Fonterra dairy farmers will be able to earn cash for their climate efforts starting on June 1.
The New Zealand dairy giant has announced it will pay an extra 1 to 5 cents a kilogram of milk solids to farms that meet climate criteria, and more for some farms.
The co-operative estimates more than 5000 farms will be eligible for a bonus next season based on last season's data.
The criteria takes into account emissions from cow feed, fertiliser, animals and drained peat soils, minus any carbon removed by trees and vegetation.
The farm's emissions need to be less than the co-op's 2017/2018 base year, Fonterra said.
An additional 10 to 25 cents a kilogram is on offer for an estimated 300 to 350 farms whose planet-heating emissions are about 30% lower than average.
The money for the 300-odd highest performers will come from incentives paid by Mars and Nestle as part of those companies' climate commitments.
Those multinationals have been working with Fonterra to meet their targets because supply-chain emissions from ingredients make up a large part of their footprints.
Fonterra says farmers can already earn up to 10 cents per kilogram of milk solids extra for meeting other, non climate criteria and these payments will be on top of that.
About 87% of Fonterra farmers will also be eligible for help with services such as making herd more efficient with genetics, which can also lower emissions.
The co-operative says it needs to reduce emissions per kilo by 30% off 2018 levels by 2030 to remain competitive, meet market access demands and comply with increased legal and reporting obligations.
Dairy is New Zealand's biggest-emitting sector, however the current coalition government does not plan to price farming emissions until as late as 2030.
Pressure from large dairy customers overseas is expected to drive some level of emissions reductions anyway, however the Ministry for Primary Industries has said it can not fully model how much yet.
