Benchmarking Dairy's Carbon Future: Inside ADPI's Sustainability Push

Jeremy Pike:

Hi, and welcome everybody. We are here live at the A DPI annual membership meeting. I'm joined here with Andy Powers here at the Milk Theory Podcast booth. Andy, great to have you here today.

Andy Powers:

Thank you so much.

Jeremy Pike:

Give us a little bit of background. Maybe tell us your role within ADPI and maybe more specifically what your day-to-day looks like and tie in how sustainability ties into that.

Andy Powers:

Okay. We'll try to give you an encapsulation. I have a fancy title. I'm Vice President of Technical Services. I'm one of two technical staff with ADPI. I joined about three and a half years ago, pleased to collaborate with KJ Barrington, my imminent food scientist partner to divide up the technical responsibilities at ADPI. I'm primarily responsible for our library of ingredient standards, the analytical methods that support them. I'm liaison to three of our standing committees, including sustainability, which is part of why we're here today. And I have some event planning responsibilities. A lot of external engagement such as with AOAC, with IDF is sit on one of the standing committees for ISO slash IDF standing committee on analytical methods for composition and things of that nature. So when it comes to science, when it comes to regulatory compliance, when it comes to food safety and quality systems, that's where I can lend my expertise.

Jeremy Pike:

Thank you. Yeah, that's great. And so you'd mentioned kind of the broader breadth of where you support kind of cross-functionally within ADPI, but also cross-functionally within the industry. When we look at, you'd mentioned as a liaise to a number of the standing committees within ADPI specifically drilling down into that sustainability committee and also your role within the Center of excellence. Can you maybe share a little bit about that specific positioning and how maybe you're able to see things within the industry that others can or maybe beyond what a member of ADPI would see?

Andy Powers:

Yeah, interesting. Let's talk about the center of excellence a little bit. First. Currently that group stands at 11, essentially captive consultants that on behalf of ADPI represent a range of topics and provide their expertise to the member community. As I said, there are 11 of the committee members right now, or the center members. Two of us are ADPI staff. I mentioned KJ Burrington and myself. When it comes to sustainability, we have Jesse Deelo from the Climate Source on the center also. And the center is an interesting resource because it's a consultancy essentially. But with the breadth of expertise from 11 different subject matter experts, our members have access to that group on a topic by topic basis. It is anonymous or confidential, rather consultation, but at the topic level and at the management level, KJ captures and summarizes the amount of engagement that we enjoy and the issues that we're getting inquiries about. And I think in that holistic perspective, it gives us a chance to identify trends. Certainly some of those trends can be sustainability related, but they can be food safety related, they can be processing related or what have you. So that overarching, and again, sanitize that confidential analysis of the topics that arise through the center gives us a chance to recognize opportunities and to work on them. The first part of your question though, I started with the second thing First, remind me just

Jeremy Pike:

What positioning were you able to have? What can you additionally glean as being liaised to the standing committee on sustainability?

Andy Powers:

Oh, sure.

Jeremy Pike:

And that tie with the center of excellence.

Andy Powers:

We've got a handful of committees at ADPI, the standing committees, as the name implies, they're permanent features for member engagement within the organization, and I'm liaison to three of those. The sustainability committee, I would say is the area where I have personally the least expertise. I think though that it provides two advantages. I mean, one, I'm accomplishing the furthering of my own technical knowledge and value to the organization and the members. But at the same time, then I don't come with any preconceived notions about sustainability. It oblig obligates me to leverage the strengths of the people around the table to identify priorities and get meaningful work done. So in that way, I really enjoy the work. I'm learning something every session. Today's was no exception and I'm looking forward to its continued representation in ADPI. It is been in place. What, I mean you've been involved from the start a couple of years now.

Jeremy Pike:

Yeah. We're probably in our second full year of it and very, very exciting, like you said, very dynamic. And so I guess building on that, you mentioned sustainability is maybe not your specific background, but why are we seeing sustainability become such a topic, such a buzzword, such a prominent feature within discussions within the industry?

Andy Powers:

Yeah, I think the consumer community has been at the dairy industry for a while on the topic of sustainability. And if you consider animal welfare a dimension of sustainability, which I do, then I think it's really those things. The resource commitments may be climate change as well as animal welfare mean that sustainability is tremendously important for dairy. We'd be irresponsible if we didn't create opportunities to address some of those issues, to try to enhance transparency and to leverage the ADPI pillars. So I think it was very timely two years ago for the board of directors to act and to unanimously vote to create this new group. I enjoy being involved with it. As all our committees operate, it's pre and pro competitive. We operate under antitrust compliance protections and nevertheless, in that environment, we're able to identify commonalities to set priorities and to work with the amplification, the leverage of the member community resources to get some meaningful things done. It can be slow work as you know, there's a bureaucratic element to it. Building consensus across a number of strong-minded and strong-willed individual contributors can be a challenge, but the rewards dividends that the process pays are tremendous.

Jeremy Pike:

Yeah, absolutely. And to your point, we had had our committee meeting here earlier today, and one of the things I do want to take a minute to reflect on, you said it was very timely that A DPI recognized the need within the industry to support sustainability. Whether that be to your point, from an animal welfare standpoint or from an ingredient standpoint, a people kind of socioeconomic standpoint. You guys have a good visibility there, but can you speak a little bit and maybe share with our listeners some of the work that was done last year, some of the stuff we were able to get accomplished? And when I think about that, I think about specifically that navigator document that provides some of that framework and standards for the new sustainability professional, I'll say.

Andy Powers:

Yeah, that's great. I appreciate the endorsement. Again, the member community decided on a set of priorities. We had three projects that were earmarked for work over the last 12 months, and a couple of them really yielded at their fruition. Then they yielded some resources for the industry or furthered our progress towards valuable goals. That navigator systems and frameworks guide is a tangible thing. It's a print document. It's also available online. It it's downloadable, it's searchable, and for the novice or the initiate, it gives a resource for understanding the landscape of regulatory requirements, different systems that can be used to track different dimensions of sustainability, and a means a model for selecting among those systems as you embark on that sustainability journey. So that's one extremely tangible dimension of our accomplishments. The other one is the work that you led. So we're continuing to drive forward towards the ultimate goal of transparency and metrics as it relates to sustainability. And of course we're talking about a missions in this particular case, product carbon footprint. The project there has had a pretty long time horizon. We made some advancements over this last 12 months, and we ratified our continued work in that area as we're talking about how possibly to disseminate some guidance and incorporate methodology and measures into ADPI's ingredient standards again being one of our pillars.

Jeremy Pike:

Yeah, that's great. And exactly right. We start to see that phrase product carbon footprint becoming more of a talking point, whether it be formally included in a contract with a customer.

Andy Powers:

You're seeing that.

Jeremy Pike:

Or even just more basic, just curiosity from a survey standpoint, I guess, where do you see that product level data being a lever for ingredient manufacturers? And you started to get to the point of where A DPI can maybe play in that from a transparency and a standards relations standpoint, but maybe share a little bit on that.

Andy Powers:

Yeah, I mean, we've alluded to ADPI's ingredient standards quite a bit in my mind for a long time now, if we got to the point where we had standardized methodology and we could generate meaningful benchmark values for greenhouse gas emissions on an ingredient by ingredient basis, that would be an additional layer of value that we can deliver in those documents, keep them contemporary, and enable our member community again to use those in commerce. And that's truly the point. They need to be practical. We're getting closer and closer to that eventuality by the minute. I think we recognize that we have to step carefully, but I think the establishment of a standardized methodology and the imminent publication of some region specific values ingredient by ingredient, at the very least, it establishes benchmarking. I think as a processor you can know, am I ahead of the curve?

Am I behind the curve? Both of those acknowledgements have value as an industry. We can also track our progress. So benchmarking that baseline is the measure against which all continuous improvement will be judged. So that's a very high level overview of the low hanging fruit. I think the potential benefits, we're going to navigate carefully. We've got to consider all the pros and cons here and don't be hasty, but I think we're getting closer and closer to another dimension of transparency and value add for those ingredient standards if we cross that finish line. Looking forward to it.

Jeremy Pike:

Absolutely. Thank you, Andy. I think we think about it, you mentioned the benefits. You started to elude a little bit to the risks that are maybe associated there. And I do want to make a point to maybe drill down on that even a little bit more, and I'll give my take on it. And obviously you've already heard this. This is more for the benefit of the broader listener group here. But when we look at things like product carbon footprint, and especially at an aggregate level, at a pre-competitive level, I think where A DPI really can stand is being that guidance document. I alluded earlier in our committee meeting, there's documentation that the innovation center is going to be putting out. There are going to be numbers out there. And so if we have these ingredients, intensity numbers already being visible within the marketplace, I think the position for ADPI is to get ahead of that to hopefully bring in those guardrails. And of course, we want to be mindful of those risks. And some of those risks are somebody may concerned because they do have a higher number than that benchmark. They may be cheering because they've got a lower footprint

Against the benchmark and their strategy or take it and run. But I think at the end of the day, the big risk that we have by not addressing this and having some acknowledged endorsed type of standardized methodology is people will take this and do the wrong things with them.

Andy Powers:

Oh, agreed.

Jeremy Pike:

And I don't know if there's any other risks that you could see maybe in the national lens from an ADPI standpoint, but even if we back up from a global standpoint and look at the US dairy industry as a collective, how does that look on a global stage? What risks might be there from the global perspective of umpteen different co-ops and processors choosing their own adventure on a footprint standpoint and how that looks to maybe a buyer halfway across the world?

Andy Powers:

Yeah, that fragmentation, I think is undesirable. I think that puts us dairy at a disadvantage. I think some unity from a science-based perspective will demonstrate two things. One, that we're being intentional about studying the opportunity at hand, and two, then we can tell the success stories about dairy's continued improvement in sustainability as time goes by. The rest of the world's a little bit ahead of us on this, or maybe you would say more than a little bit. I think the cost of inaction is substantial and we have the opportunity to cooperate and collaborate. And you hear me mention that a lot in committee proceedings. I think the benefit here is that with the endorsement of our industry partners published information that could otherwise be interpreted, whatever way you want, you called it pick your own adventure, we've got a chance to get out in front of that, provide some guidance to explain, here it comes. This is how it was generated, this is what it means. Here are the ways to put this to good use to your advantage, and here are some pitfalls to avoid. And all of that then enables further transparency. So I think the more dairy can open itself to the world, the more consumers are going to see that there's a great circularity story to tell that dairy is a good steward for the environment and that we measure up and that we're continuously working to improve.

Jeremy Pike:

Absolutely. And I think the more we look at it and where that resource could maybe help bridge a gap, maybe what your hot take is on how that would maybe play into the likes of verification. We hear that becoming more and more of a prominent ask from customers as a supplier, we may provide a number. They want to know where it comes from. Okay, now we also have this standardized methodology. Those are all great builds, but even further building on that, we've got that verification piece or audit readiness piece. How do you see maybe that type of document being able to be leveraged in that type of a situation, those downstream verifications or the audit readiness situations?

Andy Powers:

Well, I mean audit readiness is near and dear to my heart having been in quality and food safety for a very long time. And the lesson is that you're always on that journey. You're not preparing for an audit the day of or the week before, but it's the way that your company operates. It's the work that you live and breathe every single day. I think having consistent tools is going to make that readiness that much easier. I think it's going to help make quantitative and legitimate apples to apples comparisons. I think it's an important step forward. I don't personally feel the pain of those customer verifications, but I think when you can get behind credible methods and you begin to present a rationale for the approach that your organization is taking, and this is similar, if not wholly consistent from one supplier to the next to next, then you're also influencing that end user community to align and harmonize.

Jeremy Pike:

Great. And then really what role then do you see ADPI being able to maybe play to help minimize that unnecessary burden that now becomes the table stakes of verification and audit readiness?

Andy Powers:

Yeah, so we've got a couple of aspects of our strengths, and one of them is we call it leading the way. That's really about training and resources. So that's a strength of our organization. We're talking about tools that are being developed by others. The innovation center is leading the charge. You've got others like the climate source that are doing valuable work in carbon accounting and lifecycle analysis. That's not our forte, but what we can do is make sure that those advancements are known to the industry and they understand how to use these emerging tools. And I think that's one dimension. The other one is our bringing people together principle. So whether that's through training, whether it's at conferences like this one, I don't want to toot our own horn, but the point is that we already have this core strength of bringing people together to hear our messages, to hear from dairy industry experts, and through that platform, the communication about all this valuable work reaches the people who need the knowledge, need

Jeremy Pike:

The information. Absolutely. Yeah, and I think it's great. We had heard Patty say over a thousand or near a thousand registered, registered attendees, and then obviously you've got the handful of others that are here because of this event. So just even the notoriety that ADPI has within the industry and the following that it brings, I think further obviously just shows the reputation that then precedes ADPI both from a domestic standpoint as well as hopefully

Andy Powers:

Yeah, growing internationally. Yeah, I agree.

Jeremy Pike:

And so I guess kind of bridging that and maybe transitioning a little bit, would you say what are some of the lookouts in the next five to 10 years? If you had that magic crystal ball, what would you say specifically within sustainability or a position within ADPI, how those may pair together, what it would maybe look like in that kind of near medium term?

Andy Powers:

Well, I don't know that I could take an organization wide stance, but I can tell you my opinions. I voiced one of them today. Of course, we're focused on emissions on farm, and that's the lion's share of the opportunity. Maybe that means there's low hanging fruit, everybody's working on that. Enteric emissions are a known challenge and we've got some good tools like feed additives and other ways to mitigate that dimension of dairy sustainability. But I think we often overlook, as I said in committee today, the processing dimension of dairy's footprint. And I think we'd be remiss if we didn't seek potential opportunities for improvement there as well. I'm a little bit processing oriented in my mind too, so I lean towards not leaving processing behind in this journey towards sustainability improvements. So let's pay attention to processing. I think that's something that we've got to do.

I'm not saying the enteric emissions problem is solving itself, but people are working really hard on it and the focus is there other dimensions of things that we need to pay attention to. I'm concerned that we're focusing on emissions and we're not thinking about what I would consider globally a bigger picture, and that's water. We're not thinking about it enough. Dairy is doing a tremendous amount to cycle and recycle to make circular the utilization of water and it's water intensive, and yet people don't understand. You get into the 94 or 95, 97% circularity of water through the dairy value chain, and yet the rest of the world to differing degrees is wrestling with water availability and water management. This is a little bit near and dear to me. I live in Arizona. I'm a transplant there. I didn't grow up there coming from the Midwest and moving to the Sonoran Desert, it's absurd to me to see the abuses of water availability that come from the, I don't remember.

I think it's called the All-American Canal system that was built between 1928 and 1940. This makes Colorado River Water available to the entire state of Arizona and others. Southern California depends on it very heavily, and we've seen levels at the reservoirs and in the river itself at all time. Lows over recent years, global warming's playing a part in that. And yet we continue to take that influx of water that we take for granted and we put it on golf courses and we put it on public green spaces. It's beautiful. I don't believe it's sustainable and it reflects a lack of appropriate prioritization that it would be a mistake that dairy would be extremely remiss to make. So water management, long-winded way to say, I think we're taking it for granted might be a first world position that we need to rethink carefully. And I don't know that the regulations in our current environment are supportive of water conservation, resource conservation in general. So very long-winded response to say, Matt Water, I think we've got to start paying more attention to that.

Jeremy Pike:

No, I appreciate both of those perspectives, and I'll give my 2 cents and drill into both of those a little bit as well. I think to your point, that other 20% of the holistic picture of what an ingredient, what a product that a customer would be getting. We know to your point, we know that the on-farm pieces, the lions share, but we look around the room here and you see all the variety of exhibitors that are here joining us. Yes, some of them, most of them have a presence for technologies on dairies, but also a number of the different exhibitors here are also primarily focused on the processing side. And there are so many levers or opportunities at the processor level that especially when you look at some of those near term targets where folks might have 20, 30, 40% reduction targets by 2030 and excluding 20% of your holistic picture, you're missing out on maybe a chunk of reduction there. So that's kind of my just hot take initial thought, the 20%.

Andy Powers:

Yeah, I think our minds are aligned on that. Totally get it.

Jeremy Pike:

And then from the water piece too, obviously can very much sympathize with you there. We're based in the high desert of Idaho water in our areas, the Magic Valley, due to the aquifers and the canal systems that similar timing, early 19th century or 20th century development of those systems, we've experienced a very, very low precipitation, very low moisture year. We saw a little bit from Mark Russo's discussion yesterday there sharing some of those percentages, and I think our county was maybe sub 70% of where it needs to be. And so that's a concern for us from a water standpoint. Obviously upstream for us on, no pun intended upstream for us on the farm side, that water delivery through the canals is reliant on that snowpack and water availability. If all of a sudden that water isn't there, you see that cascading, those dominoes fall of, well, now maybe crops perform horror or you're taking a field and shorting it of water.

And then the flip side on the plant for us, we utilize and leverage cow water. And so even if water is reduced on the farm, say, and this is maybe the extreme end of it, but if water is reduced on the farm side, regardless of all the implications that throws for the producer, worst case say milk output is reduced. We're reliant on that milk for one, obviously our business, but two kind of that fourth product category from our core business is water. We're taking that milk stream, fractionating it out into its various macronutrients, isolating then that cow water polishing it and using it back in our plant. So if we don't have that, that minimizes our ability to recycle and reuse a lot of that. That increases our withdrawal and then now we're in even a worse spot. So kind of a double edge there on both fronts. And again, Idaho obviously is similar to what we're seeing in Arizona, but then we've got folks on the other side that have so much water, they don't know what to do with it, and cities are flooding, and so it's very interesting times.

Andy Powers:

I hear you. I wanted to be clear. I mean, you tell the story about what dairy is currently doing, and I think dairy has been a fantastic steward of water as a precious resource. I think dairy can stand as an example to other industries instead of focuses on areas where we are making tremendous progress, but especially in water management, dairy is strong, and that perspective about global water availability, shortages, global climate, all those issues, that really to me is a worldview and not a dairy specific one.

Jeremy Pike:

Well, that's great. I appreciate that perspective, and I see we're coming up on our time here and I want to be mindful of your busy schedule. I know it's speed dating for most of the folks that are here, and we're kind of running ragged here over the last few days, so I do want to be mindful, but I think maybe one kind of rapid fire type wrap up question we looked at and we've answered the question maybe what's the unavoidable sustainability topic? We alluded to the water piece. Maybe to end on a more positive note, what would you say gives you the most optimism within the dairy industry? Where we're going specifically? Obviously in my world, in the sustainability world, what's one thing that you can say, hang your hat on us. Dairy is the best at this, or we have what just gets you excited and optimistic?

Andy Powers:

Yeah. I hate to give a boring answer. US dairy is especially strong at scale. I mean, I think we are the low cost producer of milk and milk derived ingredients globally, and that's been a tremendous opportunity for us to compete as global trade dynamics have changed. I don't think that's all of it, though. I think dairy has especially embraced sustainability as a journey and not a destination. I think dairy already had in its hip pocket a number of success stories based on farm practices that go back centuries in some cases. They've been tremendous stewards of our environment and now having documented ways to evaluate what dairy's doing and to put some numbers to those advantageous or those conscientious practices, I think that's fantastic.

Jeremy Pike:

Awesome. Thank you, Andy. Very well put. Think we'll end on that. I appreciate your time today. I guess any other final thoughts or words that you have for the group?

Andy Powers:

Well, in that sense of thinking about sustainability as a journey, we're really at the beginning of that with ADPI. I think I'm encouraged that our members continue to embrace the need and recognize that there is a lane, there are strengths of our organization that are unique and that can be leveraged to amplify the successes of others. And the rising tide analogy, right? All of us are going to benefit from the good work that's being done, and we are playing a part in getting that message out there. I enjoy it. I'm passionate about the work that we're doing right now. I'm grateful for the contributions of people like you who are thought leaders for our industry. And as long as you got the energy and the will, keep it up, happy to collaborate with you.

Jeremy Pike:

Thank you, Andy. Appreciate the time. Appreciate your insight.

Andy Powers:

You're welcome.

Jeremy Pike:

Thanks everybody, and we'll see you on the next one.

Andy Powers:

Yeah, thanks for the invitation.