, effective and efficient water use on

farm – requiring all farms to be measuring water use by 2018/19, setting an industry

water use benchmark, irrigation systems being designed and operated to ensure

efficient water use.

In 2003 Fonterra signed the Dairying and Clean Streams Accord along with the Ministry for the

Environment, Ministry of Agriculture and Forestry and regional councils. This was one of the first

major industry efforts to extend practice beyond regulatory bottom lines, engage with

stakeholders and take responsibility for improving practices. In response to this Accord significant

improvements were achieved across the country.

In July 2013 the new Sustainable Dairy: Water Accord (SDWA) was signed by all dairy companies in

New Zealand, along with the industry-good body DairyNZ and other interested organisations.

Fonterra farmers are already working towards the SDWA’s stock exclusion, effluent management

and nitrogen management requirements as part of their everyday farming practices under the

Supply Fonterra programme.

http://en.wikipedia.org/wiki/Ministry_for_the_Environment_(New_Zealand)

http://en.wikipedia.org/wiki/Ministry_for_the_Environment_(New_Zealand)

http://en.wikipedia.org/wiki/Ministry_of_Agriculture_and_Forestry_(New_Zealand)

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