New analysis by European financial group ING, indicated that an increasing number of large dairy companies have plans to become ‘net zero’ in the future.
In its publication ‘From grass to glass: The future for dairy companies on the path to net zero’, ING said that measures on farms play a crucial role in reaching targets but often raise costs for farmers.
Paying out a sustainability premium of a couple of cent per litre of milk to farmers would make a difference, but dairy producers struggle to pass on such premiums to customers, ING has stated.
Research on the path to ‘net zero’
The research article explores:
- CO2 reduction targets being commonplace in the dairy industry;
- Reducing energy use and switching to green energy;
- Rewarding farmers for their work;
- Communicating sustainability efforts towards customers;
- The progress so far, and the work that needs to be done.
ING has stated that if dairy processors want to become ‘net zero’ in 2050, they need to look beyond their own operations.
Around 95% of the greenhouse gas (GHG) emissions from dairy products happen either upstream or downstream in their value chain.
Emissions on farms in the form of methane (enteric fermentation, manure), nitrogen (fertiliser use) and carbon (land use change, energy use) are the predominant factor and account for 65% to 80% of all the emissions from grass to glass, according to the ING report.
Senior sector economist at ING Research, Thijs Geijer said: “Most major dairy companies have set carbon reduction targets for their own operations and their value chain by now.
“The current phase is all about executing on the accompanying strategies by taking a range of measures in processing plants and supporting measures on farms.
“This means investments in processing facilities that help to reduce the dependence on fossil fuels but can also include operational expenditure on feed additives that reduce methane emissions from cows.”
Head of Food, Beverage and Agribusiness EMEA at ING, Kiran Sanchit added: “A full value chain approach is required in order for the dairy industry to decarbonise in line with net zero targets.
“Dairy processors have a major role to play in steering their farmer base towards net zero, as well as retailers and governments.
“As we have seen in other industries, incentives are key to get farmers to justify the substantial investments needed and the higher prices associated with sustainably produced dairy products.
“In the longer-term replacing part of dairy consumption by plant-based alternatives could also play a role in reducing the environmental impact of the industry as a whole,” he concluded.
Dairy production
According to the ING analysis, it takes about 1kg of CO2 to produce 1kg of milk in key dairy regions.
The carbon footprint of producing 1kg of milk is a key metric for both dairy farmers and processors and is increasingly being used as a benchmark.
Countries with a relatively low number generally benefit from factors such as their favourable climates, sophisticated farm management practices and advanced animal breeding, according to the report.
Dairy farms in countries like New Zealand and Ireland operate in a grass-based system and require less external input.
On the contrary, dairy farms in the United States, China and Denmark operate in a more intensive system and manage to reduce their footprint by achieving a higher milk output per cow.
Both systems offer opportunities to reduce the carbon footprint but also have limitations, according to ING.
