Episode 20 - Dairy industry experts answer a dairy farmer’s sustainability questions

Jill Houin  0:00 

Where do you see on farm sustainability practices and technologies going in the next 510 years?

Sara Dorland  0:06 

Let’s be honest, we’re the outlier. We are taking a different approach than the other groups, the other groups are looking at reducing or eliminating, and we’re saying let’s take a diversified data science backed, efficiency, economic approach. To me, I favorite our approach. That doesn’t mean that it’s going to be easy for us, it doesn’t mean that we aren’t going to have to make substantial commitment to this. Here’s the thing I’m absolutely certain about when it comes to us dairy, we have got some of the best innovators out here in this room. When it comes to technology, we will employ what makes sense, and we will drive efficiency and we do that whether we’re told to or not because it makes economic sense. It makes the farms more efficient. And when we sit down and take a look at things like genetics, genomics, different feed types, methane digesters, how we rotate crops, all of those things combined, create this story, and it’s a truly remarkable story. Welcome

Jill Houin  1:20 

to the very first live your Dairy Checkoff Podcast. I’m Gil Huyen from Indiana, and I’m going to have everyone introduce themselves.

Jamie Jonker  1:28 

I’m Jamie Jonker, the Chief Science Officer and Vice President of sustainability and Scientific Affairs for the National Milk Producers Federation.

Mark Benson  1:35 

Good afternoon. I’m Mark Benson, chief procurement officer and VP of Governor affairs and global responsibility with Lapena foods company. Hello,

Sara Dorland  1:43 

everyone. I’m Sarah Dorland. I’m the managing partner of Ceres dairy risk management.

Jill Houin  1:48 

Okay, so as a dairy farmer, I’ve had my own questions about sustainability. How can my family implement practices and technologies that are right for our farm? Not just helping the environment, but also economically sound? How can we, as a family choose different things that are sustainable for our food, our animals and our business? At our farm, we’ve been able to implement manure strategies, like having a manure bedding with our dryer, and utilizing time and implementing in 2013, a digester and we work with the University of Notre Dame and take their food waste, to also create more electricity for 1000 houses in our in our town. So earlier this month, I had the opportunity to go to the World Dairy Expo and talk to a lot of farmers and learn about their concerns about sustainability. These are the top three that I was able to hear. Is this all on the farmers backs. What is the rest of the value chain doing for sustainability? If the 2050 environmental stewardship goals are for the US dairy industry? Is every farmer expected to reach Net Zero? Will the environmental sustainability become competitive, or put farmers in a place where they get dropped if their farms progress is not the same level as other farms. These are two hot topics. And they’re really concerns for the farmer last year for the first time consumer responses to a global survey showed that more are concerned about planetary health than personal health, over 70% of Gen Z believe it’s up to their generation to stop climate change from getting worse. Clearly, the environment and climate change are in the top of the minds of the growing number of people, as well as countries and businesses, including food and beverage companies that have set sustainable goals. Question number one is for all the panelists. From your perspective, what is the biggest opportunity we have as US dairy, from farm to retail to show that we can be environmental solutions? Jamie, we’ll start with you.

Jamie Jonker  4:06 

So I think it’s important to recognize that dairy farmers have always been sustainable. It’s just that we’re looking at it through slightly different lens these days, and the journey that you’re being asked to go through as US dairy farmers, dairy farmers in other parts of the world are also going through those same types of journeys. The difference is the opportunities that you have versus the challenges that they have the solution in the Netherlands to environmental issues, there is going to be fewer cows, not finding ways to help make their industry more sustainable. The solution in New Zealand is a methane tax. The solutions here in the US will be driven by economic solutions that will be available to dairy farmers in all 50 states and Puerto Rico of all sizes, all types of production. And it’s going to be that journey of your own business decision from the suite of opportunities. That works best for you, and most importantly, those environmental benefits that you’re going to be delivering to society should and will be monetized. And so we’re going to have the opportunity as US dairy industry to be sustainable, not only in the greenhouse gas realm, but more importantly, in the economic pillar that is so important to your businesses as individual dairy farmers. And that’s the difference between the US dairy sector and our competitors around the world.

Mark Benson  5:30 

Thanks, Jamie, just add a few points first, and I’ll get into a couple of opportunities just in a second. But I wanted to take the opportunity before getting to that to thank all producers in this room and who are not in this room for everything you do for our business and our industry. Every day, every week, every month, it is deeply appreciated. Again, our business starts with milk. And it’s incredibly important. So when I think about a couple of the opportunities that are out there, the first one for me, is we’ve all got a role to play. So from a processor perspective, we have an opportunity to lead and demonstrate action and drive results in this area, just like we’ll do on farm. So that’s a key thing to do. And I know I’ve heard already today. And I know we’re actually doing a ton of this already as an industry. But we need to take every opportunity to communicate what we are doing with consumers and every member of the value chain. And then finally, the thing that I’ve really thought about that seems maybe like our biggest opportunity, and one of the most exciting things to come is how do we identify and develop and create more turnkey ready now available projects, particularly on farm that can be implemented quickly and accelerate our progress even further? Anaerobic digesters? I know we’ve talked about that. But both the technology but also the ready now aspect of that, when I was in discussions just a few years ago, with producers on looking at a digester solution, before it felt there was a lot to put together, there was a fair amount of complexity, it wasn’t necessarily a turn key option today that feels different, feels like we’ve got momentum there. So the question is, how do we develop more of those types of solutions? How do we create that turn key actionable opportunity. So it’s more of a business choice and a decision to move forward, we have a revenue stream to go with it as sustainability benefit to go with that. Those are the types of opportunities that can take us further and take us faster.

Sara Dorland  7:30 

As we sit down and take a look at sustainability. There’s tremendous opportunity. Sometimes the loudest voices in the room are hard to get above. And that’s something that I think is unique opportunity for us. Because if we sit down and take a look at what Europe and New Zealand are telling consumers, we have to get out there and tell our story. Sometimes what that’s going to require is technology, it’s going to require data, it’s going to require a lot of effort on the part of farms, but it’s well worth it. Because one of the things that we’re seeing in the sustainability story that they’re telling, that they want folks to believe grass fed is the only way organic is the only way limit your fertilizer, let’s reforest prime agricultural land, consumers are hearing that the opportunity and the challenge for this room and everyone else in this industry is to cooperate and explain that that might not be the only solution. Our approach is diversified. Whether you have 10 cows or 10,000. Cows, I would argue that the US approach of study technology, science based solutions makes more sense. One of the things when we sit down and take a look at what our competitors are doing. They forgot one aspect of sustainability. One thing we aren’t limiting as we head into the future is the number of human beings that we have to sustain on this earth. We have to feed billions of people, restricting technology and our ability to do that makes it more challenging. I’m absolutely convinced if industry works together and collaborates, we can be the solution and feed the world. But it’s going to take everyone working together. The best example that I have recently that was so impressive when we go out and we look and we talk to folks in industry that they cite over and over and over again as an example of what dairy did so very well. And they wish others and livestock would do is the Farm Program, where industry got together and came up with a set of standards and rules and measures and reporting that folks can rely on that people can use as a resource. If we take a similar approach and sustainability and look at the opportunity that the Europeans and the Kiwis have left us. This is a tremendous advancement for us dairy, not only in growth, but if we take a look at that 18% That we really had to compete at to get over the last 20 years. We’ve got two groups number one and Number two who are somewhat conceding the market, if we can do it well and meet the needs that those consumers are asking us to meet and fulfill that information void?

Jill Houin  10:09 

And what are the consumers really asking us to meet? So that teed me up perfectly for Jamie, you spend a large percentage of time understanding the science and policy landscape surrounding environmental sustainability? So I’d like to start with you and ask you this question. I often hear from farmers who is defining what it means to be sustainable? And who sets the metrics and what data or science are they using?

Jamie Jonker  10:36 

Fantastic question. And it seems like it’s anybody and everybody is defining sustainability, and all in different manners. But I think what’s important for our dairy farmer community and our USDA value chain is what’s being done at the national level here in the US. And what we do through the Innovation Center for us dairy in that pre competitive process, looking at how we define sustainability, as a US dairy sector. There are others that want to define what sustainability should look like for our industry. You know, there are NGOs that have their versions of sustainability, our customers certainly have demands about what sustainability on your farms and processing plants might look like. But we’ve gone through this journey as a US dairy sector that is making us more nimble, we’re investing in the research so that not only are we going to have that 18% exports, we’re going to double that in the next 10 years. I know crystal harden is going to make that happen. And we are going to be the producer of choice because of the way that we have set up sustainability in the US. And that pre competitive process, looking at it and tackling it as a sector, issue, and opportunity. And I think that is fantastic. And the vision of the dairy farmer boards to invest in this going back more than 15 years is phenomenal, because we would not be up here on stage today to be able to talk about the great things that are in are going to happen in the opportunities. We’d be up here talking about the challenges, the limitations and the problems. And so that investment is paying off dividends now, and it’s going to continue paying off dividends in the future.

Jill Houin  12:16 

So being proactive is really important. So Mark Lupino sells cheese to some of the biggest global food service brands. When you engage with them on sustainability. What are their biggest questions and or areas of concern for dairy, both in the US and around the world? Do they see consumers willing to pay more for products with sustainable labels or stories if consumers are willing to pay more? Are brands and processors willing to pay for sustainable dairy in

Mark Benson  12:46 

terms of our customer conversations? I would say if I were to sum it up in a couple of words, what our customers are asking us about as it relates to sustainability right now is they’re looking for evidence of progress. They’re looking for confidence that we’re on track to meet the goals that we’ve established, whether it’s for 2030, or out even further beyond. Are we on track? Are we making progress, show me evidence that is happening. And the discussion is moved more to projects and specific results, tangible results, versus aspiring to a particular goal? We’ve kind of done that. And now we want to see the tractions I would say that is a big part of the dialogue. I think funding and the financial aspects are certainly a big topic, a very important topic. And I think one of the key things that I’m really confident about and really encouraged about is some of the recent federal funding announcements that have been recently shared and in specifically indexed to the dairy industry. So that that is certainly going to be a big part of the equation for all of us. I think we know there’s a number of investments that will be necessary to reach the goals that we’re all striving for. And that’s certainly going to be a big part of it. Lapena has done some of that too. at a smaller scale. We have funded and sponsored certain projects, pilot studies, advancing the farm Yes, tools, accelerating those things, to really do our part to help and support the progress that we know we need to make. So I think it’s all those things together. That’s gonna help us move forward faster and further. And Sarah

Jill Houin  14:19 

coming back to the farm. One of the shared concerns amongst dairy farmers is around the economics of sustainability. They’re asking really tough questions for you guys. I’m really excited for your answer. Because given the rate of accelerating expectations, combined with the increasing costs of running a sustainable farm, many farmers are concerned that they won’t be able to afford new technologies and practices that some companies may require what resources exist to help dairy farmers assess the risk and economic opportunities about sustainability.

Sara Dorland  14:56 

I would say the US dairy industry is doing a very good job about development. Seeing a benchmark a baseline, how are we going to measure these things? Are we going to have it perfect the first time? Probably not. But I am absolutely certain we will have more technology that’s available to help us with this data collection and record keeping, is it going to be free? Are you going to be able to do it without any time commitments? Unfortunately, the answer’s no. But here’s what I would say about that. From the farm perspective, this is a tremendous opportunity. We’re talking about potential for growth that we haven’t seen in a while. And when we sit down and take a look at what’s happening in Europe, whether it’s Irish dairy cows wearing methane, capturing backpacks, that’s somewhere about 30 euro cents per 100 weight, or the tax that they’re proposing in New Zealand today, somewhere, again, that 20 to 30, New Zealand cents. If we sit down and take a look at it, however we do it, there’s going to be a cost, I think I’d rather be investing in my future. And this ability to not only maintain but to potentially grow and expand and to continue to manage a dairy business that looks rather familiar. Consider the opposite. If we don’t do anything, there is a cost to shrinking. There is a cost to losing those international markets. There is a cost to tax and other penalties, I would say that it’s a tremendous opportunity, again, for us to take a look at what we can do, and how we can communicate that message. But again, it’s going to take an effort and you’re going to have to leverage industry, the companies you work with to really assimilate that information on

Jill Houin  16:31 

the farm. And Jamie, the net zero initiative was launched two years ago as to help make practices that improve sustainability on a farm more affordable and more widely accessible for farmers of all sizes. But a concern that farmers have is around the term net zero and specifically, is the expectation that every dairy farm achieves net zero and related what tools are available to help farms plan and make decisions. Can you speak to the overall goal of net zero initiative, what it is and what it is intended to do, as well as all the resources available to farmers,

Jamie Jonker  17:11 

all of them. Okay. So let’s just set a little ground here, our 2050 goal is sector to be net zero greenhouse gas, not everybody individually. So each part of the sector from into the 30,000 individual dairy farms to our costs and processors, to our customers have a role in this. Not everybody will need to be at net zero. We have farms today that are at net zero or our carbon sequestered already. Not every dairy farmer is going to be at net zero by 2050. And they don’t have to be we’re looking at the sector wide being there. And how do we get there? Well, some things that are available today, Mark mentioned digesters digesters are going to be important part of that process, but they’re not going to work on every dairy farm, because they’re not going to be affordable at Every Size level, there are changing economics on that that are making it more viable at our medium and smaller farms. But there’s other things that can happen when we look around the farmstead, menorah is about 1/3 crop production is about 1/3 enteric. Methane is about 1/3. So we have challenges and opportunities in all of those areas. We heard from Bob O’Brien about the investments that are being done in research and looking at alcohol modernizing our crop production system for the dairy industry for now in the future in the US, looking on the enteric methane side, which is one of the more difficult ones because it’s the wonder of the rumen. And how it how the microbes in there transform materials that we cannot digest into high quality milk, protein and milk fat. And we don’t want to upset that. But there’s technologies coming along that look like they’re going to be very promising feed additives that can reduce enteric methane emissions by 30 or more percent, there’s going to be opportunities there. And what we’re building is a suite of opportunities for folks to choose from for what’s best for their business. And that gets me into the last thing and keys on some serious points about the measurement aspect. Yes, we have to report numbers going through a farm environmental stewardship evaluation may seem pointless, we hope you’re getting value out of it. The engine in farm es today comes from the groundbreaking lifecycle analysis that the industry paid for you as dairy farmers paid for more than a decade ago, that engine needs some tuning. So what we’re actually doing is we’re going to have a new engine in the farm environmental stewardship program by July 1 of 2024. And working with a model called Rufus it’s a process based model. We’re going to have a version of that in farm es, and that’s going to have several layers to it. The first is going to be continued aggregation of data so that the coops and processors can report their scope three missions to their customers because their customers are asking for it. Matter of fact, they’re probably demanding it it also is going to allow for scenario planning. If I do this on my farm, what is the impact so that That way, you can start making informed decisions on changing your operation in response to the important societal benefit that you’ll be giving, which is reducing greenhouse gas emissions. And that’s going to be I think, fantastic opportunity. And again, it’s your investment as a dairy farmers into this process that really is making this happen and going to bring the opportunities to you. It’s paying back. So many times the investment that’s been put into the Innovation Center and put into the Farm Program, could I

Mark Benson  20:28 

just have maybe one piece that I’m not sure if everyone has awareness of this, but there is probably one key moment every year. And right now it is an annual process for us when we roll up and re forecast how we’re doing against our GHG reduction commitment. And that is the moment when we receive our consolidated report on the refreshed data coming from the farm. Yes tool. We’ll do that next month. And that is a really, really big deal in terms of us understanding how we’re progressing. And every year that has a bigger data sample, and gives us even more confidence in what we’re projecting and what we’re sharing, we then take that exact same information and translate that into our customer reporting with all of our customers who are asking for that same information. So the tool is incredibly helpful for us, particularly at this phase in the process to really articulate progress, and articulate results. So I just wanted to share that. So we talk a lot about the inputs. And we’ve done a lot of learning. I’ve personally done a lot of learning on every attribute and what goes into the tool and how we’re measuring those things. Because at the end of the day, we’re sharing that with our customers to share what’s happening, what progress we’re making, and then what we think will happen going forward.

Jill Houin  21:45 

Excellent. And you touched upon the next question that I’m going to have you expand on right now. It’s about how wonderful Lapena is doing with being in the forefront of sustainability, while winning the US dairy Sustainability Award in 2020. So congratulations to your company, and that they’re the one of the 25 processors that take part in the innovation centers processor working group to discuss process level efforts reporting around GHG emissions and reduction in waste packaging and water. What farmers are concerned about is sustainability on their backs. So what does sustainability mean to Caprino? And why is it important to your future success as a company? And what are the key factors or influences driving the focus on sustainability for the pre know and for your fellow processors,

Mark Benson  22:33 

I’d start off by saying sustainability is has always been a priority for our business over time, just like you. It’s an even bigger priority now. So it’s a big deal in our purpose that we’ve publicly announced to sustainably feed and nourish families around the world. Sustainability is the operative word. It’s the first word in our purpose statement, as an organization, so it’s a really big deal. And we’ve translated that into global responsibility is kind of the term and the strategy that we have reconciled and developed that includes all of our sustainability work with our sustainability strategy, we’ve developed commitments for scope one, scope two and scope three, scope, one and two being more in the four walls of our factories. With that strategy. We’ve identified specific budgets, specific teams, specific projects, and all the things that you would expect that we would do on that. We’re on track, we’re moving on all those projects, we’re moving forward with every focus we can. And if we get every one of those done on time, faster than budgeted every one we thought of is delivered, that’ll enable us to achieve 5% of our total goal. The other 5% is all of our non milk inputs, all of our transportation and warehousing, all of the other things that happen across our business 90% of it is related to our milk supply. So we need to do all of those things. But the reality is we can’t be successful without you.

Jill Houin  24:04 

Wonderful. And Sara looking to the future, where do you see on farm sustainability practices and technologies going in the next 510 years? And how does us dairy sustainability story and progress to date compared to other agricultural sectors?

Sara Dorland  24:21 

Let’s be honest, we’re the outlier. We’re taking a different approach than the other groups. The other groups are looking at reducing or eliminating, and we’re saying let’s take a diversified data science backed efficiency, economic approach. To me, I favor our approach. That doesn’t mean that it’s going to be easy for us. It doesn’t mean that we aren’t going to have to make substantial commitment to this. Here’s the thing I’m absolutely certain about when it comes to us dairy. We have got some of the best innovators out here in this room. When it comes to technology. We will improve Boy, what makes sense, and we will drive efficiency. And we do that whether we’re told to or not, because it makes economic sense, it makes the farms more efficient. And when we sit down and take a look at things like genetics, genomics, different feed types, methane digesters, how we rotate crops, all of those things combined create this story. And it’s a truly remarkable story. There’s more innovation out there that we have yet to explore. And we will get better at it. And as we start to get this benchmark and this understanding of where we are, to the point that what Lapena is doing, we now know exactly how to incorporate it, how to improve it, and what can we do next? I think that’s why even though farmers feel like it’s falling on their shoulders, it’s because you’re so darn good at it, we need you to do this. And that’s the history that you’ve demonstrated to us that you can take cows that are producing beyond anything we would have expected 20 years ago, and we expect that you’re going to make additional strides.

Jill Houin  26:03 

And I’m married into the dairy industry. And what amazes me is it can be 10 cows, 10,000 cows, everyone has their own little niche. We’re always looking to get better. And that drive and passion is just amazing to me. Just had to do a little side note on that. Anyway, we have very short time for questions. So Jennifer, are there any questions?

Jennifer Snyder  26:25 

Yes, Jill, there are the first question that came through. This is a great panel and a great discussion. Can you explain what role checkoff plays in sustainability work?

Barb O’Brien  26:34 

I’m going to stand up and I’m going to use the question as an opportunity actually, to make an introduction. I think you’ve certainly seen over the last 15 years the critical role sustainability plays in the business, our commitment to build a bench specifically in the science discipline, environmental science and proof building area, the partnership area and our storytelling capabilities. Over the last six months, we prioritize the hire of a new leader in this space. And I like to ask Laurie captain to stand up and I’d like to introduce her to you as she can talk a little bit about check offs role in this space relative to the other entities across the industry.

Lori Captain  27:12 

Hi, everyone. It’s great to be here, man. I was telling a few folks earlier I came out of the input, the crop input area corn and soybeans. And what an upgraded is to come to a conference where they serve ice cream and yogurt and cheese. I really appreciate it that checkoff has a really critical role to play. But I say it’s a piece of the puzzle. And our piece of the puzzle where we really contribute is in three primary spaces. One is finding solutions. And so the research that we do to find on farm solutions for farmers that big and small in technology areas that will give you options that allow you to take your sustainability journey in a way that also builds your business economically. So that is one is solutions finding solutions. The second is partnerships. checkoff is not in a position where we can financially invest in technologies on farm. But we can sure help find partners that can do that. And there’s a lot of work that we’ve done with organizations like McDonald’s, Starbucks, Nestle, and others to really work with farms to put technologies on your farms and to help defray those costs. As well as work that we’re we’ve done in the conservation space with a number of NGO partners. So solutions, partners, and proof points. And the proof points really helped tell our story to consumers, it helps with the groups that work in policy, giving them proof points, so that they can go on the hill and in other legislative bodies, and help get the kind of policy environment that we’re looking for, and also with other folks across the industry. So that is largely the work that we do in the sustainability space. We

Jennifer Snyder  28:47 

did have another question that came through the mobile app. And it says, Does it seem that as we do or disclose more about conservation and sustainability practices, that customers and consumers will demand even more? When do we began to gently push back and say we have more practical solutions than non farmers do?

Jamie Jonker  29:07 

Part of this, the idea of transparency about production is important, because there’s a lot of misinformation about what you do on a day to day basis on your farm. And just having the ability to provide that transparency actually helps folks like Latino folks like our cooperatives and other proprietary processors that are dealing with the Walmarts and McDonald’s Z, those other customers that have demands about production, but really don’t understand what the production looks like. And so part of it is helping to just with that transparency, set the record straight. That doesn’t mean that demands are going to cease, but it helps shape them to be more realistic and get them to the right place. They have a place where they want to go we want to go to the same place. They think the journey might look this way we know that the journey is going to look different because As we’re investing in it as a US dairy sector, and we know best how to get there, and that starts with the farmers and then moves through the whole value chain,

Mark Benson  30:07 

my addition to that would just be that the tools have really afforded us a way to really tell the story and communicate our progress with the data. And I would much prefer that than having a more random approach or it’s more qualitative and harder to really articulate. So the tools that we have developed are helping in that regard, and I think will continue to assist us in doing that going forward.

Sara Dorland  30:32 

I had an entertaining, I found to be an entertaining question. troubling. And that was because it was coming in from heads of companies at least two or three times in the last year. And that was a question in all seriousness that said, what would it take to convert 100% of us dairy to grass fed, and I was kind of what, what, in five seconds or less explain how this could happen and why it can’t happen. That’s why we need to be transparent. That’s why we need to help folks understand because there is somebody out there asking or demanding that of someone. And they come to people like me and everybody else up here to say, what exactly does that mean for me? Why do we have to share information is so that the consumer can be our advocates, and they’re better armed to answer things and say, Well, that just doesn’t make any sense. But we have to share the data.

Jill Houin  31:22 

Absolutely. Telling the story is a huge part. I was a consumer, I did not grow up in this and to know all of the great things that throughout the industry is doing is amazing. on that. I want to thank our guests, Jamie, Mark and Sarah for sharing their perspectives on sustainability during the special joint Annual Meeting recording of your Dairy Checkoff podcast

Transcribed by https://otter.ai