Dairy

Global demand for dairy is expected to increase by approximately 60 percent by 2050, driven by population growth and rising incomes. The greenhouse gas emissions from dairy production are significant – generated from crop production for animal feed, methane produced by cows digesting their feed and their manure.

This brief provides a summary of the main environmental and social factors that affect dairy production worldwide; however, it spotlights key players in the U.S. value chain, and provides examples of actions being taken by companies operating or headquartered in the U.S.

KEY TAKEAWAYS

  • Global demand for dairy is expected to increase by approximately 60 percent by 2050, driven by population growth and rising incomes.
  • The greenhouse gas emissions from dairy production are significant. In the U.S., the dairy industry accounts for around 2 percent of the country’s total GHG emissions. More than half of dairy’s GHG emissions are generated from crop production for animal feed, from methane produced by cows digesting their feed and from their manure.
  • Dairy production can contribute to water pollution when manure and synthetic fertilizer (used for crops to feed cows) are not managed properly.
  • Water scarcity poses risks to dairy production. In the U.S., the dairy industry accounts for 5 percent of total water withdrawal, over 90 percent of which is used to produce feed for cows.
  • Investors should address risk in the dairy supply chain through direct engagement with their portfolio companies and by supporting relevant policies and multi-stakeholder collaborations.

Environmental and Social Factors that Drive Risks

Commodity Background

In the U.S., the three biggest dairy product segments (based on revenue) are cheese, milk and milk products, and dry and condensed milk products. Other common products sold in the U.S. include butter, ice cream, cottage cheese, and yogurt.

Top Production Regions

The U.S. and India are the two biggest producers of fresh whole milk

(though together they account for less than 25 percent of total production).

CERES

Supply Chain

Some segments in the U.S. dairy products value chain are highly concentrated. 

The U.S. dairy supply chain is highly concentrated. The number of dairy operations has declined and the number of cows per operation has risen to meet increasing U.S. demand. 

CERES

Company Examples

Danone

Danone’s goal is to have at least 75 percent of its milk supply in compliance with its sustainable agricultural practices by 2020. Its program aims to improve and audit environmental practices, including water and energy consumption, use of fertilizers and manure, waste handling and wellbeing of animals. It provides a methodology customized for small milk producers.  

General Mills

General Mills committed to purchasing 100 percent of its directly sourced fluid milk by 2020 from producing regions that demonstrate continuous improvements as measured by the Dairy Sustainability Framework in the U.S. and other comparable environmental metrics globally. 

Unilever

Unilever committed to sustainably sourcing all of its agricultural raw materials by 2020, a commitment that includes the milk it uses in ice creams and margarines. To promote this goal, it developed a Sustainable Agriculture Code (SAC), which is a set of requirements for suppliers and farmers of raw materials, and implementation guides with specific advice for livestock farming and animal welfare.