The landscape of ingredient sourcing for dairy products is evolving, driven by shifting consumer and corporate interests in ethical and sustainable practices. In this article, we delve into the complexities of ethical sourcing and its impact on the dairy industry.
Defining Ethical Sourcing
Ethical sourcing encompasses a wide range of factors, including environmentally-friendly production processes, responsible use of resources, humane treatment of animals, sustainability, and fair worker treatment and wages. It goes beyond merely procuring ingredients; it represents a commitment to responsible and conscientious business practices.
Kate Clancy, Group Sustainability Director for ingredient supplier Cargill Cocoa & Chocolate, emphasizes that in today’s competitive marketplace, consumers are not just looking for great-tasting products; they are also interested in the compelling stories behind these products.
Retailers Leading the Way
Retailers like Whole Foods Market have taken significant steps toward ethical sourcing. Whole Foods commits to offering cage-free or “better” eggs in its dairy cases. Their Animal Welfare Standards for Laying Hens mandate requirements such as ample room for hens to move and scratch, no antibiotic use, and access to outdoor areas.
To communicate these ethical sourcing practices, Whole Foods uses logos on egg cartons, such as “cage-free plus,” “outdoor access,” “pasture-raised,” and “outdoor living,” to inform consumers about the living conditions of the chickens.
Jennifer Block, Senior Vice President of Dairy Community Relations for the Innovation Center for U.S. Dairy, underscores that consumers want products that are healthy, environmentally responsible, and support animal welfare and workers’ well-being.
Processor Commitment to Ethical Sourcing
Some processors are actively participating in the U.S. Dairy Stewardship Commitment, a voluntary pledge where companies document and demonstrate their progress in social responsibility, animal care, environmental stewardship, product traceability, and community contributions. As of now, 36 dairy companies, representing about 75% of U.S. milk production, have adopted this commitment.
Mike Aquino, Director of ESG for the International Dairy Foods Association, notes that ethical sourcing policies and programs not only align with doing the right thing but also provide a competitive advantage. Well-managed supply chains that consider environmental, social, and governance risk factors are less likely to face disruptions in the long run.
Changing Demographics and Ethical Sourcing
The demand for dairy products with ethically sourced ingredients is expected to increase as millennial and Gen Z shoppers gain a larger share of overall grocery spending. Anne-Marie Roerink, President and Founder of 210 Analytics LLC, highlights that these younger generations are more inclined to consider ethical sourcing in their purchasing decisions, supporting fair wages, animal welfare, and environmental responsibility.
Future Product Claims
Roerink anticipates that product claims will increasingly focus on the use of grass-fed cows for cheese and milk production, as well as regenerative agriculture. Regenerative agriculture aims to restore soil health, protect the climate, conserve water resources, and enhance biodiversity while improving farm productivity.
Verification of Ethical Sourcing
Verifying that suppliers adhere to ethical standards is a significant challenge. Third-party certification organizations can play a crucial role in ensuring that ingredients meet ethical sourcing guidelines. David Thorrold, General Manager of Sales and Marketing for Monk Fruit Corp, suggests that processors should ask suppliers to provide details on their ethical sourcing practices.
The Importance of Education
One of the key challenges is the need to educate consumers about ethical sourcing practices. Industry jargon and differing interpretations of terms like “free range” or “pasture-raised” can lead to confusion. Clear communication and consumer education are essential to bridge this gap.
Working with Trusted Suppliers
Processors are encouraged to work with trusted suppliers who prioritize ethically sourced ingredients. Amanda Greenlee, Global Organics Sustainability Coordinator, points out that consumers are often willing to pay more for products they perceive as ethically and sustainably sourced.
Final Thoughts
Ethical sourcing is a growing priority in the dairy industry, driven by consumer demand and a desire for responsible and sustainable practices. As the industry navigates the complexities of ethical sourcing, transparency, education, and collaboration with trusted suppliers will play pivotal roles in meeting these ethical standards and ensuring consumer trust and satisfaction.
Stay current with supply chain news on The Supply Chain Report. Free trade resources are available at ADAMftd.com.
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