An innovative new project dubbed Pay-As-You-Save (PAUS) has been launched today in New Zealand to make it easier for Fonterra farmers to access next generation milk chilling technology.
Milk chilling systems are critical in ensuring milk gets to the required temperature of 6°C or below within two hours of milking, but the units represent a significant capital investment for farmers and can become increasingly costly as they age.
Older units also use hydrofluorocarbons (HFCs), which are being phased down in New Zealand and across the globe.
The PAUS initiative offers Fonterra farmers the option to lease new cutting-edge systems rather than having to purchase them as they’ve typically done in the past.
The PAUS provider is a subsidiary of Cool Group, a New Zealand-owned and operated company whose other subsidiary Coolsense is an Original Equipment Manufacturer (OEM) specialising in commercial and industrial chilling systems.
Servicing of the units will be overseen by Cool Group as part of the lease agreement.
Farmers will have lease payments deducted from their monthly milk cheque from Fonterra, with the option to extend the lease when it rolls over or there is an option to buy the unit at any point in time.
Unlike existing systems which waste heat, these units generate hot water which farmers can use for cleaning the milking shed.
Dairy shed power consumption can be reduced by up to 30 per cent on average.
The new units have shown a reduction in CO2e of up to 80 per cent compared to older systems. Milk quality is also improved because the units provide milk snap chilling to 6°C or below which complies with milk chilling regulations. Older systems can struggle to achieve this, particularly as they age.
Moreover, the units deliver transparent data and allows real-time remote monitoring. Fonterra supplier Bruce Murphy of Timaru, has adopted PAUS describing it as a game-changer after years of wrestling with rising repair costs and aging chilling systems.
“The hassle-free nature of the scheme means I have more time to do other things on the farm and the leasing model eases the financial burden,” he said.
“The benefits of extra hot water, lower power bills and the environmental aspects really help sustainable farming and improve milk quality.”
Cool Group CEO, Allan Steele, said the initiative is more than just a product offering.
“It's a commitment to supporting sustainable dairy farming, reducing our collective carbon footprint, and enhancing the efficiency of milk production,” Steele said.
“The environmental and economic advantages of the PAUS project have been field-proven, marking a significant stride in the journey to more sustainable milk production. And we are excited to be working with all our partners in making a difference.”
Anne Douglas, group director of Fonterra Farm Source, said the co-operative was keen to be involved given the project brings both short and long-term benefits.
“We’re delighted to be part of this collaboration because it delivers value to Fonterra farmers through things like improved efficiencies while also helping lower on-farm emissions,” she said.
“It’s an exclusive deal that we can offer in large part because of the scale of our co-operative and strength of our partnerships.”
New Zealand Green Investment Finance (NZGIF) is providing the necessary financing for the leasing of these chilling systems.
NZGIF chief investment officer, Jason Patrick, said that by financing this initiative, NZGIF has championed a transformative step in sustainable farming practices.
“The $10 million asset finance facility from NZGIF should assist Cool Group to offer low emission chilling infrastructure to 200+ farms in the next three years,” he said.
Another important aspect of the initiative is the destruction of HFC refrigerants from the legacy equipment.
This is being undertaken in partnership with Cool-Safe, New Zealand’s product stewardship scheme for handling high global warming potential gases that are recovered from many of the older refrigeration systems.
Richard Lauder, chair of the trust running Cool-Safe, said the organisation ensures HFC’s are appropriately collected and destroyed using state of the art technology, eliminating the harm these synthetic refrigerants have on the environment.
“We are delighted to be involved and play a part in this scheme assisting the dairy sector in its efforts to reduce energy use and improve environmental impacts,” Lauder said.
At the same time New Zealand’s largest private sector impact investment fund, Purpose
Capital, has entered into a strategic alliance with Cool Group by investing equity to foster business growth.
Purpose Capital executive director, Bill Murphy, said collaborating with Cool Group Limited and being part of the PAUS project is an exciting venture for the investment fund which is working to drive environmental change in New Zealand.
“Traditional refrigerants are a considerable contributor to global warming, and their proper management and substitution represents one of the most effective climate solutions available,” Murphy said.
“We're committed to investments that drive positive change with measurable positive impacts, and this initiative is a testament to that commitment. We’re thrilled to be working alongside all the partners in this venture.”