Wednesday, 06 March 2024 10:55

Milk processors and emissions

Written by  Richard Scheper
Most global dairy companies have either set climate targets or made a voluntary commitment to meet targets. Most global dairy companies have either set climate targets or made a voluntary commitment to meet targets.

OPINION: Reducing greenhouse gas (GHG) emissions – especially scope 3 emissions that occur on the farm – has been on the agenda of leading dairy companies for many years.

Historically, productivity gains have led to more efficient milk production and lower emissions per kilogram of milk, but more comprehensive reduction strategies are needed.

As one can’t reduce what one can’t measure, in 2010 the International Dairy Federation, the Food and Agriculture Organization of the United Nations, and the Sustainable Agriculture Initiative Platform worked together to create a harmonized carbon footprinting methodology for the global dairy sector as a first step in the industry’s emissions reduction pathway.

Most companies in the Global Dairy Top 20 – Rabobank’s annual ranking of the world’s 20 largest dairy companies by turnover – have set climate targets or made a voluntary commitment with the Science Based Targets initiative (SBTi). And more recently, companies – including the majority of the Top 20 – started turning to the SBTi’s Forest, Land and Agriculture (SBTi FLAG) guidance on target setting.

Target levels, timing, and scope can differ among companies depending on their regulatory environment, downstream buyer demands, or public pressure. In this report, we look at the GHG emissions reduction targets of the Top 10 largest dairy companies, plus some of the strategies they are using to achieve these goals.

For scope 3 emissions, several of these companies have committed to a reduction in intensity levels and/or absolute emissions in the range of 30% toward 2030.

The industry has already taken numerous steps to stimulate GHG emissions reduction, such as determining on-farm emissions, creating sustainability programs, and more recently incentivizing farmers through result – and participation-driven premiums (“carrots”).

At the same time, “sticks” will remain part of the equation, with more agriculture and dairy-specific regulation on the way, as well as greater pressure from offtakers to reduce GHG emissions. Not meeting voluntary commitments – like SBTi targets – could have negative consequences for dairy companies going forward, such as reputational damage.

However, to reach 2030 goals and beyond, it is crucial to accelerate the adoption rate of on-farm GHG emissions reduction measures. This is because reductions from productivity and efficiency gains may begin to diminish in developed regions as we move closer to the target date.

After 2030, these targets may only become steeper and, therefore, a wider variety of onfarm mitigation levers are needed. In order to reach the targets set, a well-balanced combination of carrots and sticks is required, as companies are currently unable to reward farmers from downstream market participants’ contributions.

Expanding the financial incentives for farmers will likely require the cooperation and collaboration of participants and stakeholders in the value chain. With such participation, reducing GHG emissions in the dairy value chain in the longterm and accelerating the rate of reduction are believed to be possible.

Why is it important for dairy companies to be proactive?

Dairy companies have been aware of the need to reduce their greenhouse gas (GHG) emissions for many years.

In recent years, companies have faced more pressure from offtakers, end consumers, and other stakeholders – such as NGOs, environmental groups, and even shareholders – to accelerate the reduction of GHG emissions. At the same time, they understand that more regulation is likely and that targets will increase over time.

This has led to more companies proactively making the first moves.

Richard Scheper is RaboResearch’s dairy analyst

More like this

Inconvenient truth

OPINION: You would've missed this one if you rely on mainstream media for your news, but your old mate reckons credit should go where credit's due: Emissions by dairy cattle decreased by 1.6% according to the latest NZ Greenhouse Gas Inventory report.

Less hot air

OPINION: Farmers won't get any credit for this from the daily media, so Milking It is giving the bouquets where they’re due.

Featured

Case IH partners with Meet the Need

Tractor manufacturer and distributor Case IH has announced a new partnership with Meet the Need, the grassroots, farmer-led charity working to tackle food insecurity across New Zealand one meal at a time.

25 years on - where are they now?

To celebrate 25 years of the Hugh Williams Memorial Scholarship, Ravensdown caught up with past recipients to see where their careers have taken them, and what the future holds for the industry.

Rockit Global appoints COO

Rockit Global has appointed Ivan Angland as its new chief operating officer as it continues its growth strategy into 2025.

National

Top ag scientist to advise PM

A highly experienced agricultural scientist with specialist knowledge of the dairy sector is the Prime Minister's new Chief Science Advisor.

Machinery & Products

Hose runner saves time and effort

Rakaia-based equipment manufacturer Pluck’s Engineering will soon start production of a new machine designed to simplify the deployment and retrieval…

» Latest Print Issues Online

Milking It

Science fiction

OPINION: Last week's announcement of Prime Minister’s new Science and Technology Advisory Council hasn’t gone down too well in the…

Bye bye Paris?

OPINION: At its recent annual general meeting, Federated Farmers’ Auckland province called for New Zealand to withdraw from the Paris…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter