The Demand for Dairy and the Demands on Dairy Farmers

Dec 08

Paul Gardner is responsible for all Milk & Dairy Ingredient purchasing for the Danone Worldwide Dairy Division. He kicked off today’s dairy session at Global 500 speaking on dairy demand.

Globally Danone purchase 3 billion dollars of milk each year. As head of purchasing, Gardner has first-hand experience with price volatility, one of the primary challenges for the dairy industry.

"Volatility in the market is huge when you buy that much milk but volatility is a much bigger issue for farmers.  One year you can think about investing and the next year you cannot buy Christmas presents for your kids. When farmers can invest they make short term investments because volatility prevents them from making long term investments."

Although market volatility and other economic problems are serious issues for farmers there are plenty of other challenges to consider. Gardner said, “Today’s farmer is expected to be a nutritionist, veterinarian, environmental manager, entrepreneur, teacher and investor. The only thing we are not asking our farmers to is win dancing with the stars… and that is coming in 2015.”

Danone has developed a “360o approach” to help visualize these challenges and how they can work with farmers to address them. Gardner described this approach which divides challenges and corresponding goals into four categories: economic, social, health and wellness and nature.

Economic challenges that must be addressed include price volatility, slim margins and lack of security to plan mid to long term investments. Social challenges can be met by empowering farmers with training, knowledge sharing and connections. Natural resource protection issues include green house gas reduction; and water, soil, and biodiversity protection. Health and wellness issues are essential for increasing demand for milk. It is important to re-establish what is good about milk and publicize tracebility and cow welfare measures.

Gardner described a marketing campaign called “re-Cow-nnect” that Danone created in France. They found that consumers believed Danone purchased powder milk from Poland when, in fact, their milk was purchased from a local farmer within 50 miles of the plant. Danone featured photos of farmers on product packaging and enabled farmers to post videos on a YouTube channel where they could tell their own story about working with Danone. This effectively changed the customers’ misconception.

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