Dairy supply chain

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:

Dairy is Nestlé’s largest single source of Scope 3 greenhouse gas emissions. When dairy cows digest their feed they produce methane, which has a far greater global warming potential than CO₂. So-called ‘enteric fermentation’ is the largest source of emissions in fresh milk production, followed by feed production and manure.

One way we can reduce this is through implementing solutions with our dairy suppliers. We have several pilot net zero dairy farms, including in Switzerland, South Africa, the United States and Pakistan. We have bottom-up GHG reduction roadmaps and concrete plans for most of our fresh milk sourcing markets to reduce greenhouse gas emissions by 20% by 2025 and more beyond.

The results of our pilot studies have been extremely positive. After just one year, our lead test farm in South Africa reduced the size of its herd by 100 cows, but increased its total milk yield by 12%. It also reduced emissions from electricity by 24% thanks to energy-saving measures, and saw a 53% increase in active carbon in the soil, sequestering 4700 additional tonnes of CO₂, and with significant potential for further carbon sequestration.

Our pilot interventions are being replicated by other dairy farmers who visit these farms. 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.

We’re also exploring the use of novel feed supplements, wearable devices, improved nutrition and immunological approaches that reduce enteric methane production, but do not negatively impact the yield of nutritious and safe milk or animal welfare and health.

For example, in the United States, we are facilitating research to assess the efficacy and the human, animal and environmental health and safety aspects of a seaweed-based feed supplement, which has the potential to reduce enteric methane emissions significantly.

Also in the United States, we are rolling out vermicomposting, which uses worms to naturally degrade manure with lower methane production – replacing the need to capture and store the gas. The worms also remove up to 99% of wastewater contaminants and generate castings that can be used as fertilizer to improve soil health.

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. 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, 900Kb) and the list of our fresh milk suppliers (pdf, 400Kb) 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 the 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. The same applies to practices with regards to Regenerative Agriculture.

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 United States dairy operations.

The United States 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.