Digital systems transforming global dairy

Jan Shepel

QUOTE  if you want to use it:
“A new type of consumer is emerging and relating to food differently than past generations. Consumers will pay more attention to buying products that reflect their own values.”
Robert M. Erhard,
Nestle Dairy Sourcing Specialist

Consumers demand transparency, traceability


            Digital technologies are transforming the dairy industry as consumers of dairy products – indeed all kinds of food – also change all over the world. Consumers who are increasingly interested in how their food is produced, for example, can look at a website to see the chickens that laid the eggs they are eating.
            Dairy still comes in a lot of shapes and sizes around the world, but new technology is transforming some of those third-world kinds of dairy farms into modern freestall and parlor setups that would be recognized by the best producers in the United States and Europe. A man who has seen many of those changes was a recent speaker in Madison.
            Robert M. Erhard, spoke to a World Dairy Expo audience about the many changes in consumer attitudes and dairy production during a Global Dairy Symposium sponsored by the Wisconsin Department of Agriculture, Trade and Consumer Protection.
            Erhard currently serves as Nestle’s Dairy Sourcing Specialist at the company’s head office in Switzerland and is involved in global fresh milk procurement for Nestle in 30 countries. He began his career with Nestle in China in 2003 where he was a technical specialist then milk district manager. In 2013 he steered the Nestle Dairy Farming Institute Project as project manager and stayed on as Startup and General Manager until last year.
            For many farmers, the digital world and new systems have changed the way they operate. Tractors are linked into satellite navigation systems and management programs that allow them to track what needs to be done in each field.
On dairy farms there are systems to help with cow management linked into programs that collect data and interpret it for the farmer. For example, rumination monitors can alert dairy farmers if there are problems with certain cows, or if cows are in heat. “Digital is transformational,” he said.
            Erhard predicted that what comes next will be further integration of all this information so that farmers can look at a “dashboard” in the morning to alert them to what tasks need their attention. Many farmers already are doing that.
            But he sees an even greater transformation on the consumer side of the equation. Increasingly, they want to know what’s in their food, where it came from and how it was made. “A new type of consumer is emerging and relating to food differently than past generations,” he said. “Consumers will pay more attention to buying products that reflect their own values.”
            His company has initiated programs reflecting this change they see in consumers. It involves the whole system -- quality assurance, agriculture, packaging and consumption, animal welfare, traceability, social responsibility and sustainability.
            “The number of consumers looking for sustainable production continues to rise, especially in emerging markets and amongst millenials,” Erhard said. “Sustainability is important and trust is a key purchasing driver.”
            A Nielsen survey from a year ago confirmed the trend that consumers are willing to pay more for sustainable products. That was the case in Asia-Pacific consumers and Latin American consumers had the highest willingness to pay more in that survey, he said.
            “For many companies, consumer pressure is the single most important factor in raising sustainable programs,” he said. For many the definition of sustainable agricultural practices is “not wasting, not polluting and not destroying,” he added.
            In Pakistan several companies, including Nestle, began collaborating on a big project to decrease food waste.

Digital technologies are transforming the dairy industry as consumers of dairy products.

Trust is critical

Erhard sees opportunities in this kind of market, but adds that it is all built on trust. “Trust takes years to build, seconds to destroy and forever to repair.”
            For dairy products this means transparency and traceability of milk production, from farms to fields to inputs. Consumers increasingly ask questions like “where does the feed come from? Is it from a deforested area?” he said. “Those are the kinds of questions consumers are asking.
            “We have to as an industry answer these questions and gain that trust. We need to communicate what we do and then aggregate that information.”
            Erhard believes that being “consumer-centric” will contribute to better milk prices in the long run if producers and the whole industry work together. The Irish dairy industry, he said, has done this.
            They are taking a countrywide approach and by the end of this year every farm in the country will be inventoried. Their water use, greenhouse gas emissions and other factors will be measured by a third-party specialist on sustainability. The growth of grass is being monitored and advisories go out to farmers.
Financial tools are also available to Irish farmers through this new countrywide sustainability program and farmers can benchmark themselves against other Irish farmers.

Modern, professional

Erhard believes that even though Ireland is a small country, this kind of system should be a model to the world and that dairy producers in all countries should become “more modern and more professional” because it is what consumers are demanding.
He was referring to many small-holder dairy farmers in all parts of the world who are “farmers by default” and who are not interested in “going digital or professionalizing.”
“A bottle of water can tend to be more expensive than milk, even though milk is one of the world’s lowest cost and most nourishing foods,” he said. “Farmers have been pushed to be efficient but how many farmers can prove their greenhouse gas emissions are down or that they are using less water? These things are important to show,” he said.
            “You can succeed in dairy farming,” he said. “You just have to turn the corner – and it’s a different corner every day.”
            The Global Dairy Symposium was sponsored in collaboration with the University of Wisconsin-River Falls and U.S. Livestock Genetics Export, Inc.