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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.

Dairy ingredients include those bought from dairy cooperatives such as milk powders, whey or lactose. Fresh milk is sourced directly from farmers before being processed in Nestlé factories.

Our progress toward sustainable dairy production
200000 +

Our way of working in dairy at Nestlé:
Dairy graphic

 

How we approach sourcing dairy sustainably and responsibly

We have two complementary approaches to sustainably sourcing dairy: The Nestlé Dairy for You initiative and the external industry-wide Sustainable Dairy Partnership (SDP) collaborative model. Both our Nestlé and collaborative industry approach 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. This continuous improvement is closely linked with our environmental commitments.
    Farmer pouring milk in container next to cow.
  • Environment
    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
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 transparency through digitalization

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.

Training

Every year, through our direct milk sourcing operations, we train farmers and support them in adopting practices that can optimize productivity and improve incomes. 

Dairy farmers across several countries also participate in our agripreneurship program, many of whom are under 30 years old. Agripreneurship is designed to develop the next generation of farmers, creating producers with the enthusiasm and the mindset to continually develop their farms for net zero success.

Nestlé is working to engage dairy workers, managers and owners in collaboratively enhancing the farm working culture.

Supporting producer-led watershed groups

Farmer-led watershed groups offer a platform for farmers to share best practices, collaborate on optimal solutions to improve overall conservation outcomes and lessen the ecological footprint of agriculture. 

Read more about our work with the Dairy Strong Sustainability Alliance (DSSA) in the U.S.

Improving feed value and nutrient management on dairy farms in California

Nestlé, together with supplier Hilmar Cheese Company and the California Dairy Research Foundation, is supporting a proof-of-concept project in the U.S.

The project analyzes the benefits of using sugar beets as a high quality dairy feed to improve nutrient and water efficiency, measures yields of sugar beets produced as a winter feed and evaluates the key quality aspects of sugar beet roots and almond hull silage. Education sessions are also held to share the results with the local dairy community. 

This project will help the California dairy industry better comply with several Dairy Sustainability Framework goals, especially improved soil nutrient management and increased water use efficiency in feed production. 

Adding a new crop species will also promote biodiversity. The goal of the project is to develop a practical, effective solution for farmers based on the principle that nutrients and water can be best managed successfully across a multi-year cropping system rather than crop by crop.
 

Nestlé is helping dairy farmers in California diversify and improve crops.
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.
Creating Shared Value and Sustainability Report