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Dairy farming and Scope 3 emissions: Why sustainable changes must be aligned with economic benefits

Practice Director

There is huge potential for the food industry to reduce their carbon footprint whilst educating consumers on the benefits of dairy farming; however, a ‘wait and see’ approach may lead to missed opportunities

When you picture England’s green and pleasant land, likely somewhere in your mind’s eye you can see grassy rolling hills in the sunshine, perhaps with a few cows dotted over the hillside. Images such as these have been, and will continue to be, part of the British countryside; however, all is not as pleasant as it may seem if you happen to own some of those cows on the horizon.

As increasing numbers of food and beverage companies start to set and work towards net zero targets, there is a growing realisation in the industry of a need to work more closely with farmers. Unsurprisingly, a vast majority of total emissions come from down the supply chain (Scope 3), for example, 47% of Tesco’s emissions come from food production, and ingredients production is the second highest emitter of carbon for Coca Cola Europe, after packaging. However, reducing carbon footprint at a production level presents a conundrum - supply chains are notoriously highly fragmented, with very little visibility on players in the supply chain and multiple complex steps between farm and fork.

In the AgBio practice, we have spoken to companies which have announced net zero goals and are now struggling to get a handle on where to start in connecting to farmers at the start of their supply chains, or companies which are struggling to even evaluate their baseline carbon emissions in the first place.

On the supply side, we also speak to farmers and farmer organisations which are dealing not only with skyrocketing input prices, but also with increasingly difficult demands from their customers. In particular, the net zero spotlight often focuses on livestock, particularly meat or dairy production. The struggle in the dairy industry is nothing new. There has been a 67% decrease in dairy producers in the UK since 1995, yet if you couple the expectations for these dairy producers to become more sustainable with the uncertainty around the switch from BPS (government agricultural subsidy scheme on which around 60% of British farmers currently rely) to a new scheme, the situation starts to look increasingly difficult.

Happily, over the last few months, we have spoken to many pioneering farmers and companies which are willing to become first movers in implementing, recording, measuring and verifying sustainable changes. These pioneers can be on a local level, such as Mossgiel Farm in Ayrshire, which have formed a small cooperative to produce organic milk, use a bio-mass boiler for heat efficiently and are on their way to be carbon-neutral by 2025. On a company level, Kerry’s Dairy Group, which work with over 3,000 Irish dairy farmers, recently revealed their Evolve program which allows farmers to access up to €2000 of extra incentives per year for sustainable changes.

Unfortunately, these practices are few and far between. Those who are lagging behind are heavily relying on government subsidies to incentivise a change in farming, particularly the SFI (part of the new Environmental Land Management Scheme (ELMS)) being introduced by the government in phases by 2027.

Although these subsidies are welcome changes to support a new way of farming, the waiting game does not suit an industry already under fire, and the alignment of economic incentives to environmental goals needs move from the early innovators to the early majority in the private sector. Large F&B companies and cooperatives can then put their considerable marketing nous behind giving the alternative meat companies a run for their money by showing consumers just how ‘green and pleasant’ dairy farming can be, if incentivised the right way.