‘Doing the right thing is always good for business…’ Chobani president on industry-first Fair Trade certification for dairy

By Elaine Watson contact

- Last updated on GMT

Peter McGuinness: "We want to try to make dairy better, to modernize it, elevate it..." Picture credit: Chobani
Peter McGuinness: "We want to try to make dairy better, to modernize it, elevate it..." Picture credit: Chobani

Related tags: Chobani, Fair trade, Yogurt

From grim footage of workers mistreating cows to environmental concerns, consumer perceptions of the dairy industry are not universally positive, acknowledges Chobani president Peter McGuinness. But adding dairy to the sectors covered by Fair Trade certification – which tends to be associated with commodities sourced from outside of the US such as cocoa and coffee – is an important step to ensure US dairy farmers get a fair deal and – over time - adhere to stricter sustainability standards, he told FoodNavigator-USA.

Speaking to us after teaming up with Fair Trade USA to launch the first Fair Trade standard and certification for the dairy industry, McGuinness said the scheme would initially cover Chobani’s 32oz, multi-serve tubs, but will be expanded across the portfolio over time.

“We buy a lot of milk, and we partner with a lot of farms, but we hope to inspire many others to join this program so that we can make the biggest impact possible across the entire dairy industry. We fully intend to evolve and expand this program throughout our portfolio.

“We’re proud to be in dairy, and we want to try to make dairy better, to modernize it, elevate it.”

Greater accountability and greater transparency are good for farms, for farm workers, and for consumers’

Building upon its Agricultural Production Standard​ (APS) for crop production, Fair Trade USA’s dairy certification scheme​  incorporates standards and processes developed by the International Labor Organization and is now being offered to all dairy farms and cooperatives throughout the US. A revised version incorporating feedback from a public consultation process will be available in a few weeks, while later iterations will incorporate environmental criteria specific to dairy farming.

The initiative is one plank of Chobani’s Milk Matters​ program​ – which also addresses environmental stewardship, local sourcing, investing in dairy communities, and animal welfare - an issue many activists say has not been given the attention it deserves despite some short-lived media attention in 2019 following the release of shocking footage​​​ showing abuse at Fair Oaks Farms, the ‘flagship’ farm supplying milk to the fairlife​​​ brand.

The Fair Trade premium: About 3.88 cents per gallon

So what does Fair Trade certification mean in practice?

Chobani-Dear-Alice-ad-still-1
Chobani's new ad campaign highlights its credentials as a “brand with values that stand for more than the food we make....” (Picture credit: Chobani)

The Fair Trade premium for conventional milk is 45 cents/cwt (100lb, or about 11.6 gallons), which amounts to around 3.88 cents per gallon. A third of this (15c/cwt) is initially being diverted to a ‘compliance support fund’ to help operators implement one-time changes and investments to achieve compliance, while the remaining 30 cents/cwt will be paid on a monthly basis to coops and disbursed proportionately to farms.

The certification process - which typically takes six to nine months to complete – addresses working conditions, freedom of association, protections against harassment and discrimination, benefits, clear terms of employment, working hours, housing conditions, and access to on-the-job training.  

‘Some of this should just automatically happen. But that's not how life works, so we want to ensure it happens

Many of the requirements – such as not employing children or slave labor – are things you’d hope are a given. Others - such as six weeks paid maternity leave - represent a positive step forward given that at a federal level, US employers are not currently required to offer any paid maternity leave [Chobani has offered six weeks parental leave to its own direct employees since 2017].

There’s over a 300-point list to comply with,” ​said McGuinness. “And yes, some of it should just automatically happen. But that's not how life works, so we want to ensure it happens.”

He added: “I think people think farms aren’t run as well as they are, that animals aren’t treated as well as they are… the perception, in many cases, is worse than the reality as the vast majority of farmers are good people. There are some bad apples in dairy, like anywhere in life, but we want to shine a light on good practices. Greater accountability and greater transparency are good for farms, farm workers, and consumers.”

‘These expenses are investments and they're good for business’

Asked what paying the Fair Trade premium will mean for Chobani’s bottom line, McGuinness said: “Let’s go back to ​[Chobani founder and CEO] Hamdi ​[Ulukaya] 13 years ago, when he paid a premium for rBST free milk. He said, if you don't do that ​[use growth hormones to increase milk production], I'll pay you more for the milk. This is in the same spirit. Meet these criteria and we will pay you more for the milk, and as a result, your farm and farm workers will be in a better place.

“The dairy industry has struggled. At one point we had seven farms closing a day. There’s global pricing volatility and lots of variables right now, herd size, feed costs, consolidation. But we want to bring the consumer along with us, so when they see the Fairtrade symbol, see what it stands for, they'll feel better about it, and they'll buy more dairy.”

He added: “Doing the right thing is always good for business. So the childcare subsidy costs for the last 14 months cost Chobani a lot of money. We’ve done on site vaccination clinics and paid for the hours it takes to go get vaccinated, we raised our minimum wage​ to 15 dollars. Was all this an investment or an expense? We think it's an investment because it means a healthier, happier workforce.

"It’s good for business and it helps our recruitment and retention. So we'll sell more 32 ounce multi serve tubs ​[featuring the Fair Trade logo], and with any inflation, we’ll make up for it with productivity, but we'll also make up for it in volume, in demand.”

Chobani Fairtrade
Peter McGuinness: "We're proud to be in dairy..." Picture credit: Chobani

‘Even as we started to lap COVID-19, we grew year over year’

So how is Chobani performing now that it’s lapping the early weeks of the pandemic and comparables are getting tough for many packaged food companies?

“I'm happy that even as we started to lap COVID, we grew year over year,” ​claimed McGuinness. “So for March​ [2021] over March​ [2020], even though we were lapping a surge, in yogurt, we grew high single digits year over year.

“We're growing three to four times the category, and we have three years of consistent share growth in yogurt, so we're very happy with our performance. And that volume, combined with productivity, has offset any inflation.”

Volume growth was coming from new customers and heavier buying from existing customers, he added: “More people are buying Chobani and loyal customers are also buying more. We also had very high service levels through the pandemic, where others struggled from a supply chain perspective, so we've had very high on time in full deliveries, and then our retail execution team is packing out cases and keeping our in stocks high.

“So that’s really kept our yogurt business cranking.”

New products: RTD coffee ‘off to a really good start’

He added: “In oatmilk ​[a category Chobani entered in January 2020​], we're squarely number two in US food, and that continues to ramp and distribution continues to ramp, and we have high trial and repeat. But our growth in creamers​ has surprised us too; we have the highest repeats in the category, and so that business continues to move on at a good clip.

“The new RTD coffee​ has only been out for two and a half months, but we already have a 7% share of cold brew, so that’s off to a really good start too.”

 

twin-falls_plant-hamdi_ulukaya-nov-2017 cropped
Hamdi Ulukaya, founder and CEO, Chobani: “I come from a farming family and I worked at a dairy farm in Upstate New York, so I know firsthand the magic of the dairy industry, but it’s hard work and farm families face many challenges in today’s marketplace. Fair Trade USA’s certification — the first ever in the US dairy industry — will help our dairy farmers build on their hard work to raise farming standards, take care of their workers, many of whom they consider family, ensure the well-being of their animals and their land, while giving consumers greater peace of mind that the dairy they buy demonstrates a commitment to positive economic, environmental, and social pillars.” Picture credit: Chobani

  

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