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					Sustainability
overview




                 November 11th, 2009 
                                      +
• Provide a forum for the entire dairy industry to work together to offer 
consumers the products they want—when and where they want them—
and increase dairy sales through pre-competitive collaboration. 

• Combine the collective resources of the industry

• The Board of Directors for the Innovation Center represents leaders of
more than 30 key U.S. producer organizations, dairy cooperatives,
processors, manufacturers, and brands

• The Innovation Center is supported and staffed by Dairy Management 
Inc.™


                                                                             2
     Sustainability Council Members

Associations/Academic




Producers                                       Processors/Manufacturers                Retailers
 Clauss Dairy Farms
 Gar-Lin Dairy Farms, Inc.
 Graywood Farm
 Foster Brothers Farm
 Haubenschild Farms Inc.
 Nobis Dairy Farm
 Spruce Haven Farm

Co-ops




                                                                                                    Consumer/Academic
Crop Production   Milk Production   Transport   Processing   Packaging   Distribution     Retail          NGO


        3
U.S. Fluid Milk Footprint


                                                                16.5 million

                                                                  6% electricity




                                                                  35% manure
                                                                                                            Total Emissions:
                                                                    methane
                                                                                                       28 Million Metric Tons CO2e
Footprint measured in metric tons of CO2e*




                                             5.8 million
                                              12% fuel use
                                                                   59% enteric
                                                                    methane
                                              24% fertilizer                         2.0 million
                                                                                      2% refrigerant
                                                                                                       1.9 million
                                                                                        23% fuel                                          1.0 million
                                                                                                        35% container
                                              64% soil NO2
                                                                                                          formation       0.8 million      28% refrigerant
                                                                                     75% electricity   65% raw material
                                                                                                                            100% Diesel      72% energy

                                                                                                                           Transport/
                                              Crop Production      Milk Production     Processing        Packaging                            Retail
                                                                                                                           Distribution




                                                                                                                                                             4
Stakeholder Process




                      5
Leadership

   30 Industry CEOs committed to:

      Support goals for GHG reduction at each stage of the dairy  
     value  chain from farm to retail, with an overall reduction goal for 
     the industry of 25% by 2020

     Support a portfolio of 12 projects that promise to deliver 12%
     GHG reductions and create $238 million of business value
Success to Date

 Provide overview of DMI’s/Innovation Center for US Dairy’s
 Sustainability Initiative
     Goals 25% CO2e reduction by 2020
     Projects: 12 projects across the value chain (farm to retail) including 4 
     focused on creating jobs and reducing carbon at the farm.
     Stakeholders: 30 CEO’s of dairy companies representing 70% of dairy 
     sold in US, 300 active participants
     Results: $17 mill invested, 600 volunteers engaged. 
     Need: funding for project management to get these projects to scale.




                                                                                  7
Radical Transparency (The Future?)
                             • Mobile technology-enabled information 
                               at point of sale
                             • Customized to consumer values
                             • Fast, easy, and comprehensive
                             • Connect the consumer all the way 
                               back to the farm




                                                                  8
Nutrition Scorecarding

                         Principles for Nutrition Scorecarding
                            Objective
                                 § Based on accepted nutrition 
                                   science and labeling practices
                            Simple
                                 § Based on published daily values 
                                   and meaningful amounts of food
                            Balanced
                                 § Based on nutrients to encourage 
                                   and on nutrients to limit
                            Validated
                                 § Against measures of a healthful 
                                   diet
                            Transparent
                                 § Based on published algorithms 
                                   and open-source data
                            Consumer-driven
                                 § Likely to guide better food 
                                   choices and more healthful diets




                                                                 9
Everyone is trying to measure sustainability

                    Too many “scorecarding” initiatives going on
                    Various stakeholders and indicators
                    Ultimately impact of scorecard will be at the 
                     consumer and the farm gate
                    Science is nascent and in development and needs to 
                    inform the “scorecards”.
                    Need to coordinate and close the gap of the various 
                    initiatives. 




                                                      Picture: Wall Street Journal

                                                                                     10
What is the Innovation Center’s Strategy for Sustainability?

 Assist the industry in a pre-competitive manner –lift all boats
 Identify and measure what matters, identify innovation opportunities, 
 create projects, measure results
 Innovation Center strategy is not to create a scorecard, drive 
 consistency, ease of use, relevance




                                                                          11
How we’re defining sustainability in dairy


  Work -to-date
                             We are here today 
       Producer View  
                      




      Consumer View
                                                  Prioritize
                                Define Priority   Categories
                                Sustainability
       Customer View   
                                 Dimensions


          Science



   Associations and NGOs  




                                                               12
                                                     Producer View  
Producer View                                                       




         Project Goals:

             •   To develop and test a sustainability scorecard 
                 for dairy agriculture.
             •   To enable dairy farmers to communicate the 
                 quality of the services that they provide to rural 
                 communities, the dairy industry, and dairy 
                 consumers.
             •   Create a “toolkit” that allows dairy farmers to 
                 identify and select ways of positively moving 
                 the sustainability needle in ways that are 
                 practical.
             •   Qualitative and Quantitative Producer Insights




                                                                       13
   The vision for scorecarding in dairy

                        Modeling
                          Tool
                                                       Scorecards
                                                   Scorecards

We are here today 




                       Research &
   Define Priority
                     Development of
   Sustainability                               Transparent Industry-wide
                                          Transparent Industry-wide LCAs LCAs
                     LCAs and Better                        (Earthster) 
    Dimensions                                      (Earthster) 
                      Management
                        Practices




                                                                            14
Summary

  What are Measuring: Need Alignment!!?? Alignment, materiality, correlation
  Purpose increase environmental, social health and farmer vibrancy, and enconmic 
  resiliency of value chain.  De-commoditize, differentiate, and create a healthier value 
  chain
  For whom farmers and consumer



Questions
 Can we agree to work together? Is there on scorecard?  Is there a body to facilitate 
 this? How would we move forward
 Can we start on agreeing on principles
 How can we arrive a common language to the dimensions? Even if for the moment 
 even if for the moment the indicators are not the same.




                                                                                             15
Appendix
Direction of Scorecard work




                              16
Lego Analogy




Social   Environmental Economic




                                  Coined by Greg Norris


                                                          17
                                   Corporate Reporting:
                                   GRI, Carbon Disclosure Project




                                             Plant B
                                                                    LCA Reporting
                                                                                                       Scorecards
                                                                    for the Category                   pull from 
                                                                                                       Open 
                                                                                                       Source        Good Guide
                                                                                                       Data.         Walmart

       Raw Inputs (lifecycle, 
       scorecards and standards)               Plant                                 snickers
                                                                                                         %           Target
                                                                                                                     Good 
                                                                                                                     Houskeeping
                                                                                                       Weighting
                                                 A                                                     Dependant 
        ◊ peanuts                                                                                      upon 
                                                                                                       scorecard 
        o cane sugar                                                                                   preferences

        o cocoa
                                                                                                       Scorecards
           corn syrup                                                                                 pull from 
        Milk                                                                          mars             Open 
                                                                                                       Source        Good Guide
        energy                                                                                         Data.         Walmart

        plastic                                                                                           %
                                                                                                       Weighting
                                                                                                                     Target
                                                                                                                     Good 
                                                                                                                     Houskeeping
                                                                                                       Dependant 
                                              Plant B               Who owns the category for candy,   upon 
                                                                                                       scorecard 
                                                                    who creates the framework such     preferences
                                                                    that a scorecard could pull the
                                                                    necessary information and weight
                                                                    according to their preferences?

  Keystone Group
∆  Sustainable Cons.
                                   = Corp Reporting (all
o WWF Roundtables                  corp impacts must
□  ANSI                            add up)                                                                            18
◊  Specialty Crops
Indexing, measurement and reporting initiatives




                                                  19
Indexing, measurement and reporting Initiatives




                                                  20
Draft dimensions of sustainability for milk production

Environmental                             Social
§Climate Change                           §Working Conditions 
§Soil Management                          §Training 
§Water Conservation                       §Strengthening the Local Economy
§Biodiversity Conservation                §Safety Quality and Transparency 
§Waste Management                         §Animal Husbandry 
§Energy Conservation 
§Air Conservation 
                                       We know this isn’t right
Economic
§Financial Structure 
§Relation to the Market  
                                     FAO, IDF, SAI are currently using these
 
                                                  dimensions




                              Draft for discussion purposes and not for distribution
                                                                                       21
22
Prioritizing the dimensions of sustainability
                                                        Science &                                                                                   Assoc.
                                                                                          Producers                        Consumers
                                                          LCAs                                                                                      & NGOs  
                         Issues/Opportunities                                            Producers
                 Climate Change
 Environmental
Environmental




                                                                                           Producers Insights & Manomet
                 Soil Management




                                                           University of Arkansas LCAs
                 Water Conservation




                                                                                                                                                DMI’S NGO Partners
                                                                                                                            Consumer Insights
                 Biodiversity Conservation
                 Waste Management
                 Energy Conservation
                 Air Conservation
                 Working Conditions
 Social
Social




                 Training
                 Strengthening the Local Economy
                 Safety Quality and Transparency
                 Animal Husbandry
 Economic
Economic




                 Financial Structure
                 Relation to the Market




                                                          X : Major Priority                                              O : Secondary Priority
                                                   Draft for discussion purposes and not for distribution                                                            23
Prioritizing the dimensions of sustainability

                         Materiality 




                                        Source: GRI Sustainability Reporting Guidelines 


                                                                                           24
Appendix
Research Currently Underway




                              25
                                                     Producer View  
Producer View                                                       




         Project Goals:

             •   To develop and test a sustainability scorecard 
                 for dairy agriculture.
             •   To enable dairy farmers to communicate the 
                 quality of the services that they provide to rural 
                 communities, the dairy industry, and dairy 
                 consumers.
             •   Create a “toolkit” that allows dairy farmers to 
                 identify and select ways of positively moving 
                 the sustainability needle in ways that are 
                 practical.
             •   Qualitative and Quantitative Producer Insights




                                                                       26
                                                                Consumer View
Consumer View

Qualitative and Quantitative Consumer Insights             (sample size 3,000)



Objective:
Measure the relative importance of sustainability dimensions from 
  different segments of consumers
    q Of the issues identified in the focus groups (and additional issues of 
      interest):
         – What is the relationship among them for different segments?
         – What is the importance hierarchy among them?
    q How do these sustainability dimensions rank in an overview of total 
      dietary concerns?




                                                                                 27
                                                            Customer View   
Customer View                                                               




Walmart: worked to provide GHG information, Sour Cream Pilot, potential other 
  pilots



Good Guide: met with CEO, pending discussions

Objective:
  Provide sound science and  materiality 
  Articulate where opportunities for the Industry Lies




                                                                               28
                                                                                             Science
Science

 Fluid milk LCA methodology - DMI is actively working with International Dairy 
 Federation for a uniform LCA/Carbon Footprinting methodology for dairy industry; this 
 project involves experts from FAO, SAI and other international LCA experts.  

 Fluid milk carbon footprinting -  Cradle to grave
   q   Producer survey – 520 farms in 5 US milk production regions
   q   Milk processer – 50 plants, manuscript ready to submit
   q   Farm to processor transportation – about 141,000 round trips from 7664 farms to 140 processing plants 
       throughout the 48 contiguous states


 Provide final LCA report with critical review by end of 2009

 Critical review –University of Michigan, University of Iowa and, and Sylvatica –the LCA 
 Research and Consulting firm.  The reviewers are active researchers for LCA 
 methodology and bio-based product system life cycles Industrial ecology, work with 
 UNEP SETAC Life Cycle Initiative for LCA methodology and Life Cycle Inventory study. 




                                                                                                                29
                                                                     Science
Science

 Cheese LCA
  •  Waiting for USDA approval
  •  In the process of study the cheese processing procedure
  •  Cabot Farm will be the pilot to generate web-based data collection template
     Fluid Milk beyond carbon LCA




                                                                                   30

				
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