Greenpeace is putting New Zealand's milk production under the heat lamp, saying the use of imported palm kernel feed could be equivalent of up to 12 per cent of the country's greenhouse gas emissions.
It has commissioned a report by scientist Rob Carlton into the use of palm kernel expeller (PKE) - a waste product from palm kernel oil extraction.
His report, released on Sunday, says the 1.4 million tonnes of PKE imported during the last dairy season could have produced up to 8.9 million tonnes of carbon emissions - equivalent to 12 per cent of New Zealand's annual greenhouse gas emissions.
The carbon footprint comes from the destruction of rainforests and peatlands in Indonesia and Malaysia by the palm industry.
PKE imports here have increased eleven-fold since 2005, Greenpeace says.
Fonterra is the dominant dairy cooperative and its use of PKE is likely to have a significant effect on the carbon footprint of its milk products, Greenpeace says.
Two years ago major UK supermarket chain Tesco became the first retailer to label the carbon footprint of milk.
"The UK government is clearly taking the environmental impact of using PKE seriously, and now this report, which demonstrates the high carbon cost of PKE, means that there is nowhere left for Fonterra to hide. The game is up," says Greenpeace climate campaigner Nathan Argent.
New Zealand could gain a reputation for industrial dairying that destroys orangutan habitat and drives climate change, or choose to become world leaders in low carbon dairying, he said.
Fonterra says PKE makes up about 1 per cent of the dairy cow diet here - it is used as supplementary feed - and it is proactively ensuring a sustainable supply.
Its general manager of sustainability and carbon, John Hutchings, in a statement, said the Greenpeace report had not been made available to the company and it could not make informed comment on its content.
NZN