Meeting consumer demands for dairy in a low carbon world


An opinion piece by René Dedoncker, Fonterra Australia Managing Director

Providing a growing global population with more sustainable and healthy food is one of the world’s big challenges. According to estimates compiled by the Food and Agriculture Organization, by 2050 we will need to produce 60 per cent more food to feed a world population of 9.3 billion.

As the growth of plant-based alternatives to meat and dairy is showing no signs of abating, the vocal voice of the consumer means food companies are looking at the impact they have and ways to reduce their environmental footprint.

It’s no secret that consumers around the world want to know the bigger story of where their food comes from. They want to know that as food producers, we are taking our responsibility for the environment seriously and they want to know what we’re doing about it.

As a dairy nutrition company that exports to 130 countries, we know that one size doesn’t fit all. With markets at different stages of their sustainability journey, consumers have different expectations.

In highly developed markets like Australia and New Zealand, consumers want to see companies leading on emerging issues of biodiversity and lower carbon.

While in other important markets in Southeast Asia it’s about using environmental credentials to support better nutrition outcomes, along with food safety and quality reassurance – so, sustainability is more about nutrition and care for animals.

Pure dairy claims – non-GMO, no growth hormones and the like – command price premiums in Southeast Asia and North America, more than claims like low-carbon, which less developed markets historically haven’t treated as a priority.

Although this is changing. As markets in Southeast Asia grapple with pollution of waterways and haze from land-clearing burn offs, they’re increasingly turning their focus to the environmental impact of the foods they consume and the packaging it comes in.

Regardless of a consumer’s motivation for the choices they make, one thing is for certain – where their milk comes from matters.

At Fonterra, we know that sustainability is our responsibility. It’s at the heart of our businesses right across our global footprint – it’s core to our strategy and we take it seriously.

We know we have a role in dealing with the world’s great challenges. Issues such as public health, climate change, waste and nutrition all need leadership and collaboration. Businesses, such as ours, have a unique role to play.

As part of our commitment, we are adopting a regenerative mindset rather than just ‘doing enough’ to tick a box.

By 2030 we will have reduced our carbon emissions by 30% from our own manufacturing and transport operations, and we’re on track to achieve this in Australia.

We voluntarily switched off from using coal boilers at all our Australian factories in 2012 and we have recently committed to removing coal boilers globally from our sites.

In 2018 we removed all the problem refrigerants from our Australian operations. These are the most potent greenhouse gasses and while we only had a few chillers with these, it all makes a difference.

Importantly, our remuneration scheme now includes elements of our environmental targets including emission reductions and reducing waste.

Although managing our own manufacturing footprint is one thing, there’s still the question of how the milk is produced before it hits our factories.

Over a decade ago we began building a common accounting framework for dairy farm emissions within the International Dairy Federation. Using this framework we know the emissions intensity of Australian dairy is well below the global average.

Although there’s still work to be done. We know that reducing emissions on-farm is a pressure point and there are increased expectations that we help provide solutions, with the majority of the emissions in dairy coming from methane from cows.

The methane is created as cows digest their feed, so we’ve partnered with a start-up called Sea Forest to trial whether using small amounts of Asparagopsis seaweed in cows’ feed can reduce greenhouse gas emissions. It’s important that we can do this in a way that’s safe for the cows and for the milk.

We’re not experts in methane emissions, so we rely on specialists like CSIRO and Future Feed to test the effectiveness on reducing methane. We make a difference by doing what we are good at, which is making commercial dairy foods that are safe and profitable for all parts of the supply chain.

If seaweed proves to be effective, and we’re cautiously optimistic about it, then we hope our trial will have made it easier and faster to take seaweed to scale in many dairy herds.

So whether consumers are looking for companies transitioning to a low-carbon future, reducing the waste sent to landfill, or ensuring the health of herds – dairy has a role to play in feeding the world’s population.

In turn, by our business doing what is right for the environment, we can create distinctiveness for our brands to drive consumer preference and loyalty, which, over time, creates value.

Through this virtuous circle we see how sustainability is an edge for Fonterra, and not just a license to operate.