Incentivize regenerative agriculture in dairy production

Nestlé is committed to reducing CO2 emissions by 20% by 2025 and source 20% of its fresh milk from farms implementing regenerative agriculture practices by 2025. More than 70% of Nestlé's total footprint stems from agricultural products as part of Scope 3, and milk contributes 50% of the total footprint. Nestlé Brazil purchases more than 1 billion tons of fresh milk per year and has direct relationships with 1,200 dairy farmers located in the states of Minas Gerais, Goiás, and São Paulo. To decarbonize the milk production chain, dairy farmers need to be trained, technically supported, and encouraged to apply best practices at the farm level.

To achieve this, Nestlé Brazil launched the Nature por Ninho program.

Nature por Ninho is a Nestlé certification program that defines practices for dairy farmers related to milk quality, animal welfare, human rights, rational use of water, and regenerative agriculture, ensuring sustainable and regenerative milk production.

Nestlé adopted this certification program in 2006 and has since has been encouraging dairy farmers to adopt best practices on their farms. Year after year, the requirements have evolved according to the maturity of farms involved in the program, measured by the percentage of farms meeting its requirements. Now, these requirements include animal welfare, human rights, water management, manure management, and in 2022, regenerative agriculture practices.

Nestle’s field team presents the program to farmers through the Nature por Ninho Manual, which features a built in partnership with EMBRAPA (1), a widely recognized R&D institute for agriculture. This manual details, in a clear and didactic way, all the interventions and practices necessary to qualify the farm in each of the program categories. Through it, each farmer can define an action plan to evolve, as they receive greater bonuses when they graduate to the certification category.

Nestlé offers specialized technical support to farmers via monthly recommendations from agronomists and veterinarians on how to implement best practices around animal welfare, animal nutrition (focus on increasing productivity of cows), soil health (covering crops, keeping soil covered all year, fixing carbon through the photosynthesis process, diversity of species, increasing biodiversity above and below ground, increasing soil fertility and including manure in the fertilizer plan to reduce chemical fertilizers). See “Use regenerative practices to reduce agricultural emissions” for more information on regenerative agriculture practices.

Since last year, more than 9,200 hectares have been receiving these regenerative agriculture practices and more than 33,000 cows are living in compost barns that provide more thermal comfort (considering Brazil tropical conditions), health and productivity, consequently reducing GHG emissions per kg of milk.

In addition, Nestlé provides online training and best practices for farmers through the Leiteria Channel, a platform to train, engage, and support the transition to regenerative practices. When the farms are ready, QCONZ, a third-party company, visits them to verify the implementation of the practices using the Nature por Ninho Checklist). According to the practices/requirements implemented, the farms are classified as bronze, silver, or gold and, at the end of the month, receive a milk price bonus corresponding to their certification category as a recognition.

The dairy farm's footprint is annually measured by the Cool Farm Tool. Nature por Ninho is targeting decarbonization through the transition to a regenerative agriculture system focusing on increasing cow and crop productivity, improving soil health, biodiversity, and farmer profitability.

Climate impact

Targeted emissions sources

Scope 3:

• Category 1 (purchased goods and services), which represents 70% of Nestlé’s footprint

Decarbonization impact

• 9.5% less carbon emission per liter of milk in the first year of the program. The global commitment is to reduce emissions by 20% by 2025, 50% by 2030, and reach net-zero emissions by 2050.

Business impact

Benefits

• The development of regenerative agriculture and low-carbon milk production has enabled differentiation for producers and has contributed to increasing the resilience of the business, optimizing the use of resources, and reducing production costs.

• The journey has contributed positively to family succession, with the new generation of producers engaged and sensitized to the theme, seeing themselves attracted to continue the work of regeneration that their parents/grandparents started.

• After one year of the program, the farms receiving technical specialized support successfully demonstrated that regenerative agriculture is bringing benefits beyond environmental aspects in productivity and profitability. Farms that implemented Nature por Ninho gold practices increased corn silage production by more than 4% while reducing costs by 8%, which represents an increase of more than 4% in dairy farming profitability when compared to conventional farms.

Costs

• Bonus program: Nestlé offers farmers participating in the Nature por Ninho program a bonus, which can vary from 2-5% of the milk price, depending on farm category.

• Training and development of farmers: Nestlé subsidizes 100% of specialized costs associated with agronomist and veterinarian visits in the first year, to support the milk suppliers. The subsidies will decrease over the years, as the farmers learn and reap the benefits. In the last four years Nestle invested more than US$ 2,5 million in training and technical support to the Brazilian dairy farmers.

50% of the amount invested in this initiative is recovered due to a tax incentive (PIS/COFINS) hosted by the ministry of agriculture and livestock.

Impact beyond climate and business

Co-benefits

• Soil: Contribute to the construction of fertile and healthy soil by using techniques such as soil cover, diversification, less compaction, and reduction of chemical fertilizers. The program has already contributed to reducing the impact on farms in an area equivalent to 9,200 football fields.

• Water: Increase water retention in the soil by keeping it covered most of the year, as well as implementing water meters to measure and manage water consumption on dairy farms. Some 75 million liters of water was saved in two years of measurement and monitoring together with EMBRAPA.

• Biodiversity: 2,300 hectares of native forest preserved, maintaining the biodiversity of fauna and flora

• Increase biodiversity in the system, above and below ground, through crop diversity, crop cover, green and organic manure, and promoting the conservation of forest areas.

• Other indicators:

  • Diesel consumption: 48% of the areas of the properties that still carried out conventional cultivation migrated to no-till or minimum tillage (regenerative agriculture practices), reducing the consumption of diesel fuel per hectare.

  • Fertilize usage: The usage of manure (as a natural fertilizer) in crop fertilization plans also contributed to a reduction of 13% of chemical fertilizer usage.

  • Animal welfare: The cows receive a balanced diet and plenty of quality water, in an environment that promotes comfort and well-being.

Potential side-effects

Each farm’s management of the technical and financial indicators needs to be monitored to ensure that best decisions are being taken. The economic sustainability of the farm needs to be prioritized. It is important to highlight that some practices of this transition to regenerative agriculture can compromise production in the first year, if not managed correctly (monitored by experts). It is also important to monitor soil analyzes in areas where manure is applied to avoid soil saturation.

Typical business profile

This type of project can be applied to companies that have their core business associated with the dairy value chain. Long-term partnerships with suppliers is key to engaging and achieving sustainability maturity. As farmers observe the benefits and the positive impact of this solution, they are open to move to the next level and maintain the farm’s evolution.

Approach

Firstly, Nestlé mapped the main challenges of the transition into regenerative systems (that is, farmer engagement, regenerative agriculture knowledge, specialized support, and development and technology transfer), and secondly designed initiatives to address those challenges.

The initiative is being implemented through a structured partnership program with farmers, who are responsible for implementing practices and making the transition happen; private specialized companies, who help Nestlé and farmers measure and monitor the data evolution and use it to take better decisions; universities; consultancies; and government agencies researching and developing technologies and transferring them by training our technical teams.

Stakeholders involved

• Milk farms: They are supporting this transition by implementing practices and changing their mindsets.

• Communities: Rural communities need to be aligned; knowing the program to also change their mindsets and contribute to the journey.

• Government (EMBRAPA): The journey is new for all the dairy farmers; the solutions, metrics, and technologies need to be transferred to the field; they all need training.

• Consulting companies (Labor Rural, QCONZ): The journey needs to be collaborative and farmers need training as well as technical and specialized support. They need to be able to monitor data evolution, economics, environmental KPIs, and use data to make better business decisions.

Key parameters to consider

• Solution maturity: The extensive implementation of regenerative agriculture is a relatively new approach to farming. However, many common regenerative practices are being tried and tested and gaining popularity as more sustainable ways to produce food.

• Technical constraints or pre-requisites: Partners receive robust training to implement the program.

• Additional specificities (e.g., geographical, sector or regulation): Partner with specialized and recognized R&D institutes to ensure scientific basis, validation, and recognition of the program.

• Eventual subsidies available: According to local legislation, the following tax benefits are being used: PIS/COFINS (Programa mais leite saudável – Ministry of Agriculture and livestock).

Implementation and operations tips

• Involve local consultancies that know the reality of the producers

• Use an engagement program to attract and keep producers in the initiative

• Develop appropriate tools to measure progress

• Find specialized technical assistance

• Develop pilot farms to validate new technologies and/or practices