2011 U.S. Dairy Sustainability Report Executive Summary

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2011 U.S. Dairy Sustainability Report Executive Summary

2011 U.S. Dairy Sustainability Report

Executive Summary

U.S. DAIRY SUSTAINABILITY

COMMITMENT


Welcome

Welcome to the 2011 U.S. Dairy Sustainability Report Executive

Summary, a condensed version of the full sustainability report,

which is available at USDairy.com/Sustainability/Report. This

report summarizes efforts led by the Innovation Center for U.S.

Dairy ® to support the industry’s sustainability commitment.

Taking the long view, we recognize that the dairy industry

must meet growing global food needs efficiently and

responsibly, while conserving the planet’s precious resources.

Accordingly, sustainability has become a key business strategy

for the industry and its future development.

Over the years, we have been addressing sustainability challenges and identifying

opportunities across the dairy value chain. Highlights of our 2011 efforts, which are

described further inside, include:

> Putting science into the hands of decision makers: Building upon life cycle assessment

(LCA) findings, we developed and tested a suite of tools that help dairy farms and

companies adopt beneficial and sustainable outcomes.

> Developing a measurement and reporting framework: We launched the Sustainability

Measurement and Reporting Framework for U.S. Dairy, an industrywide initiative to create

a standard framework for measuring and communicating the environmental, social and

economic aspects and impacts of the industry.

> Recognizing innovation excellence: We partnered with stakeholders to launch the U.S.

Dairy Sustainability Awards program, which recognizes efforts that deliver outstanding

benefit to business, community and the environment.

We are prepared and committed to build on the momentum we have established and look

forward to hearing your thoughts about our progress at InnovationCenter@USDairy.com.

Tom Gallagher

CEO, Innovation Center for U.S. Dairy

and Dairy Management Inc.

250

Stakeholder Participation

(number of formal participants)

834

Each year, an increasing number of stakeholders from

within and outside of the dairy industry contribute

time and expertise by serving as members of the

Sustainability Council (which added 22 new members

in 2011) and Innovation Center-led project teams

and working groups. We also benefit from working

with our key partners: Center for Advanced Energy

Studies, U.S. Department of Agriculture (USDA) and

World Wildlife Fund.

Sustainability

Vision

We commit to being

leaders in sustainability,

ensuring the health and

well-being of our planet,

communities, consumers

and the industry.

Larry Jensen

Chair, Innovation Center Board of Directors

and President, Leprino Foods Company

Supplemental Funding

(cash and in-kind contributions)

0

2008 2009 2010 2011 2008 2009 2010 2011

$10M

8

6

4

2

$1.45M

$8M

Funding from investors continues to augment farmer

support from the checkoff program. Supplemental

funding includes grants, awards, financial support

from key stakeholders and in-kind contributions

from formal stakeholder participation. 2011 funding

increased by 21 percent from 2010 and included $1.16

million from USDA’s Natural Resources Conservation

Service Conservation Innovation Grants.

Sustainability and Nutrition

Consumers increasingly expect that we not only produce

high-quality and great-tasting products at an affordable price,

but that we produce those products responsibly by protecting

natural resources and supporting communities. As such, the U.S.

dairy industry is taking a leading role in promoting sustainability

and providing consumers with the nutritious dairy products

they want in a way that makes our industry, the earth and its

people economically, environmentally and socially better — now

and for future generations.

“It’s hard to find

any other single

food that will give

you the levels of

nutrients you get

in dairy.”

Robert P. Heaney, MD

Professor of Medicine at

Creighton University School

of Medicine

What’s in this glass is at the heart of all we do.

Milk is a valuable source of essential nutrients that promote good health: calcium,

potassium, vitamins A, D and B12, protein, phosphorus, riboflavin, magnesium and zinc.

ENVIRONMENTAL

Innovations and efficiency

improvements have enabled

the industry to reduce the

environmental impact of a

gallon of milk.

SINCE 1944:

90% less cropland

76% less manure

65% less water

63% less carbon

We are continuously

improving through

partnerships,

research and

projects.

OUR FIRST

GOAL

25%

GREENHOUSE

GAS REDUCTION

FOR FLUID MILK

BY 2020

~25¢

LOW COST

PER SERVING

SOCIAL

A wholesome choice for a

healthy, active lifestyle, dairy

products taste great and

deliver essential nutrients.

HEALTH BENEFITS:

Bone health

Weight management

Exercise recovery

ECONOMIC

Dairy products are affordable and readily available.

• Milk is the lowest-cost food source of dietary calcium.

• Adequate dairy consumption can lower risk of certain chronic

diseases, which has the potential to lower healthcare costs

by as much as $200 billion over a five-year period.

Dairy farms support rural economies in all 50 states.

>90%

OF SCHOOLS PROVIDE

LOW-FAT AND/OR

NON-FAT MILK

Citations are provided in the full version of this report available at USDairy.com/Sustainability/Report.

18%

OF PROTEIN

IN AMERICAN

DIET IS

PROVIDED

BY DAIRY

PRODUCTS


Our Approach

The Innovation Center is leading sustainability efforts in four key areas: research, goals, innovation projects, and measurement and reporting.

2008 – 2009 2010 2011 2012 2013

BEGINNING WITH SCIENCE: LCA research helps us understand the industry’s environmental impacts and prioritize improvement efforts across the dairy value chain.

Greenhouse Gas (GHG) LCA for Fluid Milk – Completed in 2012; findings submitted for publication.

GHG Results: 17.6 lbs. of carbon dioxide equivalents (CO 2

e) per gallon of milk consumed.

Comprehensive LCA for Fluid Milk – Started with focus on water with ongoing study of land use, nutrient cycles and other impacts

On-farm water assessment completed in 2011; findings to be released in 2012.

Processing and Packaging LCA – Completed in 2011; findings to be released in 2012.

Comprehensive LCA for Cheese – Completed for Cheddar, mozzarella and natural

cheese in 2011; with initial GHG results released.

GHG Results: Lbs. CO 2

e per lb. of cheese consumed

Cheddar

8.7

Mozzarella

7.5

Natural Cheese

8.3

SETTING GOALS: We set voluntary industrywide goals and published a roadmap to achieve the first goal: reduce GHG emissions for fluid milk by 25 percent by 2020.

TRANSFORMING RESEARCH INTO RESULTS: Our GHG reduction projects aim to reduce GHG emissions by approximately 11 percent and deliver an estimated $238M in business value across the value chain.

MEASURING AND REPORTING: Research findings contribute to the development of an industrywide framework to measure and report sustainability performance.

CONTRIBUTION OF U.S. DAIRY INDUSTRY TO U.S. GHG EMISSIONS

U.S. GHG Emissions = 7,168 Tg CO 2

e

U.S. Dairy Industry: ~2%

The GHG LCA for Fluid Milk, in conjunction

with other studies, shows that dairy

contributes less than 2 percent of total

U.S. GHG emissions.

Sustainability Measurement and Reporting Framework for U.S. Dairy project launched.

Fall 2011–Summer 2012: Develop guiding principles; identify and define indicators

for initial topics:

Economic: local economic impacts

and product differentiation

Environmental: energy, GHG emissions,

water quantity and quality

Social: working conditions, animal care,

community contributions

Summer: public review of draft

guiding principles and environmental

indicators and metrics.

Winter: public review of social and

economic indicators; update principles

and Framework.

January: Submission of draft Framework

to Innovation Center Board for approval.

Topics for consideration after 2012:

Economic: value across the supply

chain, financials and others

Environmental: waste, biodiversity/

land use, crop production and others

Social: food safety, health and nutrition,

and others

As part of the Framework project, work is under way to identify indicators to measure and report on the social and economic dimensions of the dairy industry.

SOCIAL

The dairy industry is an integral part of our nation’s heritage: from the role that nutritious

dairy products play in our diet to the strong ties with our communities.

> Workforce: One of dairy’s strongest community ties lies in the approximately 900,000

jobs created by our industry. As such, we place a high value on workforce availability

and retention (an industry challenge), safety, training and employee benefits.

> Animal Care: In late 2010, the National Milk Producers Federation started the National

Dairy FARM Program: Farmers Assuring Responsible Management (FARM), a nationwide

verifiable program that addresses animal well-being. At year-end 2011, nearly half of the

nation’s milk supply came from participating producers.

> Community Contributions: Individually and collectively, companies across the industry

actively support charitable hunger relief and food aid efforts, and raise awareness

of healthy lifestyle choices that help combat issues such as malnutrition and obesity.

America’s dairy producers have pledged $250 million over five years to the Fuel Up to

Play 60 program to improve children’s health.

ECONOMIC

Dairy’s supply chain generates economic benefits at the local, regional and national levels

through employment, local tax revenues and purchases of products and services. Every

dollar spent locally by a dairy producer creates a multiplier effect of more than two and a

half times the original dollar spent.

> The United States is the largest producer of cow’s milk in the world, and dairy is the

fourth largest agricultural commodity in the U.S. Dairy’s on-farm revenues are $31.4

billion, contributing 10 percent of total receipts from sales of agricultural commodities.

> Farms and dairy processors operate throughout all 50 states.

9.1 MILLION COWS

ON MORE THAN

53,000 FARMS

PRODUCED

192.8 BILLION

POUNDS OF MILK

1,200

DAIRY PLANTS

PRODUCED A

VARIETY OF DAIRY

PRODUCTS

AMERICANS

SPENT ~6%

OF THEIR

FOOD BUDGETS

ON DAIRY


Dairy Value Chain: Impacts, Opportunities and 2011 Project Accomplishments

FEED PRODUCTION MILK PRODUCTION PROCESSING

PACKAGING

TRANSPORTATION/

DISTRIBUTION RETAIL CONSUMER

KEY ENVIRONMENTAL IMPACTS based on completed and ongoing LCA research

GHG EMISSIONS

key

sources

WATER QUANTITY &

QUALITY

ADDITIONAL ASPECTS

key topics

IMPROVEMENT OPPORTUNITIES

GHG REDUCTIONS

WATER MANAGEMENT

key approaches

fertilizer production,

energy use

biodiversity, land use

energy efficiency,

agricultural systems

improvements

cows (enteric),

manure, energy use

biodiversity, land use,

air quality

feed efficiency,

manure management,

energy efficiency

energy use

energy efficiency,

new technology

energy use,

materials

fuel use,

refrigerants

energy use,

refrigerants

unused/

expired

products

packaging materials waste to landfill waste to

landfill

energy efficiency,

sustainable materials

fuel efficiency, fuel

type, driver habits

energy efficiency,

waste reduction,

recycling

waste

reduction,

recycling

GHG REDUCTION PROJECTS: 2011 ACCOMPLISHMENTS

ON FARM

BEYOND THE FARM

Farm Smart TM

Development and beta test of the Farm

Smart toolkit to support dairy and crop

production management decision-making

Farm Energy Efficiency TM

Launch of online resource:

USDairy.com/SaveEnergy

310 energy audits conducted

Estimated GHGs reduced:

700 metric tons

Estimated energy cost savings:

$148,000

Cow of the Future TM

Publication of paper on research

priorities for reducing dairy cow

enteric emissions

Dairy Power TM /

Biogas Capture and Transport TM

15 anaerobic manure digesters

brought online in 2011 to produce

renewable biogas

Estimated GHGs destroyed:

1.2 million metric tons

Estimated GHGs avoided:

301,000 metric tons

Dairy Plant Smart TM

and Next Generation Cleaning TM

Development and beta test of two tools within

the Dairy Plant Smart toolkit to support energy

management in fluid milk pr ocessing plants

Processing and Packaging LCA TM

Study findings on processing and packaging

white and value-added milks and creamers

submitted for peer review to be published in 2012

Next Generation Processing: UV TM

Proposed inclusion of ultraviolet (UV) illumination

in Grade “A” Pasteurized Milk Ordinance as a

technology to adjunct pasteurization process and

lower energy usage

Dairy Fleet Smart TM

Development and beta test of Dairy Fleet Smart

tool to support fuel and cost reductions in milk

transport and distribution of dairy products

Learn more about each project at USDairy.com/Sustainability and in the 2011 U.S. Dairy Sustainability Report.


2012 U.S. Dairy Sustainability Award Recipients

In 2011, the Innovation Center launched the U.S. Dairy Sustainability Awards program

with award sponsors Elanco, U.S. Dairy Export Council ® and the Center for Advanced

Energy Studies/Idaho National Laboratory. The awards recognize efforts that advance the

sustainability of the dairy industry by delivering benefits to business, community and the

environment. Program supporters include World Wildlife Fund, USDA, MilkPEP and the Dairy

Research Institute. ®

We are honored to present the inaugural award recipients.

Elanco Award for Outstanding Dairy Farm Sustainability

Blue Spruce Farm | Bridport, Vermont

Holsum Dairies, LLC | Hilbert, Wisconsin

Werkhoven Dairy, Inc. | Monroe, Washington

U.S. Dairy Export Council Award for Outstanding Dairy Processing &

Manufacturing Sustainability

Darigold, Inc. | Seattle, Washington

Honorable Mention

Oakhurst Dairy | Portland, Maine

Center for Advanced Energy Studies/Idaho National Laboratory Award

for Outstanding Achievement in Energy

DF-AP, LLC | Gooding, Idaho

Brubaker Farms | Mount Joy, Pennsylvania

The Innovation Center for U.S. Dairy provides a forum for the dairy industry to work together precompetitively

to address barriers and opportunities to foster innovation and increase sales. The Innovation

Center aligns the collective resources of the U.S. dairy industry to offer consumers nutritious dairy

products and ingredients, and promote the health of people, communities, the planet and the industry.

The Innovation Center was founded through the farmer-funded dairy checkoff program in 2008.

For more information about the Innovation Center, visit USDairy.com.

For citations and references, and to view the full version of this report which follows the Global

Reporting Initiative Reporting Framework V3.1, visit USDairy.com/Sustainability/Report.

We welcome your feedback on this report at InnovationCenter@USDairy.com.

©2012, Innovation Center for U.S. Dairy. All rights reserved.

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