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Dairy supply chain

milk being poured

 

Dairy is our biggest raw material by volume, with many milk and milk-derived ingredients used in our products. These include dairy and infant nutrition products, as well as ice cream, beverages and confectionery.

The key challenges that arise in dairy supply chains relate to greenhouse gas (GHG) emissions and animal welfare, issues we are committed to addressing in collaboration with farmers and suppliers.

 

Our approach to sourcing dairy sustainably and responsibly

We source dairy in two ways.

  1. Dairy ingredients such as milk powders, whey or lactose are bought from dairy cooperatives.
  2. Fresh milk is sourced directly from farmers before being processed in Nestlé factories. We work with over 200,000 dairy farmers directly in 27 countries.

Our overall dairy sustainable strategy is driven by our internal Dairy for You initiative and the external industry-wide Sustainable Dairy Partnership (SDP). Both of these initiatives play an essential role in driving a major shift in the way we source and produce nutritious dairy ingredients as part of our net zero journey.

Our Dairy for You initiative aims to continuously improve our sourcing operations and to transparently share our progress with key stakeholders, including consumers. It encompasses:

  • Quality
    Delivering full milk traceability and ensuring food safety
    Worker in dairy factory
  • Agriculture
    Working with our dairy farmers to continuously improve local production systems that improve the farmers livelihood and animal welfare. We train farmers and support them in adopting practices that can optimize productivity and improve incomes. This continuous improvement is closely linked with our environmental commitments.
    Farmer pouring milk in container next to cow.
  • Nature
    Transitioning to climate neutral and regenerative dairy farming systems encompassing the climate footprint, water stewardship, soil health and biodiversity in our dairy value chain, and using recyclable or reusable packaging.
    River flowing through fields
  • Animal Welfare
    Upholding rigorous animal welfare standards - We recognize and share our stakeholders' concerns about the welfare of animals raised for food and the need to ensure sustainable animal production systems. Through our Responsible Sourcing Standard and the Nestlé Commitment on Farm Animal Welfare, we are helping bring about positive change throughout our supply chains.
    Chickens and goats

Sustainability in practice
Working to reduce emissions in our dairy supply

Our pledge to reach net zero emissions by 2050 will push us to seek new innovations to decrease our emissions. One way we can achieve this is through implementing solutions with our dairy suppliers. We have several pilot net zero dairy farms in place aiming to tackle GHG emissions, including in Switzerland, South Africa and Pakistan. We have bottom-up GHG reduction roadmaps and concrete plans for most of our fresh milk sourcing markets to reduce emissions by 20% by 2025 and more beyond. 

So far, after just one year, the results of our pilot studies have been extremely positive. Our lead test farm in South Africa reduced its cows by 100, but since the start of the trial increased its total milk yield by 12%. It has reduced emissions from electricity by 24% thanks to energy-saving measures, and seen a 53% increase in active carbon in the soil, sequestering 4 700 additional tonnes of CO2, and significant carbon sequestration potential remains. 

There were also challenges. Low rainfall meant that in some fields, pastures needed to be re-established, exposing the topsoil and affecting the potential to improve its health. There were also some practical problems associated with the smell of organic fertilizer and administrative challenges in selling electricity to the grid. 

The pilot interventions are being replicated by other dairy farmers who have been visiting the farm. This is an approach that genuinely has the potential to contribute to a meaningful impact on climate change, not just for Nestlé but for the whole industry.

Ensuring Traceability

We carry out risk assessments of the dairy farmers involved in our supply chain against our Responsible Sourcing Standard, focusing on animal welfare, labor practices and environmental impact. Our farmers are assessed by independent auditors such as SGS. We are also investing in projects that support sustainable dairy practices.

To hold our suppliers and ourselves accountable and to drive industry-wide transparency, we have published the list of our Tier 1 dairy ingredients suppliers (pdf, 917Kb) and the list of our fresh milk suppliers (pdf 389Kb) in our supply chain, along with their countries of origin.

Digital technologies have the capacity to transform the dairy industry. We have digitized the traceability of our milk, from farm to factory, using a tool called Global Milk Solution. It includes payroll, GPS tracking and route optimization to ensure transparency and transport efficiency. We are currently piloting new tools including calculating GHG emissions per farm or liter of milk to track progress and ensure continuous improvement.

Supporting safe labor practices in dairy 

Ensuring a fair, safe and healthy working environment for farm workers is a priority for Nestlé. For several years, Nestlé has collaborated with partners and stakeholders throughout our dairy supply chain to enhance farm workforce development in U.S. dairy operations.

The U.S. National Milk Producers Federation has also developed an on-farm evaluation tool to support farmers in understanding human resources and safety management best practices. The tool aids implementation of these best practices and tracks improvements over time.

Nestlé also funds multiple projects to engage dairy workers, managers and owners in collaboratively enhancing the farm working culture. The projects focus on building trust and improving job satisfaction, worker safety and productivity.

Nestlé is working to engage dairy workers, managers and owners in collaboratively enhancing the farm working culture.
Creating Shared Value and Sustainability Report