Unilever Sustainable Sourcing Workshop - Overview of Australian Dairy Farm Risk Management Systems Helen Dornom Dairy Australia 27 th August, 2012

DA’s role DA invests around $52-$58m annually on industry based RD&E and other service activities. We look across whole dairy value chain for areas where collective action or collaboration can be used. DA’s Investment is based on industry agreed issues /priorities Farm Inputs Domestic and Export Markets Milk Processing Manufacturing Milk Production Import 2

Strategic Priorities 1.Improve farm margins and growth opportunities 2.Promote and protect dairy 3.Integrated response to climate change and natural resource management 4.Grow capability and skills

Discussions today –Overview of the systems to manage risk –Discussion on Food Safety Systems and controls domestically and internationally -Ag and Vet Chemical Controls -Animal Health and Welfare -Environmental Controls/industry programs

Media Education / Academics Scientists Health Professionals Activist / interest groups Health Organisations Policy Makers Community Government & regulators Food Industry Industry Service providers Agricultural Interest groups Customers Financial Institutions DAIRY PRODUCT ENVIRONMENT

… how to select a manufacturer ? Added values for strategic suppliers 3 basic criteria for all the suppliers Product safety Ethics Chain quality Product quality Product availability

Many components: –Food safety –Health and nutrition –NRM –Animal health and welfare –Employer skills and employee attraction –Politicians and investor communication –Product promotion –Investor confidence by existing owners and new capital Brand Dairy

Replacements Live Export Fodder Mixed Farm Cull CowsBobby Calves Reared for beefVealers Abattoirs Milk Farm Enterprise MeatOtherAnimals

Contamination of product Spoilage of product Pathogens Food safety Sources of on-farm risk

Odours Water pollution Carbon Noise Sources of on-farm risk Environment

Exotic diseases Endemic diseases Weeds Pests Biosecurity Sources of on-farm risk

Animal welfare Sources of on-farm risk Husbandry practices Production diseases Land transport Bobby calves

Occupational Health & Safety Sources of on-farm risk Skills Knowledge Equipment Zoonotic diseases

How do dairy farmers manage these risks? As part of their everyday activities Structured risk management programs –identification –analysis –evaluation –treatment –monitoring –review Performance measured against agreed standards

Verification of compliance Self assessment Environmental protection agencies Local government officials Dairy company field officers State dairy food authorities Private veterinarians State government DPI’s Animal welfare agencies Vocational trainers

Dairy assurance activities Regular Checking and Continuous Monitoring Line Management Review Third Party Audit SCOPE AND FREQUENCY Day to day - embedded in work place activities Control Self Assessment – driven by risk profile and manager’s span of control Internal and External auditing – sampling and verification, aimed at Policy and Standards compliance, and identifying system weaknesses

An established framework SDPI’S PRIVATE VETS VOCATIONAL TRAINERS National Standards Dairy Industry On-farm QA system SELF ASSESSMENT Sources of risk Verification International Standards Contamination Spoilage Pathogens Odours Water pollution Carbon Noise Husbandry Production diseases Land transport Exotic diseases Endemic diseases Weeds & pests Skills & knowledge Zoonotic diseases BIOSECURITY OH&S ANIMAL WELFARE FOOD SAFETY ENVIRONMENT DAIRY COMPANIES LOCAL GOV’T EPA’S SDFA’S

A comprehensive system SDPI’S PRIVATE VETS VOCATIONAL TRAINERS SELF ASSESSMENT Milking sheds Milking equipment Cleaning Sterilisation Water quality Milk chilling Cooling towers Identification Traceability Stockfeeds Herd health Veterinary drugs Agricultural chemicals Pest control Effluent management Hygienic calf rearing Bobby calf management Competency and training First aid Accountability Non-conformances Sources of risk Verification Contamination Spoilage Pathogens Odours Water pollution Carbon Noise Husbandry Production diseases Land transport Exotic diseases Endemic diseases Weeds & pests Skills & knowledge Zoonotic diseases BIOSECURITY OH&S ANIMAL WELFARE FOOD SAFETY ENVIRONMENT DAIRY COMPANIES LOCAL GOV’T EPA’S SDFA’S What dairy QA covers

20 A “Whole of Chain” Approach All parties responsible Understanding needs and performance – One-step forward – One-step back Consistent Minimum Mandatory Standards Partnership Industry & Government

Context Issues Food Safety Animal Welfare Environment: Natural Resource Management Stewardship Environmental Degradation Human: OH&S Community Expectations Business Viability

Trade and other commercial/regulatory issues Food Safety Program Mandatory (Dairy) Eg. Antibiotic residues Milk quality BJD 3 step plan Animal welfare (Cattle code) Environmental Issues OH&S ON FARM DAIRY QA PROGRAM

On Farm Dairy QA Program Trade and other commercial elements Food Safety Program (FSP) Mandatory Dairy elements Hygienic milking Milking premises Meat elements Ag + Vet + Chemicals Water supply + quality Cleaning or Sanitizing Micro biological Contamination Traceability and Records Personal competency Stock feeds

Dairy Food Safety Compliance Framework DAFF STATE DAIRY/FOOD AUTHORITY AUTHORISED OFFICER APPROVED AUDITOR FSANZ Food Safety Standards Export Control Orders State Legislation Regulations/Codes of Practice National Auditor Competencies Contract - Deed of Undertaking Interpretive Guidelines Standard Operating Procedures Steering Committees Working Groups Harmonisation of Export & Domestic Standards

Dairy Farm AuditsNumber of Licensed Dairy Farms Number audited Total Queensland* NSW* Vic* Tas445 SA306 WA *SRAs require audits at least every 24 months In LPA listed 190,801 program participants, with 5,819 inspections/audits (3%) Dairy had 42% on- farm FSP audits Farm Audits

Verification of Dairy FSPs SRAs undertake desk reviews yearly SRAs undertake 5% verification audits of all dairy farms at least every 3 years In 2009/2010, 195 verification audits (2.5%) SRAs - national dairy farm auditor workshop held every 6 months - covers issues arising from audits, consistency of interpretation, implementation and reporting

MeatMilkAnimalsOther ReplacementsFodder Live ExportMixed Farm Cull CowsBobby Calves Reared for beefVealers Abattoirs Farm Enterprise Inputs Food Livestock Water Labour Outputs Effluent Dead stock Water Nutrients Context Issues Community Expectations Business Viability Food Safety Animal Welfare Environment: - Natural resource - Stewardship - Environmental degradation Human: - OH&S Constraints Market needs / wants (Domestic - Export) - No. of standards + verification systems Lack of recognition of common / shared outcomes + effective existing controls - Lack of knowledge / evidence - Risk based proposition not well understood

Effectively managing on farm risks

Dairy Australia’s key focus areas include:  Dairy Moving Forward (Research, Development & Extension) (SP1)  Dairy Futures CRC (Animal and Plant performance) (SP1)  Feeding Systems (SP1)  Mastitis and Fertility (SP1)  Automatic Milking/Precision (Smart) Farming Systems (SP1)  People (NCDEA, People in Dairy, Workplace Planning, Leadership Development) (SP4) 7

Dairy Australia’s key focus areas include:  Project Horizon 2020; value Chain models (NSW/Qld/WA) (SP1)  DIAL (including technology transfer) (SP2)  Health and Nutrition (Research and policy advice) (SP2)  Animal Health and Welfare (SP2)  Carbon tax and Water Access Issues (SP3)  Reputation Management/Sustainability (SP2)  Market Analysis (Situation & Outlook) /Market Access (SP1) 8

5 2 Identifying areas of leverage and risk Build on strengths of national and regional economic contribution, product quality, safety and nutrition? Proactively reassure on fat, animal welfare and environmental management (especially in areas of water and greenhouse gas emissions)? Regional community Health Value creation Integrity Environmental stewardship