In recent years there has been increasing pressure on companies to demonstrate greater environmental stewardship and social responsibility. This comes at a time when the business case for sustainable operations grows stronger every year.

Over the past 75 years, US dairy production has made significant reductions in water and land use while drastically reducing greenhouse gas (GHG) emissions—but consumers and investors want more from the industry.

“As the dairy industry has made significant improvements over the last several decades to reduce greenhouse gas emissions on the farm and at the processing plant, while at the same time increasing productivity and protecting our natural resources – that’s no longer enough,” said Danielle Quist, vice president of regulatory affairs and counsel, International Dairy Foods Association (IDFA), during the “Decarbonize Dairy” panel at IDFA’s Dairy Forum on January 25. “As dairy is doing more, processors and producers have been united in committing to achieving Net Zero by 2050 and at the same time, dairy companies are setting their own rigorous sustainability targets and working to report those metrics to consumers and to the public.”

Recently, US dairy producers and processors united in their commitment to reduce emissions as part of the Innovation Center for US Dairy’s goal for the US dairy industry to become carbon neutral or better by 2050. Meanwhile, food companies are setting their own rigorous sustainability metrics for suppliers while the proliferation of private carbon markets gives farmers real income potential from carbon reduction strategies.

“In 2007, the Innovation Center for US dairy was established and it represents processors and dairy farmers, all the way to retail,” said Mike McCloskey, co-founder and chief executive officer of Select Milk Producers, during the panel discussion. “There’s over 65% of the milk produced in the nation sitting at that table, constantly making decisions on how we’re going to continue to approach this (Net Zero).”

Environmental impact

For many businesses, supply chains have come into focus because they use resources and money and can be a source of unnecessary waste. Companies have started to measure the environmental and societal impact of their suppliers and services, from the beginning to the end of their life cycles.

Sustainable supply chain management involves integrating environmentally and financially viable practices into the complete supply chain lifecycle, from product development, to production, packaging, transportation, warehousing, distribution, consumption, return and disposal. Environmentally sustainable supply chain management and practices can assist organizations in not only reducing their total carbon footprint, but also in optimizing their end-to-end operations to achieve greater cost savings and profitability.

In 2020, Dairy Farmers of America (DFA), Kansas City, Kan., a national dairy cooperative owned by family farmers, announced plans to become the first US dairy cooperative to set a science-based target to reduce greenhouse gas (GHG) emissions.

DFA is setting a science-based target and committing to reduce both direct and value chain greenhouse gas (GHG) emissions by 30% by 2030, from a base year of 2018. By having their targets validated by the Science Based Targets initiative (SBTi), DFA is supporting the Paris Agreement’s broader goals to keep global warming below 2 degrees Celsius.

“Our dairy farm families have always been great stewards of the land and environmentally focused, because it protects the land for future generations,” said David Darr, senior vice president and chief strategy and sustainability officer at DFA. “While the entire dairy industry from farm to manufacturer only contributes about 2% of total US greenhouse gas emissions, we know it’s imperative to keep doing better and making improvements.”

To reduce climate impact and reach its science-based target, DFA, its businesses and its farm family-owners are working across its supply chain to reduce greenhouse gas (GHG) emissions on farms, in processing plants and on the road.

While conventional supply chain management focuses on the speed, cost and reliability of operations, sustainable supply chain management adds the goals of upholding environmental and societal values.

“The dairy industry, globally, accounts for about 4% of greenhouse gas emissions -- that may not seem like a lot, but in comparison that is a little bit more than the airline industry and so it’s a significant source of emissions,” said Michael Wironen, PhD, senior scientist, agriculture and food systems, The Nature Conservancy. “If you’ve signed up to the science-based targets initiative (set under the Paris Agreement), you are asked not only to reduce emissions in your fleet, in your factories, etc., but in your supply chain. If you want to actually achieve these goals and reduce your supply chain emissions, you need to be able to work with your processors, with the producers themselves, to actually scale up the adoption of these practices and these technologies that mitigate emissions.”

There is an increasing demand for sustainability in supply chains. Nearly half of US consumers say they would change purchasing habits to reduce their impact on the environment, according to Nielsen. Consumers are more concerned than ever about where products come from and how they’re produced. Researchers at MIT’s Sloan School of Management found that consumers may pay 2-10% more for products that provide supply chain transparency.

Where it begins

One of the biggest challenges for the dairy supply chain comes from the very beginning: the farm.

“The challenge is 90-plus percent of companies, processors, food companies, food retailers – 90-plus percent of your greenhouse gas footprint is something you can’t really directly control,” said Jason Weller, president, Truterra, the sustainability business of Land O’Lakes, Arden Hills, Minn. “It’s coming out of the farm gate emissions — cradle to farm gate on a dairy farm is globally around 90-plus percent of emissions — and the dairy food supply chain curves on the dairy farm.”

Methane (CH4) is a gas produced largely from bacteria that live in soil, water and the stomachs of ruminant animals, such as cows. Methane is considered a greenhouse gas (GHG) because it can trap infrared radiation in the atmosphere, causing an increase in air temperatures. Methane is the second most abundant global man-made GHG, behind carbon dioxide (CO2), According to a report by Sustainable Dairy in conjunction with the University of Wisconsin-Extension.

Methane, once emitted, will exist in the atmosphere for 12 years, which is shorter than the lifetime of CO2. However, methane is able to trap more radiation compared to CO2 resulting in much greater global warming potential. Overall, methane represents 16% of annual GHG emitted to the Earth’s atmosphere based on its Global Warming Potential.

While there are challenges for the dairy industry in reducing its carbon footprint, there is plenty processors can do to have an impact. DFA is doing its part by supporting advances in feed efficiency, herd nutrition and feed additives designed to reduce emissions and using renewable energy methods, such as solar panels and wind power, on farms and in processing facilities.

Land O’Lakes, Inc.’s on-farm sustainability commitments are on track to be adopted by its more than 1,600 member-dairy farms by 2025. By that target date, all Land O’Lakes’ dairy farmer-owners will complete an intensive, on-farm sustainability assessment aligned with the US Dairy Stewardship Commitment while maintaining universal compliance with the National Milk Producers Federation’s (NMPF) National Dairy Farmers Assuring Responsible Management (FARM) program.

“What climate science is telling us is the sense of urgency is now,” Weller said. “So, what’s happened is a response. We have global governments, full supply chains, individual companies now realizing that sense of urgency. They are making global commitments and they are now looking for solutions.”