Can the dairy industry rise to the challenge of sustainable growth?

Sensemaking / Can the dairy industry rise to the challenge of sustainable growth?

Globally, dairy production accounts for 2.7% of humankind's carbon footprint. Now, leaders in the sector are coming together to map out the best way forward - but what are their options? Huw Spanner scans the land of milk and money.

12 Apr 2012

Globally, dairy production accounts for 2.7% of humankind's carbon footprint. Now, leaders in the sector are coming together to map out the best way forward - but what are their options? Huw Spanner scans the land of milk and money.

Is there anything that speaks more clearly of pastoral peace than a field of cows contentedly chewing the cud on daisy-speckled swathes of green? It's an image many in the dairy sector like to promote – but how often is it an accurate one?

Last year, the proposal to open an 8,100-cow 'megadairy' in Nocton, Lincolnshire provoked fears of 'factory farming' and 'battery conditions', and a petition raised by the pressure group 38 Degrees attracted over 80,000 signatures. The 'flagship for the next generation of the UK dairy industry'– as described by its champions – eventually withdrew its planning application. But did all hope for the future of the industry disappear with it, as some contend?

Not for Jim Paice, Minister of State for Agriculture and Food. He's enthusiastic about Dairy2020 – a collaborative project managed by Forum for the Future – which, he says, "is bringing the industry's thinking together to deliver economic and social sustainability, in addition to the environmental gains already in progress, through the Dairy Roadmap".

In the same year that Nocton hit the scrap heap, Dairy2020 managed to get the biggest players in the sector round a table to look for the best way forward [see box, 'Shifting the dairy system']. "It's the first time all the issues – environmental, economic and social – have been looked at on the same page", says Ivana Gazibara, who is leading the project at Forum for the Future. "To have the whole supply chain engaged and collaborating on the full range of sustainability issues is a great step forward."

There'll be commercial benefits, too. Paice believes that Dairy2020 "could enable every operator from farm onwards to know how to 'future proof' themselves" – and he wants to see this happen.

So, what are the challenges, in a nutshell? Let's start with the sums. According to a 2011 report in Farmers Guardian, the price paid for milk 'at the farm gate' has fallen by 28% in real terms since 1994 (when the Milk Marketing Board was abolished). The struggle merely to break even meant that few farms could invest in their future. Worse than that, almost half of the dairy farmers in England and Wales simply gave up. Two years ago, The Daily Telegraph reported: "Such is their despair that one [dairy farmer] a week commits suicide."

Julia Hawley grazes a herd of 60 near Melton Mowbray, and is also a member of the Dairy2020 Steering Group. To her mind, the retailers have a lot to answer for. "In the long term," Hawley says, "[their] behaviour in forcing down prices has been irresponsible." Lack of consumer awareness is also the problem, says Huw Bowles, Chief Operating Officer of the organic dairy co-op OMSCo. While British shoppers may jump at four-pints-for-a-pound promotions, they are mostly unaware of the cost cheap milk imposes on farmers, their cows and the countryside.

Today, the EU's impending abolition of quotas (introduced in the 1980s to prevent 'milk lakes' and 'butter mountains') may only increase the downward pressure on prices – as will the huge boom in production for export in some parts of South America.

Dairy production accounts for just under 3% of our global carbon footprint

Meanwhile, the industry is under growing pressure to reduce its impact on the environment – and rightly so. The most obvious issue is greenhouse gases. Globally, dairy production accounts for some 2.7% of humankind's carbon footprint. Extracting and processing milk are energy-intensive, but even in the industrialised world only one fifth of the industry's emissions is CO2. Half of them come from the prodigious quantities of methane generated in cows' stomachs and the rest from the nitrous oxide released by their manure and by other fertilisers spread on the fields that feed them.

Dairy farming also places heavy demands on the earth's resources. In 2010, a UNESCO report estimated that, on global average, it takes a thousand litres of water to produce a single litre of milk. It also noted that, in many countries – Britain not least – cows consume huge quantities of crops grown on land that might otherwise feed people. The UK's dependence on imported vegetable protein – partly used to feed the herds – is one potential concern for the future. Another is biodiversity, as farmers struggle to extract enough forage from their own land.

It's no wonder there have been calls for a reduction in the consumption of dairy products – from the UK's Sustainable Development Commission in 2007, and more recently from the UN Environment Programme. But there's also plenty of demand for them, from health professionals who value its strengthening nutrients – calcium, protein and vitamins – as well as food-lovers and manufacturers.

Given the pressures, it's understandable that farmers are keen to maximise the yield from their cows. But for badly managed animals, this can be at the expense of their health. Richard Davis, who sits on the Dairy2020 Steering Group, is a Bedfordshire farmer whose 100-strong herd produces a million litres a year: "Metabolically", he says, "a high-yield cow is on a knife-edge. If anything goes wrong when you're asking so much of her, she's in real trouble." Infertility and calf-mortality rates are high, mastitis is common and a good quarter of the country's cows are lame.

Proponents of so-called 'megadairies', where a thousand or more cows spend virtually all their lives indoors, contend that they win on all three counts: economic, environmental and ethical. How? Because they can produce huge volumes of milk reliably and cheaply; because they allow both more efficient control of feed and waste; and because they can pay more careful attention to cows' physical needs, not least by having a vet on the staff. The key is precise management – and small-scale dairy farmer Hawley finds this quite uncontroversial:

"When I go to even a 1,000-cow farm", she says, "I think: 'This is big!' – and yet there's no reason why cows should not flourish on farms even of 10–15,000, as long as that attention to detail is there."

So, what can we look forward to? Is the industrialised 'zero-grazing' model – pioneered in the US and already being adopted in China – the shape of things to come? Is it Nocton or nothing…?

In fact, the UK's varied geography calls for – and rewards – a variety of approaches. "Every farm is different", Richard Davis points out. "My neighbour just across the road farms on very heavy clay land whereas I run down to the river on gravel land. He grazes his cows a lot more than I do because his grass doesn't burn up in the summer like mine."

While intensive farms can be profitable, the traditional 'extensive' system can be more so

An important new report from DairyCo, based on detailed analysis of 330 British farms, concludes that while intensive dairy farms can be profitable, the traditional 'extensive' system of putting cows out to pasture can be even more so. Likewise, both can lose money hand over fist: it all depends on how well they are run. Recent research suggests that the most profitable operations may make as much as 30p more per litre of milk than those making the biggest losses.

Efficiency is the key, and the good news is that the economic, environmental and ethical pressures are all pushing in the same direction on this front. "The more efficient farmers", says Huw Bowles, "are also the more profitable ones, and tend to have a lower carbon footprint." Money talks, he adds, and as the cost of energy, mains water, bought-in feeds and fertiliser grows, farmers will focus on how to eke them out. Proposed reforms of the Common Agricultural Policy, recognising the need to feed a growing population and reduce environmental impact, are also likely to increase the flow of funds towards efficiency measures.

Investment is crucial, so it must be good news that farm-gate prices are likely to go up. The rising world commodity price for skimmed milk powder has put a floor in the British market, and increasingly British farmers are forming co-ops on the Continental model to beef up their bargaining power. Now, Huw Bowles explains, they can say: 'If you're not going to pay us more for our milk, we'll turn it into powder and sell it to China or India.'

For their part, the big supermarkets are now offering more realistic prices (though as yet, say producers, only for liquid milk). Tesco, whose offices were once picketed by angry dairy farmers, now pays enough to allow its suppliers not just to stay in business but to invest in better plant and better cows. Indeed, many retailers, concerned to be seen as socially responsible, now pay their suppliers a premium for milk that meets higher environmental and welfare standards. Waitrose buys its 'essential' range milk from a pool of 65 UK farmers, working with them to improve biodiversity and animal welfare, and paying them a premium. "This is great for us and great for our farmers", explains Agriculture Manager Duncan Sinclair, "as it allows them to invest in their businesses."

When Compassion in World Farming launched its Good Dairy Awards last year, the winners included not only the usual suspects – Yeo Valley, Ben & Jerry's, Green & Blacks – but also Asda, which had made a commitment that cows must have access to pasture, for example, and male calves would not be shot at birth or exported.

As Dairy2020 prepares to launch its vision on April 16, along with a set of guiding principles and draft actions for the industry, there is a sense that things are looking up. "I certainly feel more optimistic now than two or three years ago", says dairy farmer Julia Hawley. "Increasing numbers of farmers are interested in their environmental impact. The processors, too, are very focused on water and energy efficiency and there is pressure coming down through the supply chain to reduce GHGs."

The challenge is to come up with a single global standard that the Unilevers of this world can buy into

At WWF-UK, commodities expert Richard Perkins feels the dairy industry is taking responsibility for its emissions. The challenge now, he argues, "is to come up with a single global standard – covering GHGs, diffuse pollution and biodiversity, as well as how the cows are – that the Unilevers of this world, who have their own public commitment to sustainable production, can buy into".

Ivana Gazibara agrees: "Now, there needs to be a formal mechanism to take these good intentions forward. It needs to be accountable to all the industry stakeholders – whether that's farmers and processors, or civil society and animal welfare groups. And there needs to be a mechanism for monitoring progress, and reporting on it transparently, with regular check-ins to see what's still to be done."

Shifting the dairy system

Dairy2020 aims to help organisations and individuals throughout the whole of the UK dairy sector find creative solutions to shared challenges. It's exploring everything from new investment models to help farmers invest in sustainability and enjoy its returns, through to ways of engaging more effectively with the end consumer about the nutritional benefits of milk.

Over the course of five workshops, some 40 organisations across the dairy supply chain – from industry representatives and policy makers to manufacturers and retailers to farmers – agreed on a set of principles to make the sector both responsible and resilient. Among them were Arla, Asda, DairyCo, Dairy UK, Danone, the Department for Environment, Food and Rural Affairs (Defra), First Milk, the National Farmers' Union (NFU), Sainsbury's and Volac.

The challenges that UK dairy faces on the road to sustainability are too difficult for any organisation to tackle alone. That's why Forum for the Future is working with a range of players from across the system on the most important issues, such as biodiversity, animal welfare and the importance of investing in innovation. Our impact will be greater if we can harness all their energy and innovations towards the same goal, through shared principles and action plans. This 'systems innovation' approach is at the heart of Forum for the Future's ambitious new strategy. - Sally Uren is Deputy Chief Executive, Forum for the Future.

Milk of kindness?

In the future, when economic conditions improve, and as public perceptions change, we may see greater demand for free-range, and even fair-trade, dairy products. A pilot venture is bringing slaughter-free milk to the market, with the guarantee that no cow, calf or bull is ever killed as part of its production. The brand, Ahimsa, is inspired in part by Eastern principles of non-violence, compassion and respect for cows. The milk is expensive, at £2.40-a-litre delivered to doorsteps, and available from pick-up points in London and towards Luton. Another new brand, Cow Nation, promises long lives for a small herd grazing pastures and marshland in Suffolk. Its milk is on sale from Selfridges and online retailers at a similar price. But these will only ever be niche products. British milk is likely to become an increasingly polarised industry, perhaps following the example of Denmark, where some 20% of milk consumed is organic, but almost all of the rest is from zero-grazed cows.

Tech to the rescue

Raising cows for their milk is an ancient practice, but it can always be refined by advances in technology. For example, sensors in a collar worn by the cow or a pressure pad beneath her feet in the milking parlour can detect the first signs of lameness, long before a human could, so that it can be dealt with before it becomes acute.

The Technology Strategy Board is providing funding for a £1.4 million project to develop a smart collar in a joint project involving The University of Strathclyde, Morrisons, the Scottish Agricultural College (SAC) and Embedded Technology Solutions – a Strathclyde spin-out company which is developing the product, among others. The collar uses the same sensor as used in Wii gaming to monitor the cow's movement and balance, and can send a health report to the farmers via a mobile signal. In the future, farmers could receive texts alerting them to any to distress in the dairy.

Good news for Daisy, but what about her offspring? Increasingly now, farmers are buying sexed semen, to reduce the number of unwanted male calves. The mapping of the bovine genome, completed in 2004, is allowing breeders to select for traits that suit their system of farming or that are generally desirable, from high butterfat content, to resistance to disease, to efficient digestion that produces less methane and more milk.

And what about the cows' own diets? Research into additives to cattle feed that might reduce belching – including linseed and garlic – has yet to achieve much, but new varieties of forage crops hold promise. Aberystwyth University is working to improve strains of sugar-rich rye grasses and high-protein red clover to help cows produce more milk per hectare of feed.

Huw Spanner is a freelance writer and editor. Additional material by Anna Simpson.

Photos: iStockphoto / Thinkstock

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