Milk Power - Making more from milk

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October 2015 Auckland office: +64 9 353 9700 Wellington office: +64 4 498 5000 www.minterellison.co.nz Milk Power Making more from milk

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We speak to Synlait CEO John Penno and Milk Supply Manager David Williams about a world first initiative focussed on best practice which has Synlait, its milk suppliers and its customers, awash with pride.

Transcript of Milk Power - Making more from milk

Page 1: Milk Power - Making more from milk

October 2015

Auckland office: +64 9 353 9700Wellington office: +64 4 498 5000

www.minterellison.co.nz

Milk Power Making more from milk

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Ask a dairy farmer if they’re doing their best and chances are the reply will be an unequivocal ‘yes’.

Question the same soul if their approach is world-leading best practice, across all aspects and measures of performance, and the answer may be a bit more muted. Unless they happen to be part of Synlait’s Lead With PrideTM program.

Launched in April 2013, this ground breaking undertaking recognises and financially rewards suppliers who achieve what has been bench marked as dairy farming excellence.

It started off as a literal ‘one stop shop’ for farmers seeking assistance with compliance and related issues particularly in regards to the environmental impact of dairying.

From there it has grown into what those in the industry see as a world-leading undertaking. One that is designed to be transformational and one that guarantees the integrity of pure, natural milk produced on certified dairy farms.

Synlait Managing Director and CEO Dr John Penno is firmly on the front foot when touting the merits of Lead With Pride.

“To produce world-class milk-based nutritional products and create value for all, we need leaders who are committed to farming excellence. Our proposition of ‘making more from milk’ by definition needs to be driven by pushing the boundaries of innovation.”

“Our focus here is farmer-based but one of our key overall objectives is partnering with the best customers. Lead With PrideTM fits perfectly with this as the best customers demand supply chain integrity. Little wonder the program has become a compelling part of the story of the journey milk makes from the farm to the consumer.”

Turning the tideSynlait’s Milk Supply Manager David Williams is personally chuffed that Leading With PrideTM is gaining momentum and taking on a life of its own.

“It is not compulsory. Farmers make the choice of whether to take part or not.

The original intention was to find ways to create value behind the farm gate in order to add value to Suppliers and customers alike. Given the negative press the industry was

attracting related to environmental issues the starting point had a ‘Green’ focus.

“We were concerned about the community perception of dairying in Canterbury, and the fact that there was no way of recognising the great work that farmers have been doing. We believed that following best practice, and incentivising farmers to be more planet friendly, would improve not just their image but also returns. From this foundation the program quickly developed into an undertaking based around four key precepts (environment, milk quality, animal health and well being, and social responsibility) as we investigated other opportunities that could be exploited with a farm assurance program.”

“Around the same time we did some research work in Asia that confirmed consumers were not just concerned about food safety. They were genuinely interested in issues to do with the environment, animals and people as well. This gave us the confidence to launch Lead With PrideTM, and pay farmers a premium milk price for being part of the program.”

An internal working group made up of experts in each ‘pillar’, with oversight from a steering committee, started the more formal process of putting structure to the ideas.

While David believes it was completely unique in the world of dairying when first released, many of the elements would be recognisable to any manufacturing company. It was a matter of capturing the essence of ‘excellence’ and then systematically documenting the steps to

“A wonderful by-product of the undertaking is that we understand our suppliers a lot better, and they understand us a lot better as well”

A world first initiative focussed on best practice has dairy company Synlait, its Milk Suppliers and its customers, awash with pride.

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“In a world that is more and more concerned about food safety and quality this is a very powerful innovation.”

H Environment

H Animal Health & Welfare

H Milk Quality

H Social Responsibility

Rather than being a ‘one trick’ pony, Synlait’s multi-faceted and integrated program has real horse power. It is built around four ‘pillar’ principles that individually are important for the integrity of the program. Collectively they define levels of achievement, leadership and excellence in farming practice that Synlait is proud to promote. Research says they are also issues that customers buy into. Moreover, Synlait has beaten the market in the creation of the concept of certified dairy farms producing pure, natural milk. Making more from milk – naturally.

The Four Pillars of PrideGrass roots Once launched farmers came on board largely out of pride but also seeking the recognition of following best practice.

Some also saw Lead With PrideTM as a mechanism for correcting a particular weakness in their farming system. Not surprisingly following best practice also meant farmers could make more money.

“If, for example, a supplier is following best practice for irrigation they will only be applying the amount of water required to maximise grass production. This is usually done by analysing soil moisture levels. If a farmer is just guessing when to irrigate, they’ll probably over water which uses more energy, will slow grass growth in the shoulders of the season, and more nutrients will leach out of the soil, which will need to be replaced. This is but one example of how following best practice actually saves suppliers money, and is better for the environment.”

To further test the precepts around the program, Synlait commissioned Lincoln University’s Agribusiness Economic Research Unit to complete a study on the value of the program to farmers over and above the benefit of higher premiums. The findings

confirmed that following best practice had much greater financial return to farmers that the premium payment alone.

“In their own minds, and ours, farmers are not just another supply number. They are leaders and valued partners. Over time we want the Lead With PrideTM brand to be recognised as a mark of excellence in the community.”

follow in achieving certification.

“People can literally see where their milk products originate from right down to a specific group of farms. It’s all about traceability for the consumer – from can back to the source. They can see how environmental and animal welfare issues are given priority. They can also be assured that what they’re consuming is underpinned by the best in systems and processes.

David says by the end of FY2016 at least 28 farms will be fully certified. This will create sufficient volume of product to meet the needs of customers aligned with this part of Synlait’s product supply agreements. As the concept of Pride grows and spreads through the region he has no doubt that more farmers will put up their hands and come on board.

Dr John Penno Synlait Managing Director and CEO

Lance Main First LWP recipient

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