Can Circular Economy be the driver for making a conventional dairy farm climate neutral by 2024?
Agriculture already operates with several local loops, but is it sustainable? This case explores how to get started on finding opportunities for a circular economy, to make a conventional dairy farmer's business climate neutral.
Focusing on the dimension of ‘Policy & Market’ we went through a process to explore, set goals and create a strategy for the marketable circular dairy.
The dairy farm gained valuable insight into the circularity and sustainability of their dairy, a catalogue of opportunities and a clear way forward on the path to reaching sustainable dairy production.
A large Danish conventional dairy producer, with a herd of around 2,000 cows and a revenue of around 100 million DKK, participated in the MATChE accelerator programme.
The starting point of how the farm currently is operating showed us that a lot of resource loops had already been closed, slowed or narrowed. The sand, from the beds where the cattle seek comfort, is cleaned and reused locally. Plastics are sorted and sent to recycling. The cold water that is pumped up from a well for the cows to drink first passes through a heat exchanger to cool down the warm milk and thus save energy. Finally, all the slurry and beddings are delivered to a biogas facility, which together with a recent investment in a wind turbine, contribute to delivering renewable energy. In the MATChE CE Readiness Assessment, the farm scored well on the readiness scale, with a score of 99 out of the full potential of 150.
Why then work with Circular Economy as a principle? Danish agriculture prides itself on being relatively far ahead, when it comes to effective production of foods. But in the light of a global climate crisis, the sector also stands with a major issue and task ahead of them. Here, Danish agriculture has an opportunity to be part of the solution to reach a sustainable and regenerative food system, and this is key as we broaden the scope, from thinking of a secure supply of dairy and other food products to the surrounding population, to thinking about securing a safe supply of nutrition, health and pleasure to all of the world’s population, in line with the Sustainable Development Goals (SDGs).
The dairy farm in this case aims to become a climate neutral business by 2024 and is already well on the way, when it comes to circularity. However, the question is, to what extent commercial and environmental interests can play together during such a continuous transition? The CEO of the farm set out to discover this, in collaboration with the MATChE project and the Danish agricultural knowledge and innovation centre, SEGES.
Agriculture is an ancient business. For the past many decades, dairy farming has been based on the same simple parameters: kilos of milk, percentage of fat, protein content, plate-count, whether it is GMO-fed, or whether it is ecologic or not. The dairy farm that MATChE collaborated with has therefore set itself the goal of achieving a climate neutral operation by 2024, at which stage they would like to be measured more on parameters of sustainability. It is all about adjusting the business model economically and environmentally, to lead the market to sustainability. But are the customers or the dairies willing to pay 0.50 DKK more for a litre of milk, if it comes from a climate neutral business?
This question, as well as the farm's high readiness score, drove the choice of focus area for their transition path. The focus area became one of 'Strategy and business model innovation' joined with a focus on 'Policy & Market'. This meant that an exploration of how we, by applying Circular Economy as a strategic framework and driver, can deliver a climate neutral product to the market. Followed by an exploration of the opportunities and barriers, that are present on the market, when we talk about sustainability and the requirements and regulation from both customers and government, that are influencing milk producers.
The process with farm and the knowledge centre, SEGES, started by first introducing the concept of Circular Economy in interaction with the MATChE Readiness Assessment approach, which led to ‘Strategy & Business Model Innovation’ and ‘Policy & Market’ being chosen as the main focus areas. This was followed by a mapping of the farm's strengths, weaknesses, threats and opportunities in a circular economy, using the 'SWOT' and a 'Stakeholder Mapping' tools. This helped the farm staff to establish a baseline for the creation of a future strategy and vision. Next, a thorough 'Material Flow Analysis' and 'Mapping of the current business model' were carried out, to identify hotspots for further improvement. Lastly, the 'Strategy Canvas' was used along with mappings to evaluate the potential of different initiatives. To consolidate these steps in the process, a 'Roadmap' was constructed, in order to structure the activities of the different initiatives that will bring the farm closer to its goal.
The farm gained an overview of the circularity of its business and a number of well-founded and concrete initiatives upon which to begin implementation. The farm was interested in developing a clear strategy for the implementation of circular economic initiatives in the company, including a 'climate neutral company target'; a strategic focus on both sustainable and financial goals; a set of customer and consumer-facing sales points for the fam's products; and initiatives to progress the farm's intentions, from 2020 until 2024.
We asked the CEO of the dairy farm to reflect on the process of working with the MATChE team.
"We got a new language about Circular Economy and an understanding of how we can improve our business and processes in this direction. Even though we already had the data available that we used in this collaboration, it is an eye-opener to see it in a circular context. It clearly visualises what we can do as the next step in our transition.”
The next step for the dairy farm will be to test the new business case with both consumers and partners in the dairy business.