Sustentabilidade na Cadeia de Produção de Leite na Europa

Prof. Cesare Zanasi (Univ. Bologna)

EU COW MILK GLOBAL RELEVANCE

SOURCE: http://www.clal.it/?section=produzioni_popolazione_world

The EU dairy BALANCE SHEET

The milk chain in EU – structure

KEY CHARACTERISTICS OF THE SUPPLY CHAINDairy markets are very diverse,• different products (yoghurts, cheeses hard and soft, liquid milk, cream and

butter, high value added ingredients)

• different sizes • different competition situation (local, national, European), • different seasonality,• different logistics due to shelf life.It is not possible to consider these markets as a single global market which can be

managed in a single way.

Sourcehttp://ec.europa.eu/agriculture/markets/milk/hlg/eda_bl1doc1_en.pdfhttp://ec.europa.eu/agriculture/markets-and-prices/market-statistics/pdf/2014/d20-1-420_en.pdf

The milk chain in EU – structure

• Whilst a large and growing proportion of the industry’s output is higher value added items, a significant proportion still has commodity characteristics, i.e. products of identical specification in which competition is focused on price.

• The supply chain is extremely diverse.

• There is a large ingredients market both in the EU and overseas and a growing catering and out-of-home sector.

• There are enormous variations in supply chain relationships. Some customers are committed to particular suppliers but in many cases commercial relationships are unstable and of short duration.

The dairy chain in EU – structure

There is a much higher degree of concentration amongst retailers than there is in dairy processingThe valuation of raw milk is central to the competitiveness of processors.Raw milk is usually the largest single cost component for dairy processors.For cheese it can constitute up to 80% of the wholesale price.For liquid milk it can be over half.

After raw milk costs, the majority is accounted for by energy or energy related costs and labour costs. For liquid milk the cost of packaging is very significant.

Farmers own a significant portion of processing capacity. Co-ops are estimated to account for nearly half of EU processing capacity.BUT FARMERS ARE GETTING OLDER AND STILL REPRESENT THE WEAKEST LINL IN THE VALUE CHAIN

The milk chain in EU – structurehttp://ec.europa.eu/agriculture/markets/milk/hlg/eda_bl1doc1_en.pdf

http://ec.europa.eu/agriculture/markets-and-prices/market-statistics/pdf/2014/d20-1-420_en.pdf

http://ec.europa.eu/agriculture/markets/milk/hlg/eda_bl1doc1_en.pdf

http://ec.europa.eu/agriculture/markets-and-prices/market-statistics/pdf/2014/d20-1-420_en.pdf

The EU dairy market

GLOBAL DEMAND INCREASEThe OECD and FAO, in their most recent Agricultural Outlook report, predict that global dairy demand will grow by around2% per annum up to 2023.

http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&reference=PE-541.637&format=PDF&language=EN&secondRef=01

End of quota system will increase EU markets volatility

EU encourages competition on quality and not on price

RELEVANT EONOMIC – SOCIAL AND ENVIRNOMENTAL ROLE OF DAIRY

PRODUCTS FOR EU

In molte aree svantaggiate e regioni ultraperiferiche, la produzione lattiero-casearia rimane l'unica fonte di reddito e di occupazione delle aziendeagricole. La sua sopravvivenza è essenziale per evitare l'abbandono delleterre.

In quanto componente chiave dell'industria agroalimentare presenta un forte potenziale di crescita e creazione di posti di lavoro nel lungo termine che dovrebbeessere uno degli obiettivi del nuovo piano di investimenti;

How decisions and implementation of sustainability work

Pro-sustainability Campaigns(e.g. Soy moratorium)

Investors become aware of possible damages to companies reputation

Producers/Processors/ Retailerstake action and participate in the Sustainability guidelines definition

Many private or third party voluntary sustainability initiatives emerge (e.g. Sojaplus)

Governments regulation follow and integrate or regulate sustainability initiatives or schemes (e.g. Organic in EU)

Media – Researchers – civil society organizations – International bodies ( e.g. FAO) provide info on sustainability challenges

Producers/Processors/ Retailers adapt to sustainability schemes and regulations

It is important to understand what the Industry Retailers and Investors want in terms of sustainability

SUSTAINABILITY

INVESTORS PERSPECTIVE

SUSTAINABILITY

INVESTORS PERSPECTIVE

SUSTAINABILITY

INVESTORS PERSPECTIVE

http://www.fdfworld.com/supplychain/85/Nestle-UK-Ireland-Builds-a-More-Sustainable-Dairy-Supply-Chain

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

Nestle UK & Ireland Builds a More Sustainable Dairy Supply Chain

Nestlé has been encouraging its suppliers along its supply chain to • reduce emissions • develope biodiversity-based farming techniques.

Local creameries have been making efforts to • reduce water consumption,• reduce greenhouse gasses,• improve the proportion of milk which comes from forage, • plant wildflowers to attract and encourage the resurgence

of native flora and fauna species.

http://www.fdfworld.com/supplychain/85/Nestle-UK-Ireland-Builds-a-More-Sustainable-Dairy-Supply-Chain

http://www.edie.net/news/6/Nestle-secures-sustainable-milk-supply-chain-for-Kit-Kat-and-Nescafe/26574

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

Achieving these goals means working closely with its suppliers, and Nestlé UK & Ireland is reportedly reaching out with special incentives to make the initiative worthwhile for both parties. Media reports that Nestlé offered UK-based dairy company First Milk a competitive pay rate for its dairy supply in exchange for their cooperation and help in this endeavor.

If repeated and sustainable success is achieved, it seems likely that other divisionsof Nestlé global operations will pick up the mantle and start moving toward a more sustainable dairy supply chain as well.

Nestle UK & Ireland Builds a More Sustainable Dairy Supply Chain

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

British dairy supply chain a ‘global leader’ in terms of environmental sustainability: Industry reportBy Mark Astley+ , 26-Jun-2013The British dairy supply chain – comprising farmers, processors and retailers – is a “global leader” in terms of environmentalsustainability, an industry-funded report has claimed.http://www.dairyreporter.com/Manufacturers/British-dairy-supply-chain-a-global-leader-in-terms-of-environmental-sustainability-Industry-report

UK Dairy Chain sustainability requirements

SOURCE: http://www.danone.com/en/for-all/mission-strategy/our-strategy/a-sustainable-food-chain/

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

DANONE and Sustainability

Danone has today identified four key focus areas for their engagements looking ahead to 2020

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

Source EU dairy industry EDAhttp://eda.euromilk.org/fileadmin/user_upload/Public_Documents/Fact_Sheet/Sustainability/2015_06_16_EDA_one-pager_on_preventing_food_wastage_in_t.pdf

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

EUROPEAN DAIRY ASSOCIATION (EDA)

Topics discussed

• Food Waste: Waste revision targets and packaging waste

• Animal Nutrition: Feeding dairy cows with sustainable soy

• Environmental Foot Printing

• Water Re-use

• References for Emissions Techniques

• Influence of Agricultural Policy on Rural Development

• The Global View on Dairy Sustainability

http://eda.euromilk.org/fileadmin/user_upload/Public_Documents/Annual_Report/EDA_Annual_Report_2014.pdf

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

EUROPEAN DAIRY ASSOCIATION (EDA) SUSTAINABILITY FRAMEWORK

Dairy Sustainability Framework (DSF): developed and managed by the Global Dairy Platform (GDP)

• Shall give guidance to the dairy sector worldwide as to how to work towards improvement of its sustainability

• Allows the sector and industries working in the sector to develop coherent communication on the progress made on the road to improved sustainability.

SOURCE: http://eda.euromilk.org/fileadmin/user_upload/Public_Documents/Annual_Report/EDA_Annual_Report_2014.pdf

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

INDUSTRY PERSPECTIVE

EUROPEAN DAIRY ASSOCIATION (EDA) PROJECTS

Product Environmental Footprint (PEF) project: The highest visibility and most probably the deepest strategic impact work in sustainability according to EDA

CO2 Emissions and the Emission Trading Scheme (ETS)

Best Available Techniques Reference Document (BREF)The BREF concept has been introduced to build up a technical performance benchmark for different industries with regards to a variety of emissions from production plants, and the part looking at the food industry includes the milk processing industry

What is the Policy context?

1 Climate change and clean energy

2 Sustainable transport

3 Sustainable consumption and

production

4 Conservation and management of

natural resources

6 Public health5 Social inclusion, demography and

migration 7 Global poverty and Sustainable

Development challenges

SEVEN KEY CHALLENGES

25

EU Sustainable Development Strategy (EU SDS)

EU food Sustainability future strategy

Source: DG Agriculture and Rural Development.

The CAP post-2013: From challenges to reform objectives

EU food Sustainability future strategy

Source: DG Agriculture and Rural Development.

The new greening architecture of the CAP

THE EU POLICY FOR MILK

THE MILK PACKAGE

http://ec.europa.eu/agriculture/milk/milk-package/com-2014-354_it.pdf

Financial support to milk producers in disadvantage areas to prevent rural migration and environmental degradation

No other measures directly linked to sustainabilityMain concern is preventing price volatility, frauds, protect producers from risks and in general promote the sector demand both internally and internationally

THE EU POLICY FOR FOOD CHAINS

High Level Forum for a Better Functioning Food Supply Chain published its final report on 15 October 2014, concentrates its discussions and/or actions in the following areas:

- business-to-business trading practices, - the Internal Market for food and drink products,- sustainability, - social dialogue and food price monitoring.

EDA is following the work carried out by the High Level Forum via the Food & Drink Europe B2B platform

http://www.interregdairyman.eu/upload_mm/0/f/1/732f3eac-fe02-461e-961d-1170e3a9a623_Rapport%20Dairyman%20Regional%20sus_LR.pdf

http://ec.europa.eu/environment/agriculture/index.htm

CAP and dairy see pag.12http://ec.europa.eu/agriculture/milk/milk-package/com-2014-354_en.pdf

The HIGH LEVEL EXPERTS GROUP (HLG) should considerhow the EU can mobilize resources to invest in first order R&D into, among

others, agricultural productivity and how dairy can make a contribution to climate change mitigation

The EU dairy industry does not have the resources to engage in first order scientific research.

EDA RECOMMENDATIONS TO RESEARCH

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

ACADEMIC PERSPECTIVE

Source:http://orgprints.org/21761/7/21761.pdf

SUSTAINABILITY OF DAIRY SUPPLY CHAIN

ACADEMIC/INDUSTRY PERSPECTIVE

The conference will analyse environmental sustainability along the dairy supply chain, Various aspects of resource efficiency, • Waste transformation along the supply chain• Packaging • Feeding• Sustainable Dairy farming systems• Water consumption• Milk processing: sustainable innovations• Link between environmental sustainability and nutrition