‘Trilogue’ talks between the European Commission, the EU Council of Ministers and the European Parliament are now under way on proposals that, in its initial text, included large dairy farms in an emissions control regime designed to restrict pollution. If the final legislation includes these businesses, they will need to secure industrial emissions permits to operate, and covering all types of pollution, including manure run off.

A general approach by the EU Council of Ministers, representing EU member states, initially backed including dairy in the legislation, which had been proposed by the Commission, whose current leadership is making the environment a key priority under its European Green Deal policy (1). Ministers backed dairy’s inclusion when units reared 350 or more cattle (the Commission had proposed a minimum of 150), except on more extensive farms, where the stocking density is less than two cows/hectare and used only for grazing, growing fodder or forage (2).

The drafts debated thus far include significant amounts of detail on how a revised EU industrial emissions system would work. For instance, the council text says that where member states set general rules for a sector, they should require best available techniques (BAT) “relevant in determining the lowest emission levels achievable.” These would be based on detailed guidance already issued by the European Commission, which are regularly updated.

Emissions control

The proposed law also laid down some basic minimums for emissions control permit registrations, such as providing information on a dairy producer’s activities, the animal type, the capacity of the installation, sources of emissions from the installation, the nature and “quantities of foreseeable emissions from the installation into each medium.”

If dairy remains in the final text, EU member states would have to police dairy businesses covered by the law and make sure that they inform regulators “without delay, of any planned substantial change, which may have consequences for the environment.” Governments would have to ensure dairy producers monitor and/or calculate their emissions, and associated environmental performance levels methods would be described in the operating rules set down in the national implementing legislation: “The operator shall keep a record of, and process, all monitoring results, for a period of at least 65 years, in such a way as to enable the verification of compliance,” added the Council text.

It stated that larger dairy producers would “have to ensure that any land spreading of waste, animal by-products or other residues [follows] best available techniques, and that it does not cause significant pollution of the environment.”

Given the extent of these rules, it is not surprising that the dairy and general farming sectors have lobbied against them, with some success at the European Parliament, which largely voted to exclude dairy from the text in July (3). Centre-right MEPs argued successfully that the regime as proposed would spawn excessive bureaucratic controls. Whether that stance prevails will depend on the determination of the EU executive and the Commission to hold the line on firm activist environmental policy and whether it can persuade enough member states in the Council to follow suit.

Ignoring realities

For the time being, EU dairy producers have breathed a qualified sigh of relief, with EU farm and food producer organisation Copa-Cogeca saying: “The Parliament recognised the IED is an ill-suited legislative instrument that simply ignores basic realities of the livestock sector.” It argued that extending the law to the dairy sector would generate “problems and difficulties on the ground; unbearable administrative and economic costs, risk of liquidation or excessive concentration, and of shifts of production toward non-EU countries.” It called on the Council and its member states “to embrace” the European Parliament position during ongoing trilogue talks.

However, even if that happens Copa-Cogeca has concerns about a remaining provision within the parliamentary version of the law, which asks member states when assessing what installations are covered by whatever law emerges from the tasks to, “consider two or more installations located close to each other run by or under the control of the same operator as one.” If dairy farms remain in the final text, but there is a floor on the size of businesses covered by the directive – for instance, in cattle numbers, that rule could bring linked (but formally separate) dairy businesses under the IED’s pollution controls.

Copa-Cogeca said EU “negotiators should make sure that this rule does not create more harm than the good it is intended to protect and especially, that it does not enlarge the scope of application.”

Rejecting the idea

Many dairy producers, however, simply reject the idea that their farms should be regulated under EU industrial emission legislation. Speaking after the reform was initially proposed, Marianne Steele, the president of the Walloon Federation of Agriculture, said she doubted Commission claims that administrative costs for affected producers would be €2,400 a year:

“According to our calculations, it will be considerably more because of the best available techniques (BATs) that accompany it. But beyond the non-negligible financial aspect, we find it deeply shocking to associate the practices and the daily running of our farms with the term ‘industrial’, even though our farms are subject to the highest production standards. There is also a risk of stigmatisation, which could undermine the relationship of trust established with our customer base in the excellence of our products.”

Some environmentalists disagree. A comment from the Eurogroup for Animals, said, “Given the large ‘hidden’ costs that intensive animal agriculture has for the environment, public health and animal welfare, the sector should not be exempted from the ‘polluter pays’ principle.”

The European Commission, however, has also been working on guidance for reducing dairy sector pollution for some time (4). It released detailed best available techniques (BAT) for the sector in 2019, which, while focusing significantly on downstream product manufacturers, also contained advice on how to reduce water pollution emitted by dairy producers, such as clean-in-place (CIP) techniques, or energy conservation, such as re-routing production heat emissions for useful purposes, using heat exchangers and more. Whether such techniques are made mandatory at large EU dairy producers via a revised industrial emissions directive remains to be seen.

Notes:

1. www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2022/0156/COM_COM(2022)0156_EN.pdf

2. data.consilium.europa.eu/doc/document/ST-7537-2023-INIT/en/pdf

3. www.europarl.europa.eu/doceo/document/TA-9-2023-0259_EN.html

4. eippcb.jrc.ec.europa.eu/sites/default/files/2020-01/JRC118627_FDM_Bref_2019_published.pdf

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There has been some optimism prompted by the 77-year-old leftist Luiz Inácio Lula da Silva, who governed between 2003-2010, unseating ultraconservative Jair Bolsonaro in October’s elections for a four-year term, however. Lula has formed a multi-party administration that gathers progressives and moderates. And the dairy sector does have a voice in cabinet, as one of the most powerful ministers is agriculture minister, Carlos Favaro, a senator from the agribusiness rich state of Mato Grosso, in the western-centre of the country. Favaro is widely seen as a friend of the dairy industry.  

Help required 

The sector needs this help. Analysts at the Brazil government agricultural research unit Embrapa (Empresa Brasileira de Pesquisa Agropecuária) think that the country’s milk production shrank by more than four per cent in 2022 because of global constraints such as Russia’s invasion of Ukraine (hindering the availability of animal feed from these two farming giants). China’s economic woes because of its zero-Covid 19 policy also harmed Brazil’s dairy sector, reducing imports because of lower consumption and shifting to suppliers geographically closer, to cut delivery times.  

London-based market research company Euromonitor has said Brazil’s dairy products and eggs segment together generated US$21.3 billion in earnings last year, which while substantial was a frustrating figure for the industry whose analysts were expecting more sales. This underwhelming performance was caused by growing production costs – Brazilian inflation was 6.47 per cent in October 2022, for instance, with Brazilian unemployment being 8.1 per cent in November and 2022 GDP growth being weak at an anticipated 2.8 per cent (OECD projections).  

Brazil’s dairy industry also saw its milk production fall in 2021 by 500 million litres year-on-year, down seven per cent, forcing milk imports to rise by 21.5 per cent. Domestic production costs have risen sharply. Over the last two years, Embrapa’s index for the cost of milk production ICP/Leite rose a staggering 62 per cent, with the fuel and fertiliser input prices soaring. Producers have been unable to pass on such increases to consumers in fill, so their incomes have fallen, especially in the second half of 2022 – from August’s Brazilian Real BRL3.53 (US$0.67) to BRL2.50 (USD$.48) in December. So, the pressure is on for providing some help for the industry.  

Exports and imports 

Favaro said in a statement on 17 January that he wants to make it easier for Brazil to export every product of animal origin, including dairy. His intention is to offer companies a single and pre-set process for exportation, which would end inconsistencies, secure sanitary certification and, thus, avoid sales losses. “We are working to broaden our markets, show Brazil’s potential to the world, and that also includes the simplification of internal processes so companies can be ready for this new moment,” the agriculture minister said.  

Analysts, such as Natália Grigol, a researcher at Cepea, the Centre for Advanced Studies in Economy at the higher school of agriculture of São Paulo University, agree that is not the most ambitious agenda for companies but see it as a positive first step.  

Favaro can count on his president’s support in reopening foreign markets, as Lula is trying hard to appeal to foreign leaders to rebuild bridges broken by Bolsonaro’s tacit and even open support for deforestation in Brazil – a major international concern given the Amazon’s key role in limiting climate change.  

Brazil has existing trade deals to export dairy products to China, Argentina, Australia, Myanmar, Egypt and Thailand, but it is not a traditional dairy exporter. An example of the country’s difficulties in that field lies in an agreement to export dairy to Mexico. A high volume of trade was supposed to kick off at the end of 2021, but so far it has barely totalled one tonne due to taxes imposed by the Mexican government.  

Gustavo Beduschi, executive director of Brazil’s dairy sector association Viva Lácteos, said during an industry panel in December that Mexico’s import taxes are about 45 per cent, which makes it impossible for Brazilian companies to export.  

“We saw that as a great deal. Mexico is a great importer of cheese, powder milk and skimmed milk. Now we need to get to the second stage, and have them reduce those taxes,” said Beduschi. He is also hopeful that China will become a key market for some exporters whose products have a longer shelf-life, but for now, exporters are finding sales a challenge: “We had to learn a lot about trading with China, understanding it is a different regulatory environment, with specifics and special consumer habits.”  

Regardless, Beduschi added that Brazilian dairy companies are still focused on expanding their presence in these recently opened markets rather than searching for new ones. He believes a close association with the new government will be important in making these targeted sales happen.  

While the agriculture ministry likes to explore new opportunities (and these might emerge in the European Union and the Mercosur bloc, which includes Brazil, finalise a trade deal this year), Beduschi said: “Our vision is that it is more productive to work at the markets we have.”  

Too soon to see 

Silmara Figueiredo, marketing director at ABIQ, the Brazilian Association of Cheese Industries (Associação Brasileira das Indústrias de Queijo), said it is too soon to say if the new administration will bring better results than the one per cent year-on-year growth in volume during 2022, based on output of 1.3 million tonnes. “We have had a historic high in the price of milk due to scarcity. That brought a price increase in a year of reduction of family income. Cheese remained on people’s grocery lists, but in smaller amounts,” Figueiredo told Dairy Industries International. For the coming year, he said: “We will have a tough year in milk supply, below our demand. But we do hope for some recovery in income and an increase of internal consumption in 2023. The market is bringing some innovation in snacks and fine cheese, which could grow in sales.”  

Queijos de Curitiba
Cheeses from Curitiba, Paraná, southern Brazil. Credit: Rodrigo Ghedin

Some Brazilian milk producers are taking note of the strength in demand for this segment, investing in expanding their capacity and adding cheese to their portfolios, including Brazilian milk majors Piracanjuba and Castrolanda. However, consumers are still wary of high prices. Mozzarella cheese still costs more than BRL28 per kilo (US$5.40), which is almost double the price before the Covid-19.  

Embrapa researcher Glauco Carvalho said Brazil’s expected high production of grains in 2023 could help the dairy industry this year. The cost of feeding cattle is likely to go down, especially those based on food based on soybeans and corn.  

“But this will still be a year of uncertainty,” said Carvalho at a press conference in January. “There’s a new administration, there’s doubts on the fiscal area, which will impact interest and exchange rates.”  

Fernando Teodoro Fiori, the CEO of Laticínio Almeida Prado, which makes cheese based on buffalo cow milk, said his company returned to stability in 2022 despite all problems that Brazil’s economy faced, including an increase in costs. He added that this year began with more turbulence, which “took the place of confidence,” but he is more worried about the market itself than the government’s outlook.  

“I don’t see any significant change in the tax and operational side for now. What creates some concern is the behaviour of customers, since there is a tendency of reducing consumption in uncertain scenarios,” said Fiori, who added the whole industry needs credit to invest and boost growth. “Unfortunately, in Brazil, access to credit is very complex and expensive, but it is necessary for more than 90 per cent of [all] companies in our country.”  

“The market also suffers from a lack of skilled labour,” added the CEO. “If the government focuses on technical education, reducing the tax burden and releasing resources for agriculture with competitive rates, the sector’s situation will improve significantly.”  

Another issue for Brazil’s dairy industry will be legislation from the country’s new congress (parliament). At the end of 2022, lawmakers started a debate on dairy products modified with non-traditional ingredients, which have taken some market share from conventional dairy. Many consumers have confused their traditional products with cheaper ones that add milk whey and/or vegetable fats, for example. Current legislation said those modified products should comprise at least 51 per cent standard dairy ingredients and add a clear label naming all the ingredients it contains. Industry lobbyists are suggesting products sold as dairy should have a higher proportion of dairy ingredients, by law.  

If they succeed, it will be a sign that the dairy sector’s influence on the new government is solid, which could help it navigate the current unstable economic backdrop.  

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The largest share was in extended shelf life (ESL) types with a fat content of 3.5% and above. Around 69.6 million kg of this variety were produced, which means a production increase of 5.7% or 3.8 million kg compared to 2020.

For pasteurised organic drinking milk (fresh milk) with a fat content of 3.5%, production shrank from 25.6 million kg to 21.2 million kg.

The general trend away from fresh milk production towards ESL milk production continues unabated. The same trend towards ESL can be observed in the organic cream and cream products category. A total of 8.4 million kg of organic sweet cream and organic sour cream were produced.

In the case of pasteurised organic sweet cream with a fat content of more than 29%, a sharp drop in production (-29%) can be observed, whereas organic sweet cream ESL with over 29% fat content recorded a strong increase in production (+ 42.5%).

The yogurt and acidified products made from organic milk also recorded an increase in production (+4%) compared to 2020 and thus amounted to 35.8 million kg in 2021.

Kefir was once again particularly popular. Production growth was 10.4% and the total volume of kefir production last year was 4.5 million kg.

The production of organic cheese was 2.8 million kg or 10.1% higher than the amount produced in 2020. Last year 30.8 million kg of organic cheese was produced.

A particularly strong increase in production was observed for organic raw milk mountain cheese. Here the increase was 1.2 million kg or 44.3%.

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The cross-industry initiative pursues the goal of jointly gaining scientifically-based knowledge in order to make the Swiss dairy industry more sustainable and competitive in terms of climate protection and resource efficiency.

A tailor-made mix of measures is aimed at reducing greenhouse gas emissions from agricultural milk production by an average of 20%. The initiative is supported by the Federal Office for Agriculture (BLW) and will include around 300 pilot farms.

Bern University of Applied Sciences (HAFL) and ETH Zurich are supporting the project as scientific partners.

As part of a biological cycle, cows convert grass unusable for direct human consumption into nutrient-rich milk. But the question arises as to how dairy farming can further reduce its impact on the climate and how ruminants can also be part of sustainable and site-specific agriculture in the long term.

According to estimates by the United Nations, the dairy industry accounts for around 3% of total global carbon emissions. Although it is not one of the major causes of greenhouse gas emissions, solutions must be found, especially with regard to methane emissions from cows.

Further progress in the area of climate protection is also in the prime interest of local agriculture and milk processors, because, according to scenarios from the Swiss national centre for climate services, the climate in Switzerland is likely to be drier and hotter in the future.

KlimaStaR Milch aims to create a common basis for a more sustainable, resource-saving and site-specific Swiss dairy industry and to position it successfully in the long term.

By joining forces, the participants want to contribute to further reducing the climate footprint of milk and of dairy products, and thus also meet a growing consumer need. To this end, the initiative starts at the origin of the supply chain, milk production itself.

In order to achieve GHG reductions of 20%, it starts with four central points: feeding, herd management, energy and farmyard manure. Scientific survey methods and specially developed analysis technologies are used to measure progress.

Project sponsors have also set themselves reduction targets of 20% in the area of the so-called feed-food competition. In this context, food competition refers to the circumstance when food is used to feed animals, which would also be suitable for human consumption. This is the case, for example, when wheat is fed to cows.

Land competition arises, when animal feed comes from cultivated areas on which foodstuffs could also be grown. These undesirable interactions should be reduced with the help of resource-saving feeding methods and roughage-based dairy farming.

The initiative is scheduled to run for six years. From the scientifically supported results obtained, everyone involved expects partnership-based knowledge, which will allow the implementation of targeted measures beyond the project and thus help to further reduce the greenhouse gas emissions of the Swiss dairy industry, which already are moderate by international comparison.

KlimaStaR Milch contributes to the respective climate ambitions of Emmi and Nestlé, both of which want to become climate-neutral by 2050.

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“The DA, through the National Dairy Authority (NDA), fully support and welcome this new initiative as this will help jumpstart catalytic investments in the Philippine dairy industry to contribute to food security, local milk production and processing leading to agri-industrial development,” said DA secretary William Dar who was present during the event with DTI secretary Ramon Lopez and Baladna independent board member Aidan Tynan, on 11 February, 2022 in Dubai, UAE.

In his presentation, the DA chief reported that the majority of the country’s annual dairy requirement is supplied by importers and processors, as the Philippines is a big importer of dairy products, particularly milk powder.

He added that, in 2020, the Philippine dairy industry was characterised by increasing local milk production and decreasing imports and exports of milk and dairy products. The local milk production reached 26.71 million litres, an increase of 9.5% from 24.38 million litres in 2019.

Baladna QPSC is into raising livestock and production of dairy products including milk, yogurt, cheese, labneh, cream, dessert, juices, as well as animal fertilisers.

The company is Qatar’s largest locally-owned food and dairy producer, supplying over 95% of the country’s fresh dairy products. The firm now owns more than 24,000 Holstein cows on its 2.6 million square-meter facility with 40 state of the art barns, has a daily capacity of producing up to 450 tons of fresh milk and juice products on a daily basis, and has more than 1,650 employees.

Baladna has expressed its interest in setting up a large-scale and fully integrated dairy facility in the Philippines, designed to be climate-independent using world-class management systems.

The project will significantly increase local milk production by 120 million litres from the current milk production of 26.71 million litres. This will be bringing the Philippines’ total milk production to 146.71 million litres, thus contributing to addressing the local demand of 2,927.04 million litres, of which bulk is imported.

“The investments will be able to generate 2,000 new jobs during the initial phase of its first full year of operations, providing significant opportunities for domestic employment,” said Dar.

Baladna underscored that their main consideration for supporting the Philippine government is to level the playing field and foster domestic dairy production.

Meanwhile, the support of DTI, through the Board of Investment (BOI), is through the facilitation of the advantage of incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, which may also be extended to manufacturers who will be locally sourcing their inputs.

DTI and DA have also agreed to work together in looking at measures that will level the playing field, such as implementing proper labelling of fresh milk.

“DA has already identified five possible locations for the Baladna project and welcomes the Baladna team in the next few weeks for the site visit in the Philippines. DA will continuously provide the needed support to fast track the implementation of this project in coordination with DTI and other partner agencies,” Dar said.

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“For higher production standards, including their marking, we need planning, financing and implementation possibility. Only in this triad we can bring milk producers the conversion of animal husbandry demanded by the society. This requires a coordinated involvement of all involved in the chain: dairy cattle holder, dairies, trade, consumers and politics. Political framework conditions, which act supportive, are indispensable here, such as, for example, improvements in building and approval law,” says DBV vice president and dairy farmer Karsten Schmal.

With the intended offer of a reward of the QM-Milk system, the vice president sees a chance for German dairy farmers for more visibility and value creation. For this purpose, the highest possible animal welfare module, QM+, has been defined, and its implementation is now due in April.

The starting of industry communication, Initiative Milk, in the second half of 2021, was a success, Schmal notes. “We managed, in a sector with approximately 55,000 dairy farmers and 150 dairies, to set a jointly carried out industry communication. The discussions in the next topic, ‘Industry Communication & Nutrition’ have showed that the communicative challenges will be no less, but the industry has taken the right path.

“As industry, we are open and learn every day. Milk must be kept as sustainable and healthy food in the heads of our consumers,” states the vice president.

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Over a period of three years, Nestlé Germany will work along with the Frese dairy farm in Northern Hesse, which has 135 cows, in order to make this Hochwald farm a model for other farmers.

The project is led by the Hochschule für Wirtschaft und Umwelt Nürtingen-Geislingen (HfWU), with scientific and technical advice from project partners Thünen Institut für Betriebswirtschaft and Bodensee Stiftung.

To start, experts from HfWU will calculate all emissions of the farm operations. This will use 30 defined measures to reduce greenhouse gases as much as possible. That is, for example: optimal feeding of the cows, gas-tight slurry storage, construction of a biogas plant, energy production by photovoltaic systems and optimised herd management to increase milk performance.

In parallel, more humus will be built up by regenerative management of the field and grassland surfaces, as well as lakes and trees, so that more greenhouse gases can be stored.

The climate milk farm also aims to reduce its use of pesticides and mineral fertilizers.

The aim of the pilot project is to get farm emissions to net zero after three to five years.

Markus Frank, professor of plant health management at the HfWU, sums up the project: “It takes decades until hedges and trees grow really big and the soil has built up enough humus. Therefore, in our joint project, we model how much carbon dioxide the plants and the ground can really store.”

“A kilogram of milk is currently causes about 1.1 kilogram of carbon dioxide. We want to reduce the carbon footprint of our dairy products in the coming years. For this we need to know exactly, what measures are ecologically and economically useful. Our joint pilot project with Frese helps us to gain valuable insights, as we can sustainably reduce greenhouse gases,” explains Noura Rhemouga, sustainability manager at Hochwald.

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Imlek now fills over one million litres of milk a day, with its annual turnover amounting to around €300 million. The diary giant was the very first in the Balkans to invest in an aseptic filler in 2012 in order to enable germ-free filling of a section of its portfolio into PET bottles. Its prime aim was to facilitate the export of sensitive products by lengthening shelf lives and lowering transportation weights. Back then Imlek decided to invest in a linear KHS Asbofill ABF 711 filler, as with its very small aseptic zone this machinery permits sterile filling without the need for intermediate sterilization. Up to 12,000 PET bottles holding between 250 milliliters and two liters are processed per hour.

Regarding flexibility, the Asbofill ABF 711 features a vast range of bottle and closure design options, the use of which requires no mechanical intervention. One of the KHS aseptic filler’s special features is its small sanitary room that measures just 1.5 cubic meters: in combination with the machine’s room-within-a-room concept, it cuts the risk of recontamination down to practically zero. Limiting sterilization to the necessary areas only – namely just the neck on the outside of the bottle – means that sterilization media can be used more sparingly. Thanks to its compact design the filler also takes up less space and is easier to clean. It also does not need any extra water during the production cycle, and so scores on sustainability.

The Serbs were reportedly so pleased with their KHS technology that the company happily allowed the Dortmund machine and systems manufacturer to use it as a reference for other interested businesses. Colleagues frequently came to visit the Imlek facility in the Belgrade suburb of Padinska Skela to watch the machine in production under everyday working conditions. After all, the dairy had itself opted for a KHS system based on good references and sound recommendations – and hasn’t regretted its decision for one minute.

In September 2018 a devastating fire tore through Padinska Skela, destroying much of the production shop and causing serious damage to property. Like so many other lines and machines, the exemplary technology of the aseptic filler was consumed by the flames. “The end of 2018 and the whole of 2019 were an extremely challenging time for us,” remembers Darko Samardžija, chief supply officer of the Imlek Group. “To guarantee market supply with our products, we had to redirect our contracted milk quantities to our other plants in the region for further processing and to production sites outside the Imlek system. Here, we needed to make sure that all the dairies we sent raw milk to were able to meet our high production standards. After all, we wanted consumers to continue to have Imlek products in their usual top quality.”

At the start of reconstruction a clear decision was made to make the new factory the most modern in the region – a complex task, as Samardžija emphasizes, that was nevertheless completed so quickly and so successfully that the impact of the fire, in which luckily no-one was hurt, was soon forgotten.

The new InnoPET BloFill ACF-L block system is reportedly instrumental Imlek’s success, where a latest-generation KHS stretch blow moulder, an InnoPET Blomax V, has been combined with a KHS aseptic filler, the Innofill PET ACF-L, for the first time ever. The block boasts a number of further developments that not only make it even more powerful than the previous filler but also more sustainable and more economical – by saving up to 40% in energy, for example. A special transfer module has been designed to join both machines that feeds the continuous PET bottle flow from the rotary stretch blow moulder to batch processing on the linear filler. To this end, ten consecutive containers at a time are picked from the bottle flow, accelerated and separated from the following units as a group so that they can then be easily removed by grippers at their downstream stop position and placed in the filler’s carrier plates. Combining the stretch blow moulder and filler does away with the need for an air conveyor, resulting in a compact system that saves space, cuts energy consumption and eliminates a potential source of error.

“Our specifications were basically the same as when we commissioned the first machine,” Samardžija explains. “The main emphasis was to ensure product quality and production stability. And with our new acquisition we again attached great importance to a high degree of flexibility so that we can produce our various volume formats on the same machine.” The block setup means that a full format changeover can now be performed in the space of just ten minutes, taking up to 40% less time compared to single machines with an air conveyor.

The filling volume accuracy has also been improved by around 30% over the old filler. Electromagnetic induction flow meters with new evaluation software and tried-and-tested algorithms are also used in the aseptic zone to achieve this. They ensure consistent head space volumes and thus identical fill levels in the bottles and minimize the risk of excessive foaming.

The modular design of the Innofill PET ACF-L aseptic filler is also new. It basically allows optional empty modules to be planned for on procurement. These leave space for filler retrofits, such as foil sealers or dosing units for fruit chunks, should these need to be later included in the portfolio.

Finally, the KHS Innopack Kisters SP Basic from 2012, a shrink packer that can wrap up to 10,800 packs an hour in film, also forms part of the restored line at Imlek. The packaging unit is one of the few pieces of equipment in the machine park to have survived the fire unscathed. Following a general overhaul, it’s again now fully functional. “On the new line, like on the old one, we fill fresh milk in various formats and chocolate milk,” says Samardžija. In the near future Imlek wishes to further exploit the various new options already provided by its state-of-the-art technology and associated increase in flexibility. “We can imagine expanding the portfolio of our aseptic filler in the future to also include milk shakes and flavored milk,” the dairy’s chief supply officer tells us.

The Serbs currently process around 200 products. The majority of its sales is generated with fermented milk products and fresh and ultra-heat-treated milk. Financially no less significant but much smaller in volume are product categories such as dairy spreads, butter and standard value-added products. The company isn’t only just looking ahead when it comes to its production technology but also with respect to its portfolio: besides standard and organic milk products this includes lactose-free products and the probiotic Imlek Balans+ line for all those who pay particular attention to digestion and immunity. “This year we launched Imlek Protein to market, a protein-rich, lactose- and sugar-free milk beverage specially geared towards people who watch their diet and do sport,” states Samardžija. “Products like these have been a focus of the international milk industry for some time now. It’s thus only logical that we offer our consumers on the home market beverages in this segment.”

The Serbian milk magnate’s modernity also encompasses a strategic commitment to more sustainability. “With a mind to our responsibility to the environment, we’re the first local milk producer to fill our Moja Kravica brand into packaging made of recyclable, bio-based plastic,” Samardžija tells us, not without pride. “Even the caps are made of plastic that comes from plants, namely from sugar cane.”

For more information about Imlek Group, visit: www.imlek.rs and for more information about KHS, visit: www.khs.com/en.

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In Senegal, nearly 90% of marketed milk is imported, typically in the form of powdered milk. However, 30% of the Senegalese population are dairy farmers and produce enough fresh milk to meet local consumption needs.

“Our partnership with the Trade Hub will be key toward harnessing local farmers’ existing ability to provide fresh milk beyond their immediate communities, while increasing their earnings and strengthening food security, which is threatened when a staple product such as milk is not primarily bought from local producers,” says Bagoré Bathily, CEO of La Laiterie du Berger.

La Laiterie du Berger is the first Senegal-based company to brand and sell fresh, locally sourced milk in the country. It is also the first company in Senegal to obtain B Corp certification, which recognises companies that consider the impact of their decisions on workers, customers, suppliers, community, and the environment.

Since its founding in 2007, the company’s sales have grown from $0.4 million during its first year to $16.5 million in 2020. However, despite these earnings, it needed further investment to boost its operations and a strong showing of support to secure private-sector capital, which its partnership with the Trade Hub makes possible.

“The success of this activity will allow La Laiterie du Berger to illustrate tangible results to lenders and facilitate obtaining additional lines of credit for future expansion,” says Bathily.

Prior to partnering with the Trade Hub, La Laiterie du Berger lacked the capacity to source from more than its current network of 850 herders. Through its co-investment funding, it will be able to grow the number of its herders from 850 to 2,000, making it capable of collecting 5,000 metric tons of premium milk over the project’s two-year term, which ends in November 2023.

The 5,000 metric tons will generate $4.5 million in sales and increase herders’ collective incomes from $600,000 to $2 million during the life of the project.

The co-investment partnership will also support the renewal of the company’s B Corp certification, and establish a monitoring and evaluation system capable of capturing the total impact of the company’s socially conscious business practices on the more than 15,000 shop owners it works with.

In addition, the partnership will fund the training of about 1,000 herders in farm management, such as livestock management and animal health. The funding will also allow 155 new jobs to be created at La Laiterie du Berger, including in management, factory, and driver positions. About 80 percent of the roles will be reserved for youth and 15 percent for women.

According to Karl Littlejohn, acting chief of party for the Trade Hub, there is a clear need for investments in companies such as La Laiterie du Berger to professionalise milk production, make it a viable business for herders, and reduce importation. “We are confident that this USAID-backed partnership will transition herders from traditional and subsistence farming to revenue-oriented farming—and just as important—that it will encourage private sector investment,” he says.

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The project included measurement and assessment of a pilot group of farms who supply milk to Somerset based Wyke Farms, which included their own family farms and Michael Eavis’s world famous Worthy Farm, home of the Glastonbury Festival. Working with Promar International and utilising their in-house tool designed in line with IPCC methodology (2019 refinement), the assessment covered emissions from management of livestock, including heifer rearing, for milk production to ‘farm gate’. Additional questions to the GHG Emissions data set were asked to provide a wider view of the sustainability of the farm business including the following: Animal health and welfare, waste management, land management, water efficiency and energy efficiency.

The results found that the Wyke Farms Pilot Group was 1.12 kgCO₂(e)/kgFPCM, significantly lower than the UK average of 1.55 kgCO₂(e)/kgFPCM *¹ and 55% lower than the global average of 2.5 kgCO₂(e)/kgFPCM *²

The Wyke Farms pilot result was also compared to three Promar Carbon Benchmark data sets of conventional farms who operate similar systems, showing that the Wyke Farms Pilot group is lower by 0.2 kgCO₂(e)/kgFPCM than the closest data set average. This indicates that the pilot farms are delivering an effective performance based on the information provided, maintaining low emissions against production targets for the individual farm.

The pilot is the first phase of the Wyke Farms ‘Net Positive Farming’ project to work with their milk producers to reduce emissions. Rich Clothier, managing director and third generation family member at Wyke Farms, says: “Somerset, is the true home of Cheddar cheese and is the best place in the world for dairy farming where we can work in synergy with our environment, rather than having to fight against it. Just by getting all our milk supplying farms up to the best 10% we can save 100k tonnes CO on the cheese we make. We are committed to a carbon neutral future for dairying – it is the only way forward.”

Wyke Farms has spent the past 15 years integrating sustainability into the business and:

• Generates all required gas and electricity from renewables
• Is one of the UK’s largest independent generators of green gas from waste
• Produces natural fertilisers for local farms
• Recovers up to 90% of water

*¹Ecoinvent Data 3.7.1.

*² FAO: http:www.fao.org/3/ca3165EN.pdf

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It is the first of its size and offers 1,000 nomadic dairy farmers permanent farmlands. Arla is the commercial partner that will purchase, collect, process and bring the local milk to market. The company is also working with the Gates Foundation in West Africa on helping more farmers obtain livelihoods and improve food production in the region. Since 2017, the Danish Agricultural and Food Council, Danish Agricultural Knowledge Center Seges, Care Denmark, the Nigerian pastoralist organisation CORET, and the dairy farm co-operative Molcopal have been working together to help Nigeria gain more dairy supply domestically. The Milky Way Partnership programme is supported by the Danish Ministry of Foreign Affairs.

In a way, this is always what dairy is about. Feeding people nutritiously, at low cost, and giving them a livelihood. Turning what is perhaps not the best food product (grass and silage) into a very good, quality source of protein and nutrients. It is indeed something to see, and as global warming makes things such as arable crops in Africa more difficult to produce, the need for livestock farming will be shown as a greater requirement, I suspect.

• Suzanne Christiansen, editor, Dairy Industries International.
  Keep in touch via email: suzanne@bellpublishing.com
  Twitter: @dairyindustries or LinkedIn: Dairy Industries International magazine.

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For 2021, the production projection continues to be 11,575,000 metric tons of fluid milk, an increase of 130,000 tons or 1.1% above the revised 2020 production, which is now estimated at 11,445,000 tons, or 95,000 tons above USDA official.

These flat prices have driven Argentine dairy margins into negative territory since September 2020 as feed prices have risen. Relatively mild weather and flat prices have incentivised farmers to produce more milk in an effort to generate revenue. Fluid milk production in the first few months of 2021 is surpassing 2020, which had the highest level since 2015. However, a reduction in the herd size since that time means that Argentina is unlikely to reach those all-time highs until the herd can be further rebuilt.

The current negative margins, especially for smaller producers, have led to continued protest by local dairy organisations that demand that current price controls be updated or abandoned. Price controls were recently extended until mid-June, but several dairy products were removed from the price control list, including: infant formula, grated cheese, cream cheese, dulce de leche, butter and margarine, yogurt, desserts and puddings.

According to industry contacts, leading dairy processors are in negotiations with the government to establish minimum production levels for a variety of dairy products. The government’s goal is to guarantee sufficient domestic supply to help contain food price inflation. An agreement could shield the dairy industry from export controls which the government has threatened or implemented in other agricultural sectors

The government is also implementing a new law intended to increase the diversity of food products on supermarket shelves by requiring a certain percentage of shelf space be devoted to products produced by small and mid-size businesses, and limiting how much space can be assigned to products from a single company.

The effects of this law, which is beginning to be implemented in May 2021, are uncertain, but it could lead some small dairy processors to devote more production to the formal market. In the short run, supermarket chains are scrambling to diversify their suppliers to comply with the new law.

With mostly fixed domestic prices, trade continues to be important to the financial health of the dairy industry. According to a study by OCLA, a dairy industry organisation, 25.3% of Argentine dairy production went into export channels. The top five destinations for Argentine dairy products are Brazil, Algeria, Russia, Chile, and China.

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“Despite the Covid-19 pandemic, we are optimistic about the growth opportunities in Indonesia, and our decision to invest for the new factory and capacity expansion of our existing factories is a demonstration of our long term commitment to invest in Indonesia, with primary focus to create more employment, to utilide as much as possible local raw materials, and to produce quality and nutritious food and beverages products that are safe and tasty for our consumers, and to contribute to the development of Indonesian economy,” says Ganesan Ampalavanar, president director of PT Nestlé Indonesia.

The new factory will be ready for commercial production in 2023 and will apply state-of-the-art technology to ensure the implementation of highest environmental-friendly operational standards. PT Nestlé Indonesia has also signed a memorandum of understanding with the regional government of Batang, to develop a partnership with prospective dairy farmers and farmer groups to develop dairy farming and fresh milk raw materials for the new factory.

Since 1975, Nestlé Indonesia has been partnering with dairy farmers and cooperatives in East Java by providing technical and financial assistance to improve the productivity and quality of fresh milk production. Every day, Nestlé Indonesia procures about 750,000 liters of fresh milk from 26,000 dairy farmers grouped under 42 dairy cooperatives and farmers groups to fulfill the fresh-milk requirement of Kejayan Factory in East Java. About IDR 4.6 billion is paid every day or IDR 1.6 trillion paid annually to dairy farmers in rural areas, thus supporting the rural economy development and dairy farmers’ livelihood.

Nestlé’s three existing factories, located in Karawang (West Java), Kejayan-Pasuruan (East Java) and Panjang (Lampung), are also undergoing expansion.

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Creamy Foods manufactures a wide range of dairy products at its processing unit in Khurja, Uttar Pradesh including plain milk, ghee, paneer, curd, cooking cream, buttermilk and milk powder. GEA has supplied a wide range of dairy processing equipment to the dairy in the past. GEA’s experience with similar standalone UHT plants across Asia Pacific was a key factor in Creamy Foods’ decision to choose GEA, it says.

Around 34% of liquid milk consumption worldwide is UHT with Asia Pacific being one of the top three regions and one where consumption is increasing. Once packed, the product has a shelf life of up to nine months at ambient temperature, making it as practical as it is nutritious, especially where cold chain distribution is difficult to maintain.

The scope of work includes supply of a complete UHT line with a proprietary direct steam infusion technology. The line will have a milk processing capacity of 15,000 litres of milk per hour, making it one of the largest standalone UHT milk processing plants in the Indian dairy sector. The complete system, which consists of an indirect UHT combined with a direct infusion high heating module, will be designed and supplied by the GEA Aseptic Competence Centre in Ahaus, Germany. The aseptic tank, one of the most critical pieces of equipment, will be delivered from the company’s manufacturing facility in Vadodara, Gujarat.

This plant is characterised by its hybrid type. While it can process high quality products with the gentle direct infusion technology, it can also switch to the highly efficient indirect mode for processing of standardised quality products. In addition, indirect heating and cooling through special tubular heat exchangers, designed by GEA for a high heat recovery of about 88% over the entire production run, allows cost savings and is environmentally friendly. It provides a highly effective ratio of volume to heat exchange area to guarantee optimised product quality and high heat recovery with low steam and cooling water consumption.

“We appreciate the innovative and sustainable technologies from GEA and are very satisfied with the performance of dairy processing equipment supplied in the past. For this reason, we are convinced that we have chosen the right partner for our new plant,” remarks Amit Agarwal, managing director at Creamy Foods.

“We are really happy to partner with Creamy Foods once again with our most innovative solution for UHT technology. The dual mode operation makes it a perfect fit for the customer to differentiate their product along with taking care of consumer’ taste preferences. It has the lowest utility consumption, making it more economical and sustainable in the long run,” says Suket Gohil, country managing director, GEA India.

The contract was signed in February 2020 and the plant is under delivery now.

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Global milk production reached nearly 906 million tonnes in 2020, up 2% from 2019, driven by output increases in all geographical regions, except in Africa, where production remained stable. Milk volume increases were highest in Asia, followed by Europe, the Americas, Oceania and Central America and the Caribbean.

In Asia, milk output rose to 379 million tonnes in 2020, up 2.6% year-on-year, principally driven by increases mainly in India, China, Pakistan and Turkey. Kazakhstan, Uzbekistan and Japan too registered moderate production expansions.

In India, milk output reached 195 million tonnes in 2020, up 2% from 2019, underpinned by the continued rise in dairy cattle numbers and improved feed and fodder availability on favourable monsoon rains (June to September). In China, the increased output of large-scale dairy farms and their operational and production efficiency improvements underpinned the over 7% milk output growth. In Pakistan, milk output increased by 3.2%, mainly due to a rise in cattle numbers.

In Europe, milk output rose to 236 million tonnes, up 1.6% from 2019, mainly due to production increases in the European Union, the Russian Federation and Belarus. In North America, milk output reached nearly 111 million tonnes in 2020, up 2.1% from 2019. In the US, milk output rose by 2.2% to 101 million tonnes, driven by increased dairy herd numbers and milk yields. Covid-19 livestock sector assistance helped sustain internal demand and production, despite pandemic- related adverse impacts, especially labour shortages and transport hurdles. Buoyant import demand from Asia was also a factor that helped milk production expansion.

In South America, milk production expanded by 2% to nearly 82 million in 2020, driven by higher outputs in Argentina, Brazil, Chile and Uruguay, partially offset by a decline in Venezuela. In Argentina, milk production expanded faster than anticipated earlier due to improved pastures and internal and foreign demand. Brazil’s milk output rose, helped by milk production recovery in the last quarter, following one of the country’s most prolonged droughts between May and October 2020.

After four years of declines, milk production in Australia rebounded by over nine million tonnes, underpinned by good rains, improved pastures and increased fodder and feed availability. Government assistance to drought-affected farming households and the extension of farm household allowances also contributed to production expansion. In New Zealand, following a marginal (0.7%) contraction in 2019, milk output rose slightly (+0.4%), reaching 22 million tonnes.

In Africa, milk production remained stable, at 49 million tonnes. Algeria registered a significant output increase, whereas Kenya, Ethiopia and South Africa, among others, registered declines.

On the import side, international dairy trade increased by 1.2% to nearly 79 million tonnes (milk equivalent) in 2020, principally due to increased imports by a few countries, namely China, Algeria, Saudi Arabia and Brazil. China, the world’s largest dairy importer, purchased 17 million tonnes of milk products, a 7.4% increase over 2019, partly induced by the early end of

Covid-19 lockdowns but driven mainly by rising per capita consumption among affluent and urban consumers and expanding consumer base. A sharp increase in whey powder imports, prompted by surging demand from piggeries, also contributed to China’s increased dairy imports.

For further information, see: www.fao.org/3/cb4230en/cb4230en.pdf.

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Rabobank forecasts a 1.1% increase in milk production across the Big-7 dairy-producing regions in 2021. This is a decrease compared to the 1.6% year-on-year increase in 2020 and represents a modest tightening of supply, which should help support markets as demand settles into post-vaccine balance.

“China’s near-term import demand is elevated, but is expected to slow in the second half of the year. High domestic milk prices are driving interest in expanding domestic milk production, which could reduce import needs in the future,” according to Ben Laine, analyst – dairy at Rabobank. The high milk prices favoured imported whole milk powder (WMP) early in the year, but that demand could see a pause following a recent spike in Oceania prices. Milk prices in China have likely reached a peak and will begin to soften from here.

Demand will be in the driver’s seat in 2021. “Throughout the pandemic, global milk supply has been much less impacted than demand. Disruptions arose as consumers made significant shifts in their consumption patterns, which spilled through supply chains. Most of those shifts were abrupt and severe as we entered the crisis, but coming out should be much more gradual,” explains Laine.

Most economies will grow in 2021 compared to 2020. Rabobank is forecasting a 4.5% year-on-year increase in global GDP for 2021, compared to a -3.8% contraction in 2020. The impact of widespread vaccination should be felt by mid-year, which will be positive for economic activity. There will still be a long tail to some aspects of the recovery.

Arenas or convention centres may not be filled this year, but restrictions on restaurants are likely to be lifted, and holiday gatherings are less likely to be discouraged. This will positively impact dairy demand, particularly in markets like the US, where a greater volume of dairy is consumed through foodservice channels than through food prepared at home.

Also in the US, whey and nonfat dry milk have done well, though exports are currently challenged by container availability. These logistical challenges are leading to a large price spread compared to the rest of the world and discounted US commodities. Still, demand from China for whey remains strong, and the shipping challenges should be resolved by the end of the second quarter of 2021.

To download Rabobank’s quarterly report, visit: research.rabobank.com/far/en/documents/138573_Rabobank_Global-Dairy-Quarterly_Q12021.pdf.

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One area of particular interest is the reduction in nitrogen output by feeding low protein diets. This is due to the high and volatile cost of purchased feeds such as soyabean meal, along with their associated environmental costs. The recent DEFRA Clean Air Strategy (2019) also identified that 88% of ammonia emissions in the UK were from agriculture, with 28% of these due to dairy cattle.

The Harper Adams University researchers have been focussing on home-grown forage legumes such as red clover, lucerne and forage pea silages. These forages are of interest because they are higher in protein than traditional feeds such as grass silage, and therefore require less supplementary protein to be fed. They also have the added benefit of not requiring artificial fertiliser nitrogen as they naturally fix it from the atmosphere.

“Only about 25% of the protein that a dairy cow consumes ends up in the milk, but by lowering the protein in the diet to 15% we were able to increase this to 35%”, said Liam Sinclair, Professor of Animal Science at Harper Adams, leader of the research programme. “This is a tremendous improvement and means that less N is excreted that could end up in watercourses.

“Additionally, most of the reduction was due to less nitrogen in the urine which is then lost to the environment as ammonia”, he said.

The University say this reduction will greatly help dairy farmers meet the UK government’s requirement to reduce ammonia emissions by 16% by 2030. The improvement in N use was also achieved without affecting milk performance or quality. It also reduced the cost of purchased soyabean meal by around 1 pence per litre.

“This reduction in purchased feed costs will improve dairy farmers profitability, but it is very important that the diet is properly formulated to meet the cows’ requirement for absorbed protein”, added Professor Sinclair.

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