A dairy farming leader has challenged Greenpeace's accusation that the New Zealand industry's high use of palm kernel feed is contributing to the destruction of rain forests in south-east Asia.
Last year, New Zealand imported 1.1 million tonnes of palm kernel to feed its dairy herds, or 24% of the world's supply, US Department of Agriculture figures show.
A Fonterra subsidiary, RD1, is one of the largest importers.
Greenpeace climate campaigner Simon Boxer says New Zealand is directly financially contributing to the expansion of palm oil plantations in Indonesia and Malaysia, resulting in clear-felling of tropical rain forests.
Federated Farmers' dairy chairman Lachlan McKenzie says demand for palm oil itself, especially for biofuel, is increasing its production.
He says the palm kernel used in stock feed is a by-product or waste product from palm oil.
Mr McKenzie says if the farming sector did not take palm kernels they would be burnt, polluting the atmosphere.
He says palm kernel imports have fallen to a fraction of what they were last year when drought in North Island dairying regions sent demand soaring.
Fonterra's sustainability manager John Hutchings says the palm kernel sold by RD1 is a waste byproduct and the company is working to ensure it comes from certified, sustainable sources.
But he says it is up to individual farmers which feeds they use to supplement dairy cow diets when grass is in short supply.
Mr Hutchings says the palm kernel sold by RD1 comes from one reputable company, Wilmar International.
Green Party co-leader Russel Norman says Fonterra should drop the use of palm kernels, just as Cadbury dropped palm oil from its chocolate last week.
New Zealand grain growers say they have had long-standing concerns about biosecurity risks associated with imported palm kernels.
Federated Farmers' maize growers' representative Colin McKinnon says despite reassurances from Biosecurity New Zealand, palm kernel shipments have arrived here infested with insects and other contaminants.
He expects the Grain Council to continue putting pressure on MAF and the Government over the issue.
Mr McKinnon says palm kernel is also threatening the viability of maize production for stock feed.
He says during this year's autumn harvest some maize silage crops were sold for as little as 5 cents to 10 cents a kilogram, because palm kernel had displaced that market.
Lachlan McKenzie says it was pressure on dairy farmers to cut feed costs that dried up demand for maize silage, not competition from palm kernel imports.