Dairy Defines Sustainability, Land O’Lakes’ Kappelman Says

Sustainability is shaping the U.S. dairy industry’s future, making it better equipped to make sure the world has the nutrition it needs, says Pete Kappelman, a longtime dairy farmer and Land O'Lakes' Senior Vice President of Member and Government Relations. 

 “U.S. dairy farmers are deeply involved and concerned about the many communities that they touch. And that starts with producing a safe, nutritious, affordable food, but it also includes things like being good stewards of the land, for the good of the planet,” as well as being able to pass a farm down to future generations, said Kappelman in a Dairy Defined podcast. “In order to feed a growing population, we've got to work together across continents, across cultures and markets to make abundant nutritious food available so everyone can realize their full potential.”

Transcript

Alan Bjerga, NMPF: Hello and welcome to the Dairy Defined Podcast. Dairy farmers are local leaders with global responsibilities. And that encapsulates much of how Pete Kappelman has defined his service as a former Land O'Lakes member dairy farmer and board chair, and now a member of the Cooperatives Leadership team.

Kappelman is a fourth-generation farmer, having led Meadow Brook Dairy Farms, a Wisconsin operation with 450 milking cows along with 1,100 acres of cropland. The Kappelman family was Wisconsin Dairy Farm Family of the Year. And Kappelman himself was a 2018 World Dairy Expo Dairyman of the Year. But Kappelman, now serves as Land O'Lakes' Senior Vice President of Member and Government Relations has had an influence that span far beyond state borders.

Today, Pete helps lead Land O'Lakes Venture37, an independent 501(c)(3) nonprofit that maintains an affiliation with Land O'Lakes. He's a member of the Heifer International Board of Directors. Kappelman has also been an Agricultural Policy Advisor to USDA and the Office of the United States Trade Representative, all of which has given him an outlook on domestic and global agriculture. Thanks for joining us, Pete.

Pete Kappelman, Land O'Lakes, Inc.: Glad to be here, Alan.

Alan Bjerga, NMPF: Also joining us is National Milk Producers Federation Communications Director and the Head of our Young Cooperators program for Younger Dairy Farmers, Theresa Sweeney-Murphy, who's going to start things off.

Theresa Sweeney-Murphy, NMPF: Pete, we're heading toward the World Milk Day. What is the main thing the world needs to understand about US dairy and US dairy farmers?

Pete Kappelman, Land O'Lakes, Inc.: I think it's important to recognize that US dairy farmers are deeply involved and concerned about the many communities that they touch. And that starts with producing a safe, nutritious, affordable food, but it also includes things like being good stewards of the land, for the good of the planet, but also to ensure they can pass their farm down to future generations. So the word sustainability implies the stewarding of natural resources, the land, water, and air that we as an industry are making good progress on that.

Dairy also brings a vital economic aspect to our rural communities. The US dairy industry supports about three million workers in the country, and has an overall economic impact of more than $600 billion annually. Being a member-owned cooperative, it's important that we show up in our home communities. And so during 2020, between our member owners, our employees and our Land O'Lakes Foundation, more than $2 million of support was distributed to member communities for things like COVID-19 related support for hunger relief, PP&E supplies, and other basic needs.

Alan Bjerga, NMPF: You talk about the pressing needs that are at home and running a dairy farm is working up. Why the international focus in your career? That's not necessarily dimension that everyone thinks about so much.

Pete Kappelman, Land O'Lakes, Inc.: Well, absolutely, Alan. And you're right. Managing a dairy operation is incredibly challenging. But from my own perspective as a producer through the years, to what end, what does the future look like? This is not, we do not live in a domestic-only market. And yes, the US is a highly-prized and sought after market, but that will not be the primary driver of our industry's existing production and continued growth.

We are already exploiting one day's worth of production per week. And that's frankly just table stakes. If we want to play to win, it will take more than that. We're going to need to continue to innovate and focus. We'll need to continue to encourage and work with the USTR, the Trade Representative's office, as well as the USDA on trade opportunities. Our competition for these markets around the globe is not weak. They're experienced, they're savvy, and they do their homework. So we need to as well.

Alan Bjerga, NMPF: So in these international markets and the global marketplace, what are some of the biggest challenges US dairy farmers face?

Pete Kappelman, Land O'Lakes, Inc.: Today's dairy consumers around the globe care as much about what we make as how we make it. So additionally, many large and recognizable international food brands have made bold commitments to reduce their carbon footprint in the upcoming years, not too distant future. So for many of these, success' dependent on strong partnerships and buy-in all the way back to the farm.

So, we appreciate that interaction from our customers and their willingness to work with us to address issues related to sustainability. These partnerships are really crucial because we believe that on-farm sustainability isn't just about gathering data or setting reduction goals. It's about real work and lasting change that takes place on farm.

Currently in Land O'Lakes, we have some partnership projects that are happening right now with our member owners. For instance, we're partnering with Bel Brands on a project to increase the use of cover crops on our Land O'Lakes member owners farms who shipped their melt to Bel Brands facility. We also have a partnership with the The Hershey Company to implement best management practices to help improve water quality in the Chesapeake Bay and other watersheds in the region.

And then through a separate but a complimentary initiative, we've also launched true carbon with Microsoft, and they are our first secured buyer of carbon for 2021. So as part of the program, qualifying farmers can earn $20 per ton for the carbon they have sequestered on their soil over the past five years.

It's important to note that no one company can do this alone, which is why I'm also excited about the Global Dairy Platform. GDP or Global Dairy Platform's membership consists of dairy companies, associations, scientific groups, and other partners who collaborate pre-competitively to lead and build evidence on dairies role in the diet and show the sector's commitment to responsible food production. For more than a decade, the GDP has led the dairy sectors collaborative efforts to encourage the appropriate intake of nutrient-rich dairy foods and show how the sector's increasing role in sustainable agriculture.

Theresa Sweeney-Murphy, NMPF: Pete, can you speak a little bit about Land O'Lakes Venture37? How has your co-op supporting the development and success of dairy around the world?

Pete Kappelman, Land O'Lakes, Inc.: In order to feed a growing population, we've got to work together across continents, across cultures and markets to make abundant nutritious food available so everyone can realize their full potential. I've been to Africa several times personally. I've seen it firsthand, we need to do this in a way that sustains the health of the human population, as well as the health of our planet. Land O'Lakes Venture37 is uniquely positioned to do just that through its affiliation with Land O'Lakes and the co-ops connection to our dairy animal nutrition and sustainable crop production. When you pair this with the local insights from our nearly 40 years of agricultural development work that we've been doing, we've got what it takes to unlock the potential of agricultural business ventures around the world.

So if you look at 2020 alone, Venture37 accomplished quite a bit. We had more than 650 enterprises that we supported in developing countries, that created more than 2,500 jobs. We incorporated more than 530 days of support from Land O'Lakes employee volunteers, and we impacted more than 1.4 million people directly. On the dairy side, sustainable public private partnerships are a hallmark of Venture37's approach to inclusive dairy development.

So with the goal of helping farmers, cooperatives, and businesses strengthen their capacity to meet and create demand for dairy products, we increase the access to markets, finance, information technologies, and inputs. Our approach strengthens the farmers' access to animal nutrition, health technology, and improved genetics to improve their efficiency and productivity while developing dairy businesses that connect farmers to lucrative markets. So it takes all of that. It takes improving the efficiency of the producer and connecting them to the market.

For example, in Mozambique through the USDA-Funded Mozambique Dairy Development Program, we linked 4,600 small holder farmers, many of these with just one to five cows to commercial dairy value chains in the population centers. And we trained more than 17,000 farmers on improved farming techniques and management practices. By the end of this Food for Progress initiative, the value of locally produced process milk climbed from $112,000 per year to $5.9 million. So that increased incomes and made rural families more food secure.

Theresa Sweeney-Murphy, NMPF: Why is this strength of dairy and other agricultural cooperatives important both at home and around the world? And in what ways has Land O'Lakes helped your farm succeed?

Pete Kappelman, Land O'Lakes, Inc.: The way I see it, the cooperative model really brings two types of value. First, there's the instrumental value, farmer ownership of a business model that has economic value and brings that value to the member. So financial investment or equity and the returns to that equity. But then looking at the intrinsic value, the reason the cooperative model I believe is still successful today is because of the fundamental social and governance principles of working together to achieve more. We are altogether better. And cooperatives by definition provide market access and work together on a shared destiny.

The story is really similar for my own farm. We started marketing milk to our cooperative 70 years ago. Of course, the value-added returns from Land O'Lakes has always been appreciated. But more than that, we've truly valued the amplification of our voice as producers, as well as our industry's voice. Land O'Lakes like many others that are national milk producers members has always been there advocating on behalf of the farmer member, speaking with a magnified voice on their behalf, representing those producers on policy and regulatory issues.

So issues like labor and working to create a stable workforce, I mentioned trade, and not only the growth opportunities, but also standing up for and protecting our producers from unfair trade practices, let's throw tax policy in there, it's important to both the dairy producer and the cooperatives that they own. So these are really issues that are important to individual farmers. But when we take them on in a concerted effort together, we are more successful.

Alan Bjerga, NMPF: So let's talk a little bit about those public policy incentives that people advocate for in the policy arena. The US dairy industry has some ambitious goals. You're looking at net zero carbon emissions by 2050 for example. Working with members and policy, what sort of incentives would be helpful for dairy to take its stewardship up another level?

Pete Kappelman, Land O'Lakes, Inc.: Our dairy foods business is focused on sustainability commitments that will keep our farmer members on the leading edge of on-farm best practices, and then help our consumers and collaborators achieve their farm to fork sustainability goals. So when we're thinking about how to support our members' stewardship journeys, it's all about reducing risk and providing technical assistance while producers transition to these new practices.

So things like adjusting feed rations, manure storage technology, or changing cropping practices can take time to have an impact. Initially, there are changes or investments that are made for ultimately a long-term return. In short, stewardship has to be seen through an economic and environmental perspective. And that's why we think transition incentives would take on-farm stewardship to the next level. Helping farmers transition financially and agronomically will increase practice adoption.

For example, dairy producers are interested in new approaches to feed management that can reduce enteric methane emissions and subsequently reduce greenhouse gas emissions from dairy production. So we know that enteric methane emissions, which by and large is made up of gas released from cows belching, this accounts for approximately one-third of an average dairy farms greenhouse gas footprint. Addressing these enteric emissions through USDA conservation programs would substantially impact our greenhouse gas emissions.

Theresa Sweeney-Murphy, NMPF: Why are US dairy's sustainability commitments important globally? And what value does that bring to dairy farmers in Wisconsin and across the United States?

Pete Kappelman, Land O'Lakes, Inc.: Today's global customers and consumers are deeply concerned about how food is made. The US dairy community has a strong track record of taking care of animals, air, land, and water, and as a leader in environmental stewardship efforts. But we need to make that point clear to our global partners.

We've all heard this, but I believe it to be true that the farmers are the original conservationists. They continuously innovate and adopt new practices and implement technologies to produce the same amount of food using fewer natural resources, and yet still provide all the same great nutrients to consumers.

By continuing to do the right thing, and then accurately measuring and sharing our progress, we can help shape the narrative and preserve dairy's position as a safe, affordable, nutritious, and sustainable food source. This will open doors from a market access standpoint that will benefit every dairy farmer across the country from my family's farm in Wisconsin to the farm of everyone listening today.

Stating from goals like the U.S. Dairy Stewardship Commitment and Land O'Lakes own Dairy 2025 Commitment are really necessary to show the world just how serious we are about this issue. Early innovators will reap the benefits of the marketplace. As individual producers, cooperatives, and as an industry, we need to each engage and play our part to position our industry for the future.

Alan Bjerga, NMPF: We've been speaking with Pete Kappelman, Land O'Lakes' Senior Vice President of Member and Government Relations. Anything we need to hear, Pete? We don't want to miss anything before we let you go.

Pete Kappelman, Land O'Lakes, Inc.: When we look back to, especially the last year, the dairy farmer along with everyone else has been on a roller coaster ride these last 15 months or so with supply and demand swings, volatilities and personal challenges as well. But through it all, I think our industry did a fantastic job managing the shifting dynamics at the farm gate, at the processing facilities, and frankly, every step of the supply chain, all of which helped keep our nation fed during what was hopefully a once in a century pandemic.

The pandemic really brought about a return to folks spending more time cooking meals at home, which resulted in an increased demand for our dairy products. I hope for everyone's sake that this trend continues, and that we see another demand boost as we look forward to a bounce back in food service with the reopening of schools, restaurants, and other venues. And lastly, let me say that our industry showed great leadership during the pandemic supporting our nation's food supply. And I think that same leadership can be applied to meeting the expectations of global customers.

Alan Bjerga, NMPF: Pete Kappelman, thank you for your time.

Pete Kappelman, Land O'Lakes, Inc.: Absolutely. Thank you Alan and Theresa.

Alan Bjerga, NMPF: And that's it for today's podcast. For more on Land O'Lakes and its global values, visit www.landolakesinc.com/corporate-responsibility. For more about NMPF's work, visit our Food Systems Summit page that's nmpf.org/foodsystemssummit. And for more of this podcast, we're on Apple podcasts, Spotify, SoundCloud, and Google Play under the podcast name Dairy Defined. Thank you for joining us. We'll talk again soon.