Ethical sourcing of ingredients by dairy processors is becoming more prominent, widespread, and essential.

With brands, consumers, associations, and government agencies giving a greater focus to such elements as sustainability, animal welfare, and fair labor practices, operators are under pressure to only partner with suppliers that function in a virtuous manner.

“Foundational principles about the treatment of animals, people, and our planet are widely accepted as table stakes for doing business along the dairy value chain,” says Mike Aquino, director of environmental, social, and governance (ESG) for the Washington, D.C.-based International Dairy Foods Association (IDFA).

Ethical sourcing, including animal welfare, regulatory compliance, and fair labor practices, are among the top sustainable management issues listed by many IDFA members in a recent survey, he notes, adding that consumers and other parties also have sourcing expectations for a greater array of ingredients and supplier practices.

“While initially there was a large emphasis on fairly traded crops and ingredients, more brands and ingredient suppliers are building capabilities to ensure their products meet such expectations as greenhouse gas management and ecosystem stewardship,” Aquino states. 

Measures from Maple Hill Creamery LLC, a Kinderhook, N.Y.-based producer of milk, kefir, Greek yogurt, cream on top of yogurt, and butter, include feeding cows on its farms a 100% grass-fed organic diet while eschewing hormones, pesticides and herbicides, says Founder and CEO Tim Joseph.

Founded in 2009, the creamery incorporates regenerative farming practices to enhance soil health, water retention, and carbon sequestration, along with grazing techniques that promote a sustainable ecosystem and foster biodiversity, he states.

“The land is central to how the dairy makes grass-fed milk, which is naturally fortified from nutrients from the earth,” the CEO stresses.

Producing products under such a system, however, can be a slow process, Joseph says. “It takes three to five years for a new grass-fed organic dairy farmer to learn how to manage the cows and grass in a way that produces consistent amounts of milk and for the land and grass to respond,” he explains. 

The regenerative agriculture movement, however, is demonstrating that livestock, and particularly cattle, “are a powerful and positive force for improving and regenerating land and soil health,” Joseph says.

A mandatory measure for long-term success

An increasing societal emphasis on the ethical sourcing of ingredients is making it essential to follow proper practices, suppliers say. “Only businesses that are truly sustainable will be able to survive over the long term,” states Alice Lee, technical marketing manager for GNT USA LLC, a Dallas, N.C.-based provider of colors that it creates from non-GMO fruit, vegetables, plants, seeds and algae.

GNT initiatives include training farmers in sustainable agriculture while promoting biodiversity and cutting the carbon footprint of products, she says.

“Consumers are paying more attention to product creation and that will lead to more transparency around how ingredients are produced, including reassurances around the environmental footprint and the ethical treatment of people and animals,” Lee states.

While monitoring every stage of a supply chain for ethical practices can be arduous, Lee emphasizes that GNT has long-term contracts with most of its farmers. Additionally, the company’s agronomists have access to their fields to ensure the growing of raw materials are in line with expectations on ethics, sustainability, and quality.

Forging long-term partnerships with farmers while jointly supporting ethical sourcing also is a focus of Beneo GmbH, a Mannheim, Germany-based ingredient developer, says Nathalie Sadin, corporate sustainability manager.

Beneo is emphasizing regenerative agriculture to improve soil health and biodiversity while mitigating climate change and protecting water resources, she states. The company also is monitoring human rights throughout its supply chain, and working to decrease greenhouse gas emissions and waste, she adds.

Authenticate the actions from farm to table

Verifying that operators are indeed incorporating proper sourcing measures is becoming more important because of the threat of greenwashing — where companies falsely portray their production practices are sustainable and ethical, says Linnea  Halter, marketing coordinator for Global Organics Ltd, a Cambridge, Mass.-based ingredient supplier that sources products from certified organic farms and Fairtrade cooperatives to support sustainable agriculture consumer and fair labor practices.

She notes that while Global Organics audits its suppliers to ensure compliance with ethical standards and uses traceability systems “to track the journey of ingredients from farm to table,” certifying the authenticity of supplier claims can be challenging, particularly in regions where there is a weak regulatory framework.

“Sustainability has to be kept front of mind along the entire value chain, from farm to fork, and this includes ingredient sourcing,” she says. “Food and drink manufacturers are under increasing pressure from authorities and consumers to consider sustainability aspects in their chains.”

— Nathalie Sadin, corporate sustainability manager at Beneo GmbH

It also can be difficult for operators to compare and understand how parties are addressing supply chain issues because Fairtrade certifications focus on various aspects of fair trading, says Cynthia Morphet, Global Organics QA certification and customer support manager.

“The various Fairtrade and ethical certifications would ideally work toward harmonization, much as the organic certifications worldwide have already done, rather than competing with each other and dividing focus and effort,” she states.

Sharing robust, informative data within complex supply chains and then using that data to develop improvement plans is a further challenge, says John Dardis, senior vice president of sustainability, for Glanbia Nutritionals, a Chicago-based ingredient developer. 

Glanbia uses a third-party sustainability ratings provider to generate an independent assessment of its suppliers’ performance on ESG, and partners with the provider to implement corrective actions when issues arise, he states. In addition, the operator uses materiality assessments to ensure that it focuses on areas in which it can have the greatest impact. For instance, working with suppliers on the welfare of farm workers and how animals are managed, Dardis notes. 

“To drive systemic change across the food and agriculture system, we must collaborate with the stakeholders that influence all parts of that system,” says Julie Robey, customer sustainable leader, Food Solutions America, for Cargill Inc., a Minneapolis-based ingredient developer.

Cargill is working to identify and manage human rights and environmental risks within its own operation, its supply chains, and from business relationships via a corporate due diligence policy, she states. Measures include the use of satellite imagery; certifications; conducting on-site visits with supplier partners; receiving grievances via an “ethics open line;” garnering information from third-party sources, including governmental authorities, international non-governmental organizations, and consulting experts; and teaming with suppliers to manage ESG risks.

An emphasis on safety for workers, animals

Worker welfare also is a focus of Ingredion Inc., a Westchester, Ill.-based ingredient supplier. Ingredion is moving to ensure that workers have access to the necessary training and personal protective equipment when applying chemicals, says Andrew Utterback, director for global sustainable sourcing.

 “Access to sanitary facilities and hand-washing stations that is taken for granted in large row crop farming operations can be challenging for smallholders as well,” he explains.

Coming down the pipeline, Ingredion will be sustainably sourcing all if its tier-one crops, including corn, tapioca, stevia, pulses, and potato, by 2025, Utterback states. “Ethical sourcing is table stakes for selling ingredients in the food and beverage industry,” he notes.

Regardless of the standards that operators follow, it is important that they also utilize effective traceability measures to monitor ethical sourcing, analysts say. 

“Traceability fosters consumer trust in food products by offering transparency and the ability to trace each ingredient back to its origin while instilling confidence in the authenticity and excellence of the purchased item,” says Abby Ceule, vice president, functional systems, for Corbion, a Lenexa, Kan.-based provider of food preservation solutions, functional blends, and algae ingredients.

She notes that Corbion uses digital traceability systems to monitor “every ingredient’s journey. Traceability serves as a tool to authenticate ingredients and ensure the use of only premium-quality materials.” 

Moving forward, verification and traceability of sustainably sourced goods will improve with the use of new digital ledgers that track transactions along long, complex, and often global supply chains, Aquino says.

Greater incorporation of ethical sourcing measures also can occur as more dairy farmers, milk processors, and cooperatives adhere to the best management practices that are part of the National Dairy Farmers Assuring Responsible Management (FARM) program, he notes. 

The program focuses on animal care, antibiotic stewardship, biosecurity, environmental stewardship, and workforce development, and provides participants with such resources as science-based standards, verifications, and metrics with a stated aim of demonstrating that U.S. dairy farmers are committed to producing high-quality and safe milk with integrity.

“Processors may work with their suppliers and customers to learn what is feasible, and ultimately include some ethical sourcing requirements that go beyond regulatory compliance into ‘supplier codes of conduct’ agreements,” Aquino says.

He suggests that processors investigate what peer companies are doing in the space and benchmark themselves against the companies to determine if existing supply agreement obligations are sufficient to manage current sustainable sourcing expectations.

However, while there are strong benefits from engaging in ethical sourcing, program management can be burdensome. It is often costly for companies to evaluate and verify sourcing claims and operators may need to segregate ingredients that carry specific ethical or sustainable attributes from those that are not part of a program, Aquino says.

In addition, processors should have systems that enable the continual sourcing of ethical ingredients during supply chain disruptions, he notes. “Building some degree of supply chain redundancy, such as approved alternate suppliers, may help with supply continuity,” Aquino concludes.