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Supply Chain
The Dairy Industry’s Next Competitive Advantage:
Saving Money and Building Better Products with Climate-Friendly Cows

A penguin and a cow walk into a bar. The cow says, "We have a problem. Every year cows emit so much methane into the atmosphere - the equivalent of fifty-times more CO2 than the entire country of Switzerland! It's killing our image. We don't know what to do." The penguin pondered for a moment and replied, "Maybe it's something you ate."

Indeed, dairy and beef cattle production contribute to 9% of global greenhouse gas (GHG) emissions, mainly due to the fact that cows belch significant amounts of methane, a greenhouse gas around 25 times more potent than carbon dioxide. With the fight against climate change high on the global agenda, the agricultural sector is coming under increasing pressure to take more action.

According to the Food and Agricultural Organization (FAO) of the United Nations, “The need to reduce the agricultural sector’s emissions and its environmental footprint has become ever more pressing in view of its continuing expansion to ensure food security and feed a growing, richer and more urbanized world population.“

FAO’s message has been echoed by the European Union: This past summer, the European Environment Ministers at the EU Council debated a proposed directive for the reduction of national emissions of atmospheric pollutants. The draft of the new National Emissions Ceiling (NEC) Directive aims to set out new caps for emissions of air pollutants, including for the first time a requirement to cut methane emissions by 30 percent by 2030. The directive is currently being reviewed as part of the EU Clean Air Policy Package and will replace the current EU regime on the annual capping of national emissions of air pollutants.

In short, acting on methane emissions along the supply chain will soon no longer be an either or question for the dairy industry and the agricultural sector as a whole.

As the world’s appetite for dairy and meat continue to swell, agriculture has become a bigger cause of global warming than deforestation or global air travel, mostly due to the methane released by livestock farming. For the 21st century dairy industry, the main challenge is now to reduce greenhouse gas emissions while increasing production efficiency to meet the growing global market demand for dairy foods and milk.

But what kind of dairy farmer would say no to investing in a safe and climate friendly way to reduce emissions, increase milk yield and lower costs? In this day and age sustainability, productivity and competitive advantage are tight-knit, and innovative collaboratives are already starting to pave the way for climate smart agriculture.

Climate KIC, South Pole Group and Agolin SA, a Swiss producer of feed additives for livestock, have partnered to carry out an innovation project called RuMeClean (Reduced Methane from Ruminants). The goal of the project is to ensure the adoption of feed additives that have a proven potential to reduce methane emissions from ruminants. The RuMeClean project aims to unlock this vast and presently untapped potential for methane reduction from livestock.

Apart from helping the environment by lowering greenhouse gas emissions, feed additives like Agolin also increase milk yields, as they improve feed digestion. More food is converted into energy. This helps the farmers adopting Agolin to save money through lowering their bill for fodder. Climate neutral milk also offers interesting upsides in terms of sustainability-related communications and a premium positioning: While farmers can lower costs by improving feed digestion among livestock, dairy companies have the chance to brand a new low-emission product with guaranteed sustainability through certified standards and show true climate leadership.

The RuMeClean project involves key experts in the livestock and climate mitigation sector. It is in the process of registering an emission reduction project adopting a feed additive with the Swiss government. If successful, a worldwide application of methane reducing feed additives in key producing markets will have a huge impact on global GHG emissions in agriculture. The project is one of the innovative solutions available from the CSA Booster Organization, whose main goal is to increase the development, marketing and adoption of climate smart agriculture (CSA) solutions in Europe.

From a business perspective, CSA translates into an opportunity to make corporate climate efforts more visible and to brand low carbon products. More importantly, it offers a cost-effective way of reaching environmental targets, certifying the supply chain carbon footprint in accordance with international standards and increasing productivity.

The first movers are already moving fast in their quest for sustainable supply chains: Friesland Campina and Arla Foods, two of the world’s top five largest dairy producers, have already set ambitious supply chain emission reduction targets for 2020. These targets include reducing the emissions from dairy production in their supply chains.

Global behemoth General Mills has set an ambitious goal of reducing its greenhouse gas emissions by 28% by 2025 - from farm to fork to landfill. Among others, the company is scoping better dietary and manure management practices for new opportunities to reduce its environmental footprint. With annual sales toppling nearly $19 billion, General Mills is one of the world's largest food companies, boasting brands such as Yoplait yogurt and Haagen-Dazs ice cream.