It will take more than some problematic poo power projects to tackle the dairy industry’s environmental issues
The world just can’t get enough of dairy. By 2050, consumption of milk products is set to rise by 65%, driven by the lactose-loving, fast-expanding global middle class.
That’s good for dairy farmers, but the industry has a dark side. The agricultural sector accounts for nearly a quarter of worldwide greenhouse gas emissions, 14.5% of them from livestock. Dairy also has its detractors. The rise of veganism, while largely about health and animal welfare, is in part due to people’s desire to reduce their environmental footprint. The global market for milk alternatives such as almond, coconut, soy and pea, is projected to reach more than $10bn a year by 2019.
The dairy industry cannot skim over these challenges. Reducing environmental impacts is critical to its survival and growth in a changing climate. FrieslandCampina is one of the largest dairy co-operatives in the world, with an annual revenue of €11.3bn and 19,000 member farmers in Belgium, Germany and the Netherlands. The co-op’s main production is in Holland, where dairy products are not only staple foods but national symbols, and an engine of the economy.
But the industry’s environmental impacts leave a sour taste. Agriculture accounts for 10% of the Netherlands’ greenhouse emissions, most of it methane from its 1.7 million cows. Water pollution is a problem too. Around 74 million tonnes of manure is produced a year, containing phosphates and nitrates that leach into water. In excessive amounts, these chemicals cause algal blooms and starve aquatic life of oxygen. In 2015, the Netherlands shipped manure to Poland, Germany and Hungary but still exceeded its EU phosphate limits.
In the same year, FrieslandCampina updated its sustainability strategy, called Route2020. The co-operative identified three global challenges: a growing world population; enough farmers to grow food; and climate change, causing a scarcity of natural resources. These influenced the selection of its three CSR pillars: nutrition, farmer livelihoods and sustainable production chains.
It’s an admirable strategy and provides us with an understanding of the big issues facing the dairy industry. But does the group propose any solutions to the challenges? Its 2016 CSR report offers limited insights, but the company’s website provides useful information.
Readers learn that FrieslandCampina launched a “poo power” project in 2016, aiming to work with a thousand Dutch farms to convert manure into biogas using anaerobic digesters. Jumpstart, a cooperative established by FrieslandCampina, helps farmers with the financing, construction and maintenance of the digesters. Farmers can use the energy themselves and sell excess production at a fixed price. The Dutch government has committed €150m worth of subsidies to ensure farmers receive a guaranteed payment for the energy they generate. As well as slashing methane emissions, the project will contribute to the Netherlands’ 2020 renewable energy target.
Ambitious challenges
But poo is proving problematic and the project is not paying its way. While fossil fuels are cheap, the cost of installing and running the digesters is high, providing little incentive for farmers to buy in. If FrieslandCampina is serious about cutting the crap, the scheme must become profitable. A move towards larger, centralised digesters and smarter technology on farms may be one way to do this.
Maybe the co-op will find imaginative ways to get the costs under control and inspire the farmers, as it has done with consumers. To demonstrate its commitment to sustainable production chains, FrieslandCampina gave its customers a taste of farm life without them having to step foot in a field.
The co-operative partnered with the largest Dutch supermarket chain, Albert Heijn, to show shoppers the world of a dairy farmer through virtual reality (VR). Using VR glasses, customers could experience the entire production process from grass to glass by means of a 360-degree film, helping them understand where their milk comes from.
The co-op’s CSR strategy is straightforward, and its ambition to help solve three huge global challenges is commendable. Mapping their strategy to the global challenges shows commitment and clarity. But there are some big cows in the room. FrieslandCampina’s 2016 update fails to address key questions. How does it plan to tackle climate change while meeting growing dairy demands? What is its position on sustainable consumption? How will it ensure a good living for farmers if the price of milk continues to drop?
The co-operative’s glossy but vague update makes its CSR efforts seem tokenistic. Take poo power: While the project will help to reduce emissions, it does not deal explicitly with pollution from manure.
In general, FreislandCampina’s update deals with a handful of cherry-picked sustainability issues while ignoring other more pressing problems. This leaves the reader wondering – perhaps unnecessarily – how seriously the co-op takes its commitment to tackling global challenges at home.
Frances Owen is an analyst with Context Group, a sustainability strategy and communications consultancy with offices in London, Los Angeles and New York. Frances.owen@contexteurope.com