A Triple Bottom Line Planning Tool For Measuring Sustainability

A Triple Bottom Line Planning Tool for Measuring Sustainability

A systems approach to sustainability using the Australian dairy industry as a case study
Laurie Buys, Kerrie Mengersen, Sandra Johnson, Neil van Buuren and Evonne Miller
Chartridge Books Oxford 5 & 6 Steadys Lane Stanton Harcourt Witney Oxford OX29 5RL, UK Tel: +44 (0) 1865 882191 Email: editorial@chartridgebooksoxford.com Website: www.chartridgebooksoxford.com First published in 2014 by Chartridge Books Oxford ISBN print: 978-1-909287-88-4 ISBN ebook: 978-1-909287-89-1 Laurie Buys, Kerrie Mengersen, Sandra Johnson, Neil van Buuren and Evonne Miller 2014. The right of Laurie Buys, Kerrie Mengersen, Sandra Johnson, Neil van Buuren and Evonne Miller to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. British Library Cataloguing-in-Publication Data: a catalogue record for this book is available from the British Library. All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the publishers. This publication may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior consent of the publishers. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. Permissions may be sought directly from the publishers, at the above address. Chartridge Books Oxford is an imprint of Biohealthcare Publishing (Oxford) Ltd. The use in this publication of trade names, trademarks service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. The publishers are not associated with any product or vendor mentioned in this publication. The authors, editors, contributors and publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologise to any copyright holders if permission to publish in this form has not been obtained. If any copyright material has not been acknowledged, please write and let us know so we may rectify in any future reprint. Any screenshots in this publication are the copyright of the website owner(s), unless indicated otherwise. Limit of Liability/Disclaimer of Warranty The publishers, author(s), editor(s) and contributor(s) make no representations or warranties with respect to the accuracy or completeness of the contents of this publication and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This publication is sold with the understanding that the publishers are not rendering legal, accounting or other professional services. If professional assistance is required, the services of a competent professional person should be sought. No responsibility is assumed by the publishers, author(s), editor(s) or contributor(s) for any loss of profit or any other commercial damages, injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. The fact that an organisation or website is referred to in this publication as a citation and/or potential source of further information does not mean that the publishers nor the author(s), editor(s) and contributor(s) endorses the information the organisation or website may provide or recommendations it may make. Further, readers should be aware that internet websites listed in this work may have changed or disappeared between when this publication was written and when it is read. Typeset by Domex, India Printed in the UK and USA
Contents
Foreword Acknowledgements Introduction
vii xi xiii
Conceptual Model
Triple bottom line sub-models Economic sub-model nodes, indicators and measures Social sub-model nodes, indicators and measures Environmental sub-model nodes, indicators and measures
1
1 2 4 6
2 3
Dairy Sustainability Scorecard Scenario Testing for the Scorecard

Scenario testing of the Dairy Australia Sustainability Scorecard Dairy Australia sustainability scenarios Economic sustainability scenarios Social sustainability scenarios Environmental sustainability scenarios Strength of inuence across the TBL for dairy Strength of inuence in economic TBL Strength of inuence in social TBL Environmental TBL
7 11
11 13 15 18 19 20 21 24 26
vi
Evidence Base
Design Quantify Validate Evaluate Adapt
31
32 34 38 39 41
Conclusion
43 49
49 50 51
Measures for the Bayesian network

Economic Social Environmental
References
115
Foreword
Sustainability is a key driver for decisions in the management and future development of organisations and industries. However, quantifying and comparing sustainability across the triple bottom line (TBL) of economy, environment and social impact, has been problematic. There is a need for a tool which can measure the complex interactions within and between the environmental, economic and social systems which affect the sustainability of an industry in a transparent, consistent and comparable way. The authors acknowledge that there are currently numerous ways in which sustainability is measured and multiple methodologies in how these measurement tools were designed. The purpose of this book is to showcase how Bayesian network modelling can be used to identify and measure environmental, economic and social sustainability variables and to understand their impact on and interaction with each other. The authors acknowledge that key decisions on aspects of the Scorecard were made by community organisations associated with the case study for the project and these do not necessarily reflect the views of the authors. Additionally, limitations on the availability and reliability of specific environmental data reduced the number of indicators in the Bayesian network model developed for this project. The quality, reliability and standardisation of data for measuring sustainability is an important ongoing issue for measuring sustainability. A systematic review of literature relating to measurement of sustainability identified the absence of any uniform measurement tool or metrics to measure aspects of sustainability. Regardless of this shortcoming the authors believe the model developed can be adapted across other sustainability measurement tools ahead of the
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development of a more standardised way of measuring sustainability. Rather than focus on which indicator or metric was chosen by the community organisations associated with the case studies, the purpose of this book is the methodology and approach used to bring together indicators and metrics to measure sustainability. The benefits of the Scorecard include enabling stakeholders to establish baseline performance benchmarking using validated existing measures and industry standards, whilst incorporating flexibility for the addition of new measures when available. The Scorecard results can be used to model predictive scenarios, exploring the impact that change in one area has upon multiple measures and domains, thus reducing the risk of unintended negative consequences of changes in industry practice. In this book, we introduce the Sustainability Scorecard, and describe it through a case study on sustainability of the Australian dairy industry. This study was conducted in collaboration with the Australian dairy industry. The evidence base used to identify the key variables to be addressed in each of environment, economic and social domains and to determine the measures used in developing a Scorecard for the dairy industry, included: A systematic literature review, based on searches of 11 primary electronic English language library databases. Engagement of key informants and stakeholders in the dairy industry through: a workshop with key Australian dairy manufacturing industry members and nominated Dairy Australia staff on 30 June 2011 in Melbourne; a workshop with the Australian Dairy Manufacturing Industry Group on 3 April 2012 in Melbourne; and ongoing key informant consultations for the refinement of identified measures. Building on key Dairy Australia reports including: the 2009 Dairy Sustainability Project (QUT); the 2011 Materiality Survey (NetBalance); and the 2007/08 Australian Dairy Manufacturing Industry Sustainability Report (DMSC).
The result was the development of the Bayesian network model with nodes incorporating environmental, economic and social sustainability
Foreword
ix
variables for the industry in the contexts of farm, factory and market. Indicators were identified to measure the performance of each sustainability variable. The model was quantified using probability tables based on the information obtained from the evidence base. The resulting probabilities of high, medium and low sustainability for each of the farm, factor and market contexts, the environmental, economic and social variables and the overall industry as a whole, were translated onto the Sustainability Scorecard. The processes for development of the Sustainability Scorecard are detailed in the Evidence Base section (chapter 4) of this book. Within this book a description of the variables for each node, the measures for these variables, with explanatory notes on the implications of results for sustainability are provided. The Scenario Testing section (chapter 3) illustrates the way in which scenarios can be modelled to demonstrate the impact of changing one variable, e.g. a significant weather event might directly impact market outcomes. The case studies highlight the usefulness of the Sustainability Scorecard to organisations and industries in order to generate an assessment across systems that can be aggregated to give an overall score or be disaggregated to identify risks which need to be addressed. The Scorecard can also be used to model how improvement strategies might impact, positively or negatively, across all the systems of an industry. Overall, the Sustainability Scorecard is a versatile industry tool that supports decision-making in the areas of social, economic and environmental performance. This project identified baseline performance measures that can be used to identify and track future positive and negative trends in sustainability and identifying sustainability best practice in the Australian dairy industry. The Scorecard provides rigorous, scientifically verifiable and comparable measures that can be used to engage government, the community and other stakeholders in conversations around social, economic and environmental challenges to the industry and to allow policy makers and stakeholders to develop collaborative responses. Finally, the Scorecard gives the dairy industry a tool to test for future growth and new investment opportunities through scenario testing of case studies.
Acknowledgements
The researchers would like to thank the team from Dairy Australia for the ongoing partnership in projects that we believe have significant positive impacts on the sustainability and adaptation to change for a key Australian industry. Thank you to all the individuals and industry representatives who participated in the workshops and gave their time and expertise to the project. Finally, thank you to the QUT research team: Jeff Sommerfeld, Karla Morris, Anita Chauvin, Kimberley van Megen and Lindsey Dixon for their dedication and tenacity in achieving these outcomes. For further information, please contact Professor Laurie Buys on L.buys@qut.edu.au
Introduction
Over two decades ago, the Bruntland Report defined sustainable development as development that meets the needs of current generations without compromising the ability of future generations to meet their own needs (WCED, 1987). The purpose of this report was to generate a more integrated approach to sustainability, emphasising that multiple systems are at work: economic growth, development of social equality and improved protection of the environment. Its proposals were endorsed by world leaders at the United Nations Conference on Environment and Development in Rio de Janeiro in 1992 and the World Summit on Sustainable Development in 2002 in Johannesburg. Progress in developing strategies to improve sustainability has been hindered, however, by debate over definitions and intent, and the lack of tools to assist the making of an integrated assessment of risk and the modelling of potential positive and negative impacts of strategies employed in one system (e.g. economics) on others (e.g. environment) (Barlund, 200405; Drexhage and Murphy, 2010; Staniunas et al., 2012). Recommendations from the Brundtland Report have been the impetus for many global meetings of experts seeking strategies to operationalise its recommendations and to be able to measure progress in improving sustainability. In 1996 the International Institute for Sustainable Development met in Bellagio, Italy, to review the progress achieved in sustainable development since the Brundtland Commission and to develop the principles which need to underpin ongoing assessment of progress in the development and implementation of strategies for improved sustainability (Hardi and Zdan, 1997). The Bellagio Principles, as they have become known, underpin much contemporary work and formed the basis for the development of the assessment model in this report.
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There have been some successes in the implementation of the recommendations, with local governments now much clearer on, and committed to, sustainable development as a parameter for planning and decision-making, and the Brundtland Report has acted as a catalyst to develop education for young and future generations (Barlund, 2007). Its implementation in industry and government policy, however, has been fraught with debate on how to identify priorities for action, and has suffered an absence of the integrated assessment and risk management tools, which would support the more coordinated approach to strategy development which is needed (Barlund, 2007; Drexhage and Murphy, 2010; Staniunas, Burinskiene and Maliene, 2012). Critiques of the definitions alone have hindered political and policy decision-makers, preventing the development and implementation of assessment and remediation strategies to address risks to sustainability on the ground (Drexhage and Murphy, 2010). The most recent critiques on the human social element, for example, suggest that being able to meet needs now and in the future is dependent on defining what exactly these needs are, with the United Nations Development Program (UNDP) Report, Human Development Report 2011, suggesting the attainment and sustainability of social equity must focus on freedom, opportunities and choices (Nunan, 2011). It may be that progress will be most effectively stimulated by industries at the local level, assessing their sustainability against accepted global and industry specific criteria. In engaging local and cross-sector stakeholders, and involving decision-makers in these assessment processes, useful definitions and strategies may emerge from practice (Sneddon et al., 2006). Developing strategies to measure and improve sustainability within and between each of the environmental, economic and social domains, however, has also suffered from intense debate as advocates for one area fear that efforts within another could have unintended adverse impacts on their domain: the risk of sacrificing soil for solvency. Vested interests continue to construe development as an economics issue and sustainability as an environmental issue. However, what appears to be galvanising some cohesive response across sectors is the imperative of climate change (Drexhage and Murphy, 2010).
Introduction
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Nevertheless, quantifying and comparing industry sustainability across the triple bottom line of economy, environment and social impact continues to be problematic. Each is a complex system in its own right, with unique parameters that must be analysed both individually and for their effect on one another (Sneddon et al., 2006), at a level that can contribute to concrete, realistic solutions on the ground (Barlund, 2007). At present, each of the three domains has developed its own measures of risk and success and largely discreet strategies for sustainability with no analysis of how activity for improvement in one area might affect another (Sneddon et al., 2006) not recognising the need for a cohesive measure across the interconnected triple bottom line (Buys and Miller, 2009). Without this integrated analysis it is impossible to model how change in one area might benefit or harm another or work synergistically overall. Studies attempting to compare the sustainability performance of countries and industries have found performance ratings to be variable depending on which domain is measured and which sustainability indices are used (Staniunas, Burinskiene and Maliene, 2012). Any measure that is developed must be an adaptable tool that enables informed assessment, dialogue and negotiation of strategies at a global level, as well as being applicable to developing local solutions. Stimulated by economic growth in developing countries, the imperative for global cooperation, performance comparison and strategy sharing increases with the impact of climate change, population growth and diminishing resources (Brundtland, 2007). However, efforts to validly and reliably measure where problems lie and how successes are built have faltered for 20 years, in part due to the absence of an integrated measurement tool that can provide the data and analysis on which to build agreement on priorities and strategies (Drexhage and Murphy, 2010).
Working with complex interacting systems to develop reality-based strategies

A complex system is one in which the network of factors that affect the system, and their interactions, is so multidimensional and
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complicated that it is impossible for a human to keep track of the resultant processes. Moreover, the system can change through selforganisation and complex patterns can arise from relatively simple interactions (Capra, 1996; Johnson and Mengersen, 2012). Sustainability is one such complex system. It comprises complex interacting factors and processes (e.g. in the context of the dairy study: farm, factory and market processes; and environmental, social and economic factors). It is self-organising; it does not require external intervention to thrive or deteriorate (e.g. an ecosystem can be sustainable through self-organisation). It can also exhibit emergent behaviour, since intervening in one part of the sustainability system can have unintended and quite extreme effects in seemingly unrelated parts of the system (Johnson and Mengersen, 2012). It is necessary to be able to rigorously assess the impact of current natural resource management, industry development and distribution of resources, so as to model likely future scenarios, should current trends remain unchanged. It is also critical to be able to model possible outcomes of strategies which might be mooted and to address risks to sustainability to ensure no unintended negative consequences are triggered in other areas. It is necessary to understand the impacts of each system on one another, for example, the impact of industries on climate change, diminishing resources, economic shifts and social change. In turn, it is necessary to understand the impact of variables such as these on an industry, its future viability, its surrounding communities and the economies they feed or depend on (Brundtland, 2007). Thus, a tool is required that can measure complexity within and between systems and model how changes in one element, positive or negative, might flow on to others. Only then can strategies for sustainability be developed with reduced risk of unintended negative consequences (Johnson and Mengersen, 2012).
Complex systems and Bayesian networks

Bayesian networks (BNs) are mathematical models which describe the key characteristics of systems or problem domains and they can
Introduction
xvii
describe nested systems within larger systems (Johnson and Mengersen, 2012). The model structure and parameters may be learnt entirely from data, or elicited from experts, or a combination of both (Jensen and Nielsen, 2007). When the Bayesian network model structure is built by experts to represent sustainability of a particular industry, the key sustainability indicators within the contexts in which that industry functions need to be jointly identified by industry stakeholders, e.g. in the case of a primary industry such as the dairy industry, the contexts are: farm, factory and market. Each of these contexts has key sustainability indicators relating to environment, economics and social impact. The Bayesian network may be constructed as a hierarchical model, with the high-level model giving an uncluttered overview of the system, and the nested sub-models containing more detailed information (Johnson and Mengersen, 2012). Each of these nested sub-models may also contain sub-models, e.g. the Economic sub-model in figure I.1 contains three sub-models: Economic Farm, which contains the key sustainability indicators which affect a farm economically; Economic Factory, which contains the key economic sustainability indicators for a specific factory, and Economic Market, which contains the key economic sustainability indicators specific to a market. These key indicators are graphically represented as nodes in the network, and the relationships between them are shown as directed arrows. Each key sustainability indicator identified across the TBL and within the contexts of farm, factory and market, has one or more sub-indicators, which combine to represent its level of sustainability. These subindicators are also represented as nodes in the BN, as well as the measures (or metrics) that are used to calculate the probabilities of these sub-indicators. Stakeholders identify the key indicators which are important for understanding and representing sustainability on each of the TBL sub-models in the Bayesian network. Each key sustainability indicator then needs to be assessed, to understand performance on issues affecting the sustainability of the industry and the ways in which the industrys current functioning could be impacting on the sustainability of, e.g. the environment, and communities. Each key indicator is further broken down into sub-indicators. For example,
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Economic
Social
Environmental
Farm
Factory
Market
Overall Sustainability Score
Figure I.1 Summary of the Sustainability BN the high level view of the Bayesian network model
the key social sustainability indicator Employment is broken down into three sub-indicators: Labour, Training and Management for farm, factory and market. Stakeholders identify existing measures to assess these sub-indicators, where such measures exist, or they define what measures could be designed or what data accessed from other sources to best describe and capture the indicators. The available data is then analysed to create a probability distribution to quantify the nodes. For example, it may be possible to use existing measures, such as global environmental indices or industry specific measures and to also obtain data from other available information, e.g. peer reviewed research literature, industry reports, pilot studies, trials, experiments and through expert key informants assessments. The outputs of the Bayesian network can be represented and communicated as a Sustainability Scorecard in each of these unique contexts of an industry, thus allowing for specificity of analysis on the ground. The scores can then be aggregated to give an overall score for the industry across a region or a country. For example, in the Australian dairy industry there may be boutique farms producing gourmet products, large industrialised farms owned by private enterprises, farmers cooperatives across a geographic region, small independent producers, etc. Some dairy communities may be in small, well-established rural pastoral communities in the fertile
Introduction
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periphery of the continent, fertile country with a stable environment and plentiful resources; some may be in areas subjected to regular or intermittent environmental extremes such as floods or fire and some may be in remote outback settings (Dairy Australia, 2013). A Bayesian network can be developed using the local data at the local community or regional level of each of these contexts, to examine their unique features and challenges. The scores of the industry in particular sites or settings can be aggregated upwards to give an overall industry score for a larger region or the country. The scores can also be disaggregated to drop back down to that level of detail, specific to the Bayesian network for specific regions, to retain analysis of the issues specific to unique settings (Johnson and Mengersen, 2012). Bayesian networks allow the integration of multiple variables (represented as nodes in a BN) across the range of systems which impact upon sustainability in whatever context is being examined. That is, they allow the triple bottom line of sustainability, i.e. environment, economics and social impact to be measured for specific industries, for particular issues, in the range of the functional contexts of that industry and the unique geographies or communities, where that industry exists. Because the Bayesian network can incorporate whatever measures are standardised and well-accepted by that industry, it provides a common language and standardised measurement system for comparisons between regions, and could be adapted as a tool for global comparisons, such as the Sustainability Scorecard. Because the Sustainability Scorecard is developed from the ground up, identifying issues unique to industries and being able to incorporate existing agreed-upon measures, it can be adapted and customised to any industry. To assess the development of primary industries, for example, the triple bottom line can be examined in the contexts of farm, factory and market, in order to understand current performance, future demands and risk management for the sustainability of the industry. Scenarios can be modelled to assess the impacts of climate change, population growth, shifting economics, changing industry methods, market forces, and other emergent issues in each of these contexts.
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Because the nodes, indicators and measures for the Bayesian network are developed and customised by and for the industry to which they are being applied by the range of stakeholders in that industry, there is an opportunity to source converging evidence of key issues and find agreed-upon measures for important variables. It is also possible to have timely warning of emerging issues and to work collaboratively to reconfigure the network to assess the impact of those issues (Johnson and Mengersen, 2009), a Bayesian network is always a work in progress (Johnson, Low Choy and Mengersen, 2012). This approach, the engagement of the range of stakeholders involved in and affected by an industry, generates ownership of the findings and the action required to position the industry for sustainability (Johnson and Mengersen, 2009), which is critical when diverse interest groups may have competing or conflicting interests (Dimitrov and Sami, 2010). The forces which drive the social, economic and environmental sectors, the decision-makers who have the power or influence to accept or reject change, cannot be ignored, if change is to be achieved (van Kerkhoff and Lebel, 2006). It may be that part of the problem with the progress of sustainable development in the past has been the traditional divide between those undertaking the systematic research and those on the ground required to take up and act on the results of such. The dissemination of research results has usually only occurred on completion, in a unidirectional, linear communication (van Kerkhoff and Lebel, 2006), whereas, as grounded researchers explain, the ownership of ideas and a willingness to implement these relies on a more collaborative approach from the outset, before research has even commenced. It requires acknowledging that experts exist in all spheres and need to be able to share information and debate, in order to come to agreement on issues, assessment tools, priorities for remediation and an optimal approach to solving problems (Corbin and Strauss, 2008; Johnson and Mengersen, 2009), e.g. improving sustainability. Developing Bayesian networks with industry stakeholders as a measurement and planning tool addresses two of the critical factors which have stalled progress on sustainability to date, i.e. dealing with complexity across the multiple systems which affect and are
Introduction
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affected by sustainability, and engaging the divergent interest groups of environmental, economic and social systems in dialogue which generates a collaborative, coordinated effort.
Benefits of using a Bayesian network as a Sustainability Scorecard

The effectiveness of a Sustainability Scorecard depends on the veracity of the data used within the model. The reliability of data depends on the validity of the measures being used to collect that data and on the candour of the stakeholders who are sharing the information (Dimitrov and Sami, 2010). Asking parties with conflicting interests to openly share data is a challenge, as their market advantage may depend on having access to information ahead of others, or they may have filtered financial information for the greatest tax or other fiscal advantages (Dimitrov and Sami, 2010). Building the level of collaboration required to be able to make an assessment of an industry based on stakeholders actual economic or other circumstances relies on developing the trust which underpins communication in good faith. This illustrates the importance of effective stakeholder engagement, ensuring the range of key informants have been identified, and the importance of the utilisation of astute workshop processes when stakeholders are engaged as a collective; and of data gathering, which allows stakeholders to share honest figures at a level of de-identification which protects them from disadvantage as a result of honest disclosure. A Sustainability Scorecard needs to be a transparent and independent means of measuring the status of an industry and changes in that industry over time, highlighting opportunities and challenges for stakeholders. It is the engagement processes used to develop a Sustainability Scorecard, the shared agreement on issues and measures, which make it a tool for assessment and shared problem-solving at a local level (Johnson and Mengersen, 2009). Where possible, the Scorecard incorporates existing validated measurement tools, industry measures, global indices, and which
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may be used for the benchmarking and sharing of good practice between regions. Where global sustainability indices or industry standards have been used the Scorecard can be used for standardised comparisons between the same type of industry in different countries. This is why Bayesian networks and a corresponding Scorecard could provide a tool which facilitates comparisons of performance and dialogue, both locally and globally. Use of the Scorecard to establish a baseline, against which to measure change over time and in response to any changing parameters, allows the industry to which it is being applied, that the industrys stakeholders and its government and other decisionmakers to discuss those aspects of the industry which are identified as being at risk, and to collaboratively consider what strategies may need to be developed to improve sustainability as a holistic, integrated concept. A Sustainability Scorecard allows stakeholders on the ground, decision-makers in the industry, and policy and political decision-makers to: Identify key drivers and key weaknesses of sustainability: By identifying baseline performance measures of the Australian dairy industry in the areas of social, economic and environmental performance, this data, and subsequent measurements, can be used to identify and track positive and negative trends in sustainability towards identifying best practice. The measurement of triple bottom line sustainability now and in future years, using the Sustainability Scorecard, can assist in identifying opportunities to make the dairy industry more sustainable. Differences between regions and states can be identified and drive improvement strategies when developing best practice policies and strategies. Equally, the impact of policy or climatic changes can be measured or tested to promote appropriate policy responses to mitigate negative or unforeseen consequences of policy or long-term climatic changes. The Scorecard provides valuable data for establishing industry emission reduction targets for dairy and to direct initiatives to reach targets. The Scorecard which incorporates indicators like the carbon and water footprint as measures in its nodes can form
Introduction
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the basis for the industry to provide annual sustainability reporting and benchmarking. Assist communities and industry to anticipate and adapt (future focus v. reactive): The Sustainability Scorecard provides a tool for exploring future growth and new investment opportunities for the growth of the industry. The economic and social capacity of communities to sustain a dairy industry is an important aspect of the Scorecard. The outcomes of key investment decisions can be modelled and interrogated within a community or industry planning strategy. The Scorecard may be useful when addressing complex issues, such as whether a community has the workforce and other infrastructure to support the industry, or if competition for resources is imposing upon sustainability. The rigour of the Sustainability Scorecard and the Bayesian network model used to develop the Overall Sustainability Score can assist when examining a wide range of variables which correlate with economic considerations, and which directly and indirectly determine economic sustainability. The Scorecard can be an invaluable tool to identify best practice in sustainability in different areas and regions and to illustrate how these can be adapted across the industry, where possible, to achieve greater sustainability outcomes. Form a strategy for involving diverse stakeholders through a transparent engagement process: The Sustainability Scorecard provides Dairy Australia with a tool for the development of government and community responses to major structural change resulting from climate change or other sustainability challenges. Because the Scorecard is based on transparent scientific measures and demonstrates how those measures interact with one another the format gives users the ability to interact with and understand the complexity of sustainability. Thus, the Scorecard can be used to promote greater engagement with all stakeholders across the dairy sector towards ensuring that future policies and adaptation strategies can be monitored and tested for their impacts on triple bottom line outcomes. Equally, it will provide early identification of negative trends to allow Dairy Australia to advocate on the adjustment of policies
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or strategies that may have unintended negative effects. The Sustainability Scorecard gives the dairy industry a high level of flexibility in developing responses to key climatic and policy changes in the 21st century. As the Australian public becomes more aware of the need for sustainability, the Scorecard gives the dairy industry the credibility to engage in the public dialogue on behalf of its multiple stakeholders.
Development of the Bayesian network for the Sustainability Scorecard

The Bayesian network and subsequent Sustainability Scorecard were developed in three main stages. In Stage One, the conceptual model was developed along with the triple bottom line (economic, environmental and social) sub-models. In Stage Two, the set of key sustainability indicators that inform the triple bottom line across farm, factory and market were developed, and in Stage Three the different component parts of each key sustainability indicator were identified along with the available measures that could be used to quantify the model. For example, the overall conceptual model comprises economic, environmental and social nodes, which are linked to farm, factory and market nodes: within this model, the key sustainability indicators for the economic node are: economics profitability, workforce, market and physicals. Also within this model, the sub-indicators for the market were identified as: commodity prices, supply and risks. These sub-indicators were then quantified with measures that were available for each context. For example, in order to quantify the sub-indicator commodity prices for farm, the measure farm gate milk price was used. Note that more than one measure may be chosen to inform a sub-indicator. The Bayesian network model is described with more detail in chapter 2.
1
Conceptual Model
Economic
Social
Environmental
Farm
Factory
Market
Figure 1.1
Overview of the model
Triple bottom line sub-models

The three triple bottom line (TBL) sub-models provide a view of Dairy Australias triple bottom line across the entire dairy industry. Each model aggregates the sustainability scores across farm, factory and market to give a probability distribution for the economic, social and environmental triple bottom line.
Economic Farm
Economic Factory
Economic Market
Economic TBL
Figure 3a: Dairy Economic TBL model
Social Farm
Social Factory
Social Market
Social TBL Figure 3b: Dairy Social TBL model
Environmental Farm
Environmental Factory
Environmental Market
Environmental TBL
Figure 1.2 Dairy Environmental TBL model
Economic sub-model nodes, indicators and measures

There are five key sustainability indicators for the economic triple bottom line for farm, factory and market. They are economics (1), profitability (2), workforce (3), market (4) and physicals (5) and are shown in the left column of Figure 1.3. Each of these key indicators then had three sub-indicators to define them more clearly. For example, in Figure 1.3, the economics indicator (1) has three sub-indicators:
Conceptual Model
Economic Nodes and Indicators
INDICATOR NODE
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
INDICATOR
1.1 DEBT
1.1.1 Debt to Asset ratio 1.1.2 N/A 1.1.3 N/A
1.2 ASSETS
1.2.1 Debt to Equity Ratio 1.2.2 N/A 1.2.3 N/A
1.3 INVESTMENT
1.3.1 Rate of return on assets 1.3.2 N/A 1.3.3 N/A
ECONOMICS
2.2 INTEREST
2.1.1 Interest expense ratio 2.1.2 N/A 2.1.3 N/A
2.2 INCOME
2.2.1 Net farm income ratio 2.2.2 N/A 2.2.3 N/A
2.3 COMPETITIVENESS
2.3.1 N/A 2.3.2 N/A 2.3.3 N/A
PROFITABILITY
3.1 EMPLOYMENT
3.1.1 N/A 3.1.2 N/A 3.1.3 N/A
3.2 PRODUCTIVITY
3.2.1 Milk produced 3.2.2 N/A 3.2.3 N/A
3.3 MANAGEMENT
3.3.1 Attitude to future 3.3.2 Skills & Training 3.3.3 N/A
WORKFORCE
4.1 COMMODITY PRICES

4.1.1 Farm gate milk price 4.1.2 Exports and prices 4.1.3 Supermarket prices
4.2 SUPPLY
4.2.1 Milk production 4.2.2 Volume of milk processed* 4.2.3 N/A
4.3 RISKS
4.3.1 N/A 4.3.2 N/A 4.3.3 AUD/Exchange rates
MARKET
5.1 EFFICIENCY
5.1.1 Milk yield per cow 5.1.2 N/A 5.1.3 N/A
5.2 RESOURCE
5.2.1 Cost of water 5.2.2 N/A 5.2.3 N/A
5.3 INPUTS
5.3.1 Fodder costs 5.3.2 N/A 5.3.3 Product consumption
PHYSICALS
Figure 1.3 The key economic sustainability indicators and sub-indicators which were used in the case study
debt (1.1), assets (1.2) and investment (1.3). Each of these subindicators has a measure for farm, factory and market. For example, the debt to asset ratio (1.1.1) is the metric which was used to measure the performance of the debt sub-indicator for farming. Note that N/A means that no metric was identified for a sub-indictor. The reason for this may be due to the difficulty in obtaining access to suitable data to measure the sub-indicator, or due to resource constraints for the pilot case study. When information was not available, the sub-indicator was treated as being uninformative, and therefore it was equally likely to be at a high, medium or low level of sustainability. The numbering system for the indicators and measures are as follows: the first number is the key indicator node, the next refers to the sub-indicator and the last digit identifies whether the measure is for farm, factory or market. For example, 4.3.3 means the 4th key indicator node (market), the 3rd sub-indicator for that node (risks) and the 3rd measurement for the sub-indicator, which is a market measurement (farm is 1, factory is 2, and market is 3).
Social sub-model nodes, indicators and measures

The social triple bottom line is assessed using five key sustainability indicators: employment (1), legal and ethics (2), community (3), health and safety (4) and product (5) across farm, factory and market. These key indicators are shown in the far left column of Figure 1.4. Furthermore, each of these key indicators had either two or three subindicators to define them more clearly. For example, in Figure 1.4, the health and safety indicator (4) has three sub-indicators: animal welfare (4.1), occupational (4.2) and consumer (4.3). Each of these subindicators has a measure for farm, factory and market. For example, foodborne illness (4.3.3) is the metric which was used to measure the performance of the consumer sub-indicator for the market. Note that N/A means that no metric was identified for a sub-indictor. The reason for this may be due to the difficulty in obtaining access to suitable data to measure the sub-indicator, or due to resource constraints for the pilot case study. When information was not available, the subindicator was treated as being uninformative, and therefore it was equally likely to be at a high, medium or low level of sustainability.
Conceptual Model
Social Nodes and Indicators
INDICATOR NODE
INDICATOR
INDICATOR
1.1 LABOUR
1.1.1 Work-life balance 1.1.2 Work-life balance 1.1.3 N/A
1.2 TRAINING
1.2.1 VET Courses 1.2.2 VET Courses 1.2.3 N/A
1.3 MANAGEMENT
1.3.1a Attitude to future 1.3.1b Age composition 1.3.2 N/A 1.3.3 N/A
EMPLOYMENT
2.1 DISCRIMINATION
2.1.1 N/A 2.1.2 Labour equity 2.1.3 N/A
2.2 COMPLIANCE
2.2.1 Regulations 2.2.2 Regulations 2.2.3 N/A
LEGAL & ETHICS
3.1 CULTURE
3.1.1 Family farming 3.1.2 N/A 3.1.3 N/A
3.2 VALUE
3.2.1 Residents Perceptions 3.2.2 Wage contribution 3.2.3 Childrens Understanding
3.3 COHESION
3.3.1 Participation 3.3.2 Corporate Social Responsibility 3.3.3 N/A
COMMUNITY
4.1 ANIMAL WELFARE

4.1.1 Herd Health 4.1.2 N/A 4.1.3 N/A
4.2 OCCUPATIONAL
4.2.1 Farm injuries 4.2.2 Lost time injury frequency 4.2.3 N/A
4.3 CONSUMER
4.3.1 Perceptions of safety 4.3.2 Product recalls 4.3.3 Foodborne Illness
HEALTH & SAFETY
5.1 NUTRITION
5.1.1 N/A 5.1.2 N/A 5.1.3 N/A
5.2 MARKETING
5.2.1 N/A 5.2.2 N/A 5.2.3 Product Consumption
PRODUCT
Figure 1.4 The key social sustainability indicators and sub-indicators which were used in the case study
Environment sub-model nodes, indicators and measures

The environment triple bottom line is assessed using two key sustainability indicators: resource efficiency (1) and waste (2) across farm, factory and market. These key indicators are shown in the far left column of Figure 1.5. The resource efficiency key indicator has three sub-indicators: water (1.1), energy and emissions (1.2) and land and soil (1.3). The waste indicator has two sub-indicators: water waste (2.1) and solid waste (2.2). Each of these sub-indicators has a measure for farm, factory and market. For example, cleaning and treatment (2.1.2) is the metric which was used to measure the performance of the water waste sub-indicator for factory. Note that N/A means that no metric was identified for a sub-indictor. The reason for this may be due to the difficulty in obtaining access to suitable data to measure the sub-indicator, or due to resource constraints for the pilot case study. When information was not available, the sub-indicator was treated as being uninformative, and therefore it was equally likely to be at a high, medium or low level of sustainability.
Environmental Nodes and Indicators
INDICATOR NODE
INDICATOR
INDICATOR
1.1 WATER
1.1.1 Consumption & diversion from environmental flows 1.1.2 Recycling 1.1.3 NA
1.2 ENERGY & EMISSIONS

1.2.1 GHG Emissions 1.2.2 Consumption 1.2.3 N/A
1.3 LAND & SOIL

1.3.1 Nutrient management 1.3.2 N/A 1.3.3 N/A
RESOURCE EFFICIENCY
2.1 WATER WASTE

2.1.1 Fertiliser use 2.1.2 Cleaning and treatment 2.1.3 N/A
2.2 SOLID WASTE

2.2.1 N/A 2.2.2 Packaging 2.2.3 N/A
WASTE
Figure 1.5 The key environmental sustainability indicators and sub-indicators which were used in the case study
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Dairy Sustainability Scorecard
The Dairy Sustainability Scorecard builds a sustainability score, informed by the Bayesian network model. This score is an aggregated score and although it is an abstract concept, it provides the mechanism for comparing relative sustainability across sustainability indices, triple bottom line and dairy industry sectors. Having established a base line, changes in sustainability in Dairy Australia can be visually represented and communicated to stakeholders. Figure 2.1 below illustrates the utilities assigned to the stochastic nodes in the Dairy Australia Bayesian network model, and Table 2.1 shows the mapping of these scores onto a Scorecard. The colour palette on the right of the Scorecard depicts the level of sustainability of each entry in the Scorecard. The Sustainability Scorecard models for each of the TBL Economic scorecard, Social scorecard and Environmental scorecard models for dairy farms are shown in Figures 2.2 to 2.4 below.
Economic
Social
Environmental
Farm
High 34% Medium 43% 23% Low
Factory
29% High Medium 41% 29% Low
Market
High 31% Medium 41% 27% Low
Farm sustainability score

Expected utility 0.557648
Factory sustainability score

Market sustainability score

High Low
27% 29%
Medium 44%

Figure 2.1 Dairy Australia Sustainability Scorecard model Table 2.1 Dairy Australia Sustainability Scorecard
TBL KEY INDICATOR Economics Protability Economic Workforce Market Physicals Economic sustainability Employment Legal & Ethics Social Community Health & Safety Product Social sustainability Environment Resource efciency Waste Environmental sustainability Dairy Australia sustainability FARM 0.73 0.56 0.47 0.59 0.42 0.60 0.21 0.59 0.54 0.46 0.50 0.43 0.62 0.46 0.55 0.56 FACTORY MARKET 0.50 0.50 0.50 0.61 0.50 0.54 0.51 0.54 0.54 0.43 0.50 0.50 0.48 0.35 0.41 0.50 0.50 0.50 0.50 0.54 0.55 0.52 0.50 0.50 0.53 0.45 0.57 0.51 0.50 0.50 0.50 0.52 OVERALL 0.58 0.52 0.49 0.58 0.49 0.56 0.41 0.54 0.54 0.45 0.52 0.48 0.53 0.44 0.52 0.53 0.04 0.09 0.13 0.17 0.22 0.26 0.30 0.35 0.39 0.43 0.48 0.52 0.57 0.61 0.65 0.70 0.74 0.78 0.83 0.87 0.91 0.96 1.00
Dairy Sustainability Scorecard
Workforce - Farm sustainability score Profitability - Farm sustainability score

Expected utility 0.55532 Expected utility 0.466587
Market - Farm sustainability score Expected utility 0.588857 Physicals - Farm sustainability score Expected utility 0.423376 Economic Farm sustainability score
Economics - Farm sustainability score

Figure 2.2
Economic Farm Sustainability Scorecard model

Community - Farm sustainability score
Legal & Ethics - Farm sustainability score

Health & safety - Farm sustainability score

Employment - Farm sustainability score

Product - Farm sustainability score

Social - Farm sustainability score

Figure 2.3
Social Farm Sustainability Scorecard model
Resource efficiency - Farm sustainability score

Waste - Farm sustainability score

Environmental - Farm average sustainability score

Figure 2.4
Environmental Farm Sustainability Scorecard model
3
Scenario Testing for the Scorecard
Scenario testing of the Dairy Australia Sustainability Scorecard

The Dairy Scorecard model described in this book was informed by numerous metrics. However, there was data paucity for some of the sustainability indicators in the Scorecard, which was more pronounced in some sectors; for example market was not well-informed for social, economic or environmental sustainability. In these situations using a Bayesian approach, the probability distribution applied to the indicator was the uniform distribution, reflecting a lack of knowledge about the indicator. The Bayesian network model provides a baseline for assessing the trends in economic, social and environmental sustainability in the dairy industry. The model may be augmented with additional metrics, and the existing ones may be substituted with new metrics as more knowledge is gained and more research is conducted. Most of the sustainability sub-indicators were informed by only one metric. However, multiple metrics may be combined to provide an assessment of the sustainability of an indicator. For example, the management sub-indicator, which is one of three sub-indictors determining the sustainability of the employment indicator in Social Farm, combined two metrics: attitude to future and age composition.
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The dairy TBL is assessed across farm, factory and market, and culminates in a probability distribution across the levels of sustainability for the dairy industry. The value assigned to a sustainability level may be interpreted as the probability that the dairy industry has that level of sustainability. This probability should be compared to the probabilities of the other possible levels of sustainability to better understand the overall picture and the certainty we have that the industry is at a particular level of sustainability. At 100% we are certain that it is definitely in a particular state, and at the other end of the scale 0% indicates that it is definitely not at that level of sustainability. The current baseline values for the Dairy Australia Scorecard show that the probability of being highly sustainable is 27%, the probability of having a medium level of sustainability is 44% and the probability of a low level of sustainability is 29%. Consequently, a medium level of sustainability is the most likely outcome. The relatively flat nature of the distribution (the highest probability is less than 50%) is likely representative of the gaps in knowledge in some of the indicators. However, this should not detract from the importance of having a baseline from which we can build more exact
Economic
Social
Environmental
Farm High 34% Medium 43% 23% Low
Factory High 29% Medium 41% Low 29%
Market 31% High Medium 41% 27% Low
Overall Sustainability Score High 27% Medium 44% Low 29%
Figure 3.1 The probability distribution for the overall sustainability score for Dairy Australia
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models. The strength of the relationships between the various indicators and perspectives are also captured in the model, and a Bayesian network allows us to run queries against the model. This is a powerful feature of Bayesian networks. We present several scenarios and discuss the results of these scenarios.
Dairy Australia sustainability scenarios

Scenario 1 Achieving high sustainability The Dairy Scorecard BN in Figure 3.1 above depicts the current state of knowledge about sustainability in Dairy Australia. Clearly we want to explore the options to achieve an overall high level of sustainability. In Figure 3.2 below we first add information to the model to say that overall high sustainability has definitely been achieved. This is done by setting High in the overall Sustainability Scorecard node to 100%. In BN modelling this is referred to as adding evidence to the network. We can see that when this evidence is added, as expected, the most probable state of the sustainability at farm, factory and market is also High.
Economic
Social
Environmental
Factory 47% Medium 27% Low 26% High
Market 53% Medium 32% Low 15% High
High 100% Medium 0% Low 0%
Figure 3.2
Overall Dairy Scorecard sustainability is set to High
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Another perspective on this may be to ascertain which dimension of the industry to concentrate on to achieve overall sustainability most expediently. In this case we would look at farm, factory and market in turn to see what effect it has on the overall sustainability score. Figure 3.3 shows the result of setting farm, factory and market to having definitely achieved a high level of sustainability. The model predicts that there is not really much to choose between them, so the choice of which area to concentrate on will depend on Dairy Australias priorities and beliefs. Nonetheless we see that the model now predicts that the most likely level of overall sustainability will be high if any one of the sectors attains a high level of sustainability. It is important to note that there are several indicators which have not yet been informed by data or expert judgement, and as is the norm with Bayesian networks, the model should be continuously updated with new information. These scenarios should then be rerun to see whether the results provide new insights into proposed courses of action.
Economic
Social
Environmental
Economic
Social
Environmental
Factory High 29% Medium41% 29% Low
Market High 31% Medium41% Low 27%
Farm High 34% Medium43% 23% Low
Market High 31% Medium 41% 27% Low
Overall Sustainability Score High 45% Medium 34% 21% Low
High 44% Medium 37% Low 19%
Economic
Social
Environmental
High Low
Farm 34% 23%
Medium 43%
Market High 100% Medium 0% 0% Low
Overall Sustainability Score High 46% Medium 31% Low 23%
Figure 3.3 The effect on the overall sustainability score of Dairy Australia when either farm, factory and market is highly sustainable
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Scenario 2 Low sustainability in farm, factory or market If sustainability in farm, factory or market deteriorates to a low level, how is this likely to reflect on the overall sustainability score of Dairy Australia? We represent this scenario in the model by first setting just one of the sectors, factory, to a low sustainability level (Figure 3.4(a) has a 100% low for factory). This information results in the overall sustainability score being equally likely to have a medium or low score, which is a marked deterioration compared to our current knowledge about sustainability in the dairy industry (see Figure 3.1 above). If we set another sector to a low level of sustainability, for example the farming sector (Figure 3.4(b) has a 100% low for farm), then the most probable state of the industry is at a low level of sustainability.
Economic
Social
Environmental
Economic
Social
Environmental
Farm High 34% Medium 43% Low 23%
Farm 0% High Medium 0% Low 100%
(a)
(b)
Figure 3.4 Low sustainability at factory level only (a), and also at Farm level (b).
Economic sustainability scenarios

Scenario 3 Actions to increase economic sustainability of dairy farms Figure 3.5(a) below shows that the economic sustainability of dairy farms is most likely to be at a medium level (47%). Economics Farm is one of the five indicators that make up the assessment of the economic sustainability of dairy farms, and is the synthesis of three sub-indicators: debt, assets and investment. Each of the sub-indicators
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may be the result of one or more measurements that provide an insight into the level of sustainability of the indicator. In this initial version of the Dairy Australia Scorecard, the majority of subindicators have been informed by only one metric. The metric used to map onto the investment sub-indicator is rate of return on farm assets. This metric is showing a low level of sustainability with a high degree of certainty (90% probability of being at a low level of sustainability). If the rate of return on farm assets is targeted to become highly sustainable, (we do this by setting high to 100% in the model) then the model predicts that the Economics Farm indicator will also become highly sustainable with a probability of 90%, which is shown in Figure 3.5(b). Furthermore we see in Figure 3.5(b) that by targeting this one sub-indicator, the overall economic sustainability prediction also improved, so that it is now equally likely to be high or medium. If further action is taken to ensure that farming profitability (the synthesis of sub-indicators interest, income and competitiveness) is highly sustainable, we see a marked increase in the overall economic sustainability of dairy farming so that the most probable state is now a high level of sustainability (62%). One type of activity that could be considered would be first of all to gather further knowledge about the sub-indicators to provide a more accurate assessment of the level of sustainability. This is achieved by adding more metrics to the subindicators, and especially for the competiveness sub-indicator, which has no metric associated with it. If there is no empirical data available for an additional measurement, expert judgement will be required to estimate the probabilities. Once there is agreement that the level of sustainability of profitability has been accurately estimated, certain metrics can then be targeted to explore activities and strategies for improving their sustainability assessment. It is also interesting to note that this scenario of high profitability (indicator) and investment (sub-indicator) flows down to a healthy improvement of overall sustainability at the farm level. Previously, (Figure 3.6 (a)) the most likely farm sustainability level was medium (45%) and now both high and medium are predicted to be approximately equally likely at 42% and 43% respectively.
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(A)
Measures for Economics - Farm
(B)
Debt 99% High Medium 1% 0% Low
Assets 99% High Medium 1% 0% Low
Investment 0% High Medium 10% 90% Low
Investment 100% High Medium 0% Low 0%
Economics - Farm High Medium Low 50% 45% 5% High
Economic - Farm 37% 47% 16% High
Economics - Farm 90% 10% 0% High
Economics - Farm 44% 45% 11%
Medium Low
Medium Low
Medium Low
(C)
High Low
Profitabiliy - Farm 100% 0% 0% High
Workforce - Farm 24% 46% 30%
Medium
Medium Low
Investment High 100% Medium 0% 0% Low
Economics - Farm High Medium Low 90% 10% 0% High
Economic - Farm 62% 35% 4%
Medium Low
Figure 3.5 Current estimate of economic sustainability of dairy farms (a), achieving high sustainability of investment sub-indicator (b), and achieving high sustainability of protability indicator (c).
The synthesis of economic sustainability across farm, factory and market resulting from this scenario has a similarly positive outlook on the level of sustainability, as shown in Figure 3.6 below, so that Dairy Australias economic TBL now predicts high and medium sustainability to be roughly equally likely.
Economic - Factory
Economic - Factory
Economic - Farm
Economic - Market
Economic - Farm
Economic - Market
Economic - TBL 34% Medium 45% Low 21% High (a)
Economic - TBL High Low 42% 15% (b)

Medium 43%
Figure 3.6 Initial estimates for the economic TBL for Dairy Australia (a); the ow-on effect of Scenario 3 for Dairy Australias economic TBL (b).
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Social sustainability scenarios

Scenario 4 Improving social sustainability for factories in the dairy industry In the social sustainability networks for farm, factory and market there are five indicators: employment, legal and ethics, community, health and safety, and product, all of which inform the level of sustainability. In this scenario we look at social sustainability of factories in the dairy industry. Three of the five indicators are targeted to improve sustainability: legal and ethics, community, and health and safety. If we assume that each of the three indicators have achieved a high level of sustainability and enter this information into the model by setting High to 100%, then the most probable level for social sustainability at the factory level is High (60%). So we can see that although sustainability should be increased across the board to ensure a sustained high sustainability, there may be merit in starting with targeted intervention in those areas which are more easily addressed, and which can then be followed up by more extensive programs of intervention. Although the result is favourable for the social sustainability of factories, we see a more diluted effect at the social TBL (Figure 3.8) and the overall factory level (Figure 3.9). This is reasonable as the
Legal & Ethics Factory High Medium Low 100% 0% 0% High
Community Factory 100% 0% 0%
Health & safety Factory High Medium Low 100% 0% 0%
Medium Low
Measures for Employment - Factory
Measures for Product - Factory
Labour High 41% Medium 28% 31% Low
Training High 30% Medium 40% 30% Low
Management High 33% Medium 33% 33% Low
Marketing High 33% Medium 33% Low 33%
Nutrition 33% High Medium 33% Low 33%
Employment Factory High Low 30% 28%
Social - Factory High Low 60% 5% High Low
Product Factory 31% 31%
Medium 42%
Medium 36%
Medium 38%
Figure 3.7 Output from Scenario 4.
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Social - Factory
Social - Factory
Social - Farm
Social - Market
Social - Farm
Social - Market
Social - TBL 25% High Medium 45% 30% Low
Social - TBL 31% High Medium 45% 24% Low
(a)
(b)
Figure 3.8 Social TBL prior to running Scenario 4 (a), and the ow-on effect of this scenario on social sustainability (b).
Economic
Social
Environmental
Economic
Social
Environmental
Farm 34% High Medium 43% 23% Low
Factory 29% High Medium 41% 29% Low

(a)
Market High 31% Medium 41% Low 27%
Farm 34% High Medium 43% 23% Low
Factory 32% High Medium 41% 27% Low

(b)
Market High 31% Medium 41% Low 27%
Figure 3.9 Factory sustainability prior to running Scenario 4 (a), and after running this Scenario (b).
social TBL synthesises across farm, factory and market, and the overall factory sustainability synthesises across economic, social and environmental sustainability.
Environmental sustainability scenarios

Scenario 5 The value of additional data collection In the initial version of the Dairy Australia Scorecard, the environmental sustainability of dairy farms does not have a measurement for the solid waste sub-indicator, which is used together with the water waste sub-indicator to inform the Waste Farm indicator. This scenario explores the anticipated effect on environmental sustainability of dairy farming if the sustainability of this sub-indicator is known. We achieve this by setting the sub-indicators level of sustainability first to high, then medium, and lastly low. The corresponding results are shown in Figure 3.10 (b), (c) and (d), respectively.
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(A)
Measures for Waste - Farm
(B)
(C)
(D)
Water Waste 15% High Medium 55% 30% Low
Solid Waste High 33% Medium33% 33% Low
Water Waste High 15% Medium55% 30% Low
Solid Waste High 100% Medium 0% Low 0%
Water Waste 15% High Medium55% 30% Low
Solid Waste 0% High Medium 100% Low 0%
Water Waste High 15% Medium55% 30% Low
Solid Waste High 0% Medium 0% Low 100%
Waste - Farm 27% High Medium 40% Low 34% High Low
Waste - Farm 54% Medium 39% 7% High Low
Waste - Farm 21% 30% High Low
Waste - Farm 4% 64%
Medium 49%
Medium 32%
Environmental Farm 34% High Medium 40% Low 26%
Environmental Farm High 33% Medium 41% Low 26%
Figure 3.10 Environmental sustainability for dairy farming prior to setting any levels (a), results from having solid waste as highly sustainable (b), a medium level of sustainability (c) and a low level of sustainability (d).
It is clear from the model inference above that taking into account the current levels of sustainability of the other environmental indicators, a high level of sustainability for solid waste will translate into a high level of environmental sustainability for dairy farming. However, a medium or low sustainability level for solid waste will retain the most probable level of sustainability as medium.
Strength of influence across the TBL for dairy

The intensity of the arrows linking nodes in a BN reflects the relative strength of influence of the parent nodes on the child nodes (Koiter, J.R., 2006). When we look at the bigger picture (Figure 3.11 below), it appears that farm, factory and market exert an equal influence on the overall sustainability score of Dairy Australia. Furthermore, the economic TBL has an equal influence on farm, factory and market sustainability, whereas social TBL has a larger influence on Market sustainability and environmental TBL has an equal influence on farm and factory, but a smaller influence on market. In relative terms sustainability at the farm and factory levels are influenced most by economic, then environmental and lastly social sustainability. Market is influenced most by economic, then social and lastly environmental.
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Economic
Social
Environmental
Farm High 34% Medium 43% Low 23%
Factory High 29% Medium 41% 29% Low
Figure 3.11 Strength of inuence for the overall sustainability score. The thickness of the arrows gives an indication of the strength of inuence between the parent and child nodes.
Strength of influence in economic TBL
Economic - Factory
Economic - Farm
Economic - Market
Economic - TBL High 34% Medium 45% Low 21%

Figure 3.12 Strength of inuence for the economic TBL. The thickness of the arrows indicates that it is inuenced equally by farm, factory and market.
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In Figures 3.13, 3.14 and 3.15 below the three dark, thick arrows from the measurement sub-networks imply that the sub-indicators are completely defined by the measures in the sub-network. The reason for this is that the initial version of the model has generally only one metric to set its level of sustainability. For the Economic Farm sub-model (Figure 3.13 below), the sub-indicators all contribute equally to the indicator. For example, the arrows from interest, income and competitiveness all have equal thickness. The five indicators differ in their influence on economic sustainability for farming. Economics, profitability and market appear more influential than workforce and physicals. Likewise for the Economic Factory sub-model (Figure 3.14 below), the sub-indicators all contribute equally to the indicator and economics; profitability and market are more influential than workforce and physicals.
Measures for Profitability - Farm
Measures for Workforce - Farm
Measures for Market - Farm
Interest 5% High Medium 88% Low 7%
Income High 39% Medium 51% Low 10%
Competitveness High 33% Medium 33% 33% Low
Employment High 33% Medium 33% Low 33%
Productivity High 68% Medium17% Low 15%
Management High 0% Medium 25% 75% Low
Commodity prices High 18% Medium 44% Low 38%
Supply High 67% Medium 33% Low 0%
Risks High 33% Medium33% 33% Low
Profitability - Farm
Workforce - Farm
24% High Medium 46% Low 30%
Market - Farm
Measures for Physicals - Farm
Debt High 99% Medium 1% Low 0%
Investment High 0% Medium10% Low 90%
Efficiency High 59% Medium 21% 20% Low
Resource High 75% Medium 5% 20% Low
Inputs 48% High Medium 25% 27% Low
Economics - Farm
Economic - Farm
Physicals - Farm
100% High Medium 0% Low 0%
Figure 3.13 Strength of inuence in the economic sustainability for farming. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Measures for Profitability - Factory
Measures for Workforce - Factory
Measures for Market - Factory
Income 33% High Medium 33% Low 33%
Competitiveness 33% High Medium 33% 33% Low
Employment 33% High Medium 33% 33% Low
Productivity 33% High Medium 33% 33% Low
Management 30% High Medium 40% 30% Low
Commodity Prices 44% High Medium 6% 50% Low
Supply 67% High Medium 33% 0% Low
Risks 33% High Medium 33% Low 33%
Profitability - Factory 29% High Medium 42% 28% Low
Workforce - Factory 29% High Medium 43% Low 28%
Market - Factory 40% High Medium 41% Low 18%
Measures for Economics - Factory
Measures for Physicals - Factory
Debt
Assets
Efficiency High 33% Medium 33% Low 33%
Inputs High 33% Medium 33% 33% Low
Economics - Factory 29% High Medium 42% 28% Low
Economic - Factory 30% High Medium 48% 22% Low
Physicals - Factory 29% High Medium 42% 28% Low
Figure 3.14 Strength of inuence in the economic sustainability of dairy factories. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
The strength of influence diagram for the Economic Market submodel (Figure 3.15 below) also follows the same relative strengths as Figures 3.13 and 3.14 above. So the sub-indicators all contribute equally to the indicator and economics; profitability and market are more influential than workforce and physicals.
Measures for Profitability - Market Measures for Workforce - Market Measures for Market - Market
Income 33% High Medium 33% Low 33%
Competitiveness 33% High Medium 33% 33% Low
Employment 33% High Medium 33% 33% Low
Productivity 33% High Medium 33% 33% Low
Management 33% High Medium 33% 33% Low
Commodity prices 63% High Medium 13% 24% Low
Supply 33% High Medium 33% 33% Low
Risks 19% High Medium 43% Low 38%
Profitability - Market 29% High Medium 42% 28% Low
Workforce - Market 29% High Medium 42% Low 28%
Market - Market 33% High Medium 43% Low 25%
Measures for Economics - Market
Measures for Physicals - Market
Debt
Assets
Efficiency High 33% Medium 33% Low 33%
Inputs High 33% Medium 60% 7% Low
Economics - Market 29% High Medium 42% 28% Low
Economic Market 28% High Medium 48% Low 24%
Physicals - Market 33% High Medium 44% 23% Low
Figure 3.15 Strength of inuence in the economic sustainability of the market sector. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Strength of influence in social TBL
Social - Factory
Social - Farm
Social - Market
Social - TBL High Medium Low 25% 45% 30%
Figure 3.16 The strength of inuence diagram for social TBL shows that it is inuenced more strongly by farm and market than by factory sustainability.
In the Social Farm sub-model (Figure 3.17 below), the subindicators all contribute equally to the indicator, except for the Employment Farm indicator, which is influenced more strongly by labour and management sub-indicators than by training. Social sustainability is the synthesis of five indicators with two, employment and product, exerting a slightly stronger influence on social sustainability for farming than legal and ethics, community or health and safety. Similarly, Figure 3.18 below showing the strength of influence in the Social Factory sub-model has all sub-indicators contributing equally to the associated indicator, with the exception of employment, where sub-indicator management and training have a stronger influence than labour. As for farming, the employment and product indicators have a stronger influence on the sustainability of factories.
25
For social sustainability at the market level (figure 29), the strength of influence mimics that of the social sustainability of farming.
Measures for Community Farm
Culture High 0% Medium25% 75% Low
Value High 85% Medium12% 3% Low
Cohesion 50% High Medium13% Low 37%
Measures for Legal & Ethics Farm Community Farm 31%
Measures for Health & Safety Farm
High Compliance 95% High Medium 5% 0% Low Discrimination 0% High Medium33% Low 67% Low
Medium 46% 23%
Animal welfare High 100% Medium 0% 0% Low
Occupational 7% High Medium57% 36% Low
Consumer High 43% Medium24% Low 33%
Measures for Employment Farm
Measures for Product Farm
Labour High 0% Medium17% 83% Low
Training High 20% Medium60% 20% Low
Management 8% High Medium 31% Low 62%
Legal & Ethics Farm High Low 33% 16% Medium 51%
Health & safety Farm 44% High Medium 43% Low 13%
Nutrition High 33% Medium33% Low 33%
Marketing High 33% Medium33% Low 33%
Employment Farm High Low 5% 63% High Low
Social Farm 23% 28%
Product Farm High Low 31% 31%
Medium 32%
Medium 50%
Medium 38%
Figure 3.17 Strength of inuence in the social sustainability for farming. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
Measures for Legal & Ethics Factory
Measures for Community Factory
Measures for Health & Safety Factory
Discrimination High 0% Medium 33% Low 67%
Compliance High 80% Medium 20% Low 0%
Culture High 33% Medium 33% 33% Low
Value High 46% Medium 27% 27% Low
Cohesion High 25% Medium50% Low 25%
Animal welfare High 33% Medium 33% 33% Low
Occupational High 33% Medium 34% 33% Low
Consumer 15% High Medium 31% 54% Low
Legal & Ethics Factory High 29% High Low
Community Factory 32% 25%
Health & safety Factory High Low 22% 35%
Medium 50% 21% Low
Medium 43%
Medium 42%
Measures for Employment Factory
Measures for Product Factory
Labour 41% High Medium 28% Low 31%
Training 30% High Medium 40% Low 30%
Management 33% High Medium 33% Low 33%
Marketing High 33% Medium 33% 33% Low
Nutrition High 33% Medium 33% 33% Low
Employment Factory High Low 30% 28%
Social Factory High Medium Low 26% 49% 25% High Low
Product Factory 31% 31% Medium 38%
Medium 42%
Figure 3.18 Strength of inuence in the social sustainability of dairy factories. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Measures for Legal & Ethics Market
Measures for Community Market
Measures for Health & Safety Market
Discrimination 33% High Medium33% 33% Low
Compliance 33% High Medium 33% 33% Low
Culture 33% High Medium33% 33% Low
Value High 85% Medium12% Low 3%
Cohesion 33% High Medium33% 33% Low
Animal welfare
Occupational
Consumer
Legal & Ethics Market 31% High Medium 38% Low 31%
Community Market High Low 44% 14% High Low
Health & safety Market 24% 33%
Medium 41%
Medium 43%
Measures for Employment Market
Measures for Product Market
Labour
Training
Management
Nutrition 33% High Medium 33% 33% Low
Marketing 33% High Medium60% 7% Low
Employment Market High Low 29% 29%
Social Market High 29%
Product Market High 37%
Medium 42%
Medium 48% Low 22%
Low
Medium 40% 23%
Figure 3.19 Strength of inuence in the social sustainability of the market sector. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
Environmental TBL
Environmental Factory
Environmental Farm
Environmental Market
Environmental TBL High Medium Low 35% 37% 28%
Figure 3.20 Strength of inuence diagram for environmental TBL showing that it is inuenced most strongly by farm environmental sustainability. Factory and market have an equivalent, but lesser inuence on environmental TBL.
27
Figure 3.20 above shows a much stronger influence being exerted by the environmental sustainability of dairy farms than the environmental sustainability of factory and market. However, within each of the three perspectives of farm, factory and market (Figures 3.21, 3.22 and 3.23) we see that the two indicators which synthesise environmental sustainability, resource efficiency and waste, have an equal influence on the resulting sustainability levels. For both these indicators, the sub-indicators which combine to yield their sustainability have equal influence on the outcome of the associated indicator.
Measures for Resource Efficiency Farm
Measures for Waste Farm
Water High 72% Medium14% 14% Low
Energy & Emissions High 25% Medium 50% Low 25%
Land & Soil High 33% Medium 33% 33% Low
Solid Waste High 33% Medium 33% 33% Low
Resource Efficiency Farm High 40% High
Waste Farm 27%
Medium 42% Low 18%
Medium 40% Low 34%
Environmental Farm High Low 34% 26%
Medium 40%
Figure 3.21 Strength of inuence on the environmental sustainability for farming. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Measures for Resource Efficiency Factory
Measures for Waste Factory
Water High 33% Medium 33% 33% Low
Energy & Emissions High 30% Medium 40% 30% Low
Land & Soil 33% High Medium 33% 33% Low
Solid Waste 25% High Medium 55% 20% Low
Resource Efficiency Factory High 29%
Waste Factory High 32%
Medium 43% Low 28%
Medium 40% Low 29%
Environmental Factory High Low 31% 29%
Medium 39%
Figure 3.22 Strength of inuence on the environmental sustainability of dairy factories. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
29
Measures for Resource Efficiency Market
Measures for Waste Market
Water 33% High Medium 33% Low 33%
Energy & Emissions High 33% Medium 33% 33% Low
Land & Soil 33% High Medium 33% Low 33%
Water Waste 33% High Medium 33% Low 33%
Solid Waste 33% High Medium 33% Low 33%
Resource Efficiency Market High 29%
Waste Market High 31%
Medium 42% Low 28%
Medium 38% Low 31%
Environmental Market High Low 31% 30%
Medium 39%
Figure 3.23 Strength of inuence on the environmental sustainability of the market sector. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
4
Evidence Base
The Australian dairy industry agreed to collaborate in the development of a Bayesian network for the dairy industry in Australia, and to test the adaptation of that Bayesian network as a Sustainability Scorecard to measure their performance on the triple bottom line of environmental, economic and social impacts (TBL), and to utilise this model to explore the changes the dairy industry in Australia may need to make to be sustainable. The viability of the Australian dairy industry is dependent on how well it addresses and adapts to unprecedented and long-term challenges such as those posed by population growth, social change, technological improvements, internationalisation, climate change, and so on; not just for their impact on the industry, but also for the industry to respond constructively to the imperative to adopt more sustainable practices. The successful adaptation of the industry is also critical as a major contributor to meeting one of the great challenges facing agriculture globally, i.e. the need to ensure a secure supply of food in the face of increasing global populations, particularly in the Asia-Pacific region. This project builds on previous work undertaken by the Queensland University of Technology (QUT) with Dairy Australia (Buysand Miller, 2009), Understanding the value of the Dairy Industry in Australia, Identifying a sustainability framework and key variables to measure it: Preparing for the future and the Commonwealth Scientific and Industrial Research Organisations (CSIRO)
32
A synopsis of the vulnerability of Australian dairy farming to climate change. The development of a BN is an iterative process with five key stages: Design (conceptual model) Quantify Validate Evaluate Adapt
Design
The Bayesian network for Dairy Australia was designed using input from a wide range of stakeholders. Therefore the design phase included both the design of the stakeholder engagement processes for developing the dairy industry Bayesian network and then the design of the Bayesian network itself. The Bayesian network for sustainability in the dairy industry comprises two sets of factors: those that describe the context, i.e. farm, factory and market, and those that describe the sustainability domains i.e. environmental, economic and social. The Bayesian network model was designed so that it reflects sustainability from different viewpoints. It represents sustainability at each of the TBLs, aggregating across farm, factory and market, and also at each of the three dairy industry domains of farm, factory and market, aggregating across the TBL. For example, the Economic TBL in the Bayesian network model opens out into three subnetworks: economic farm, economic social and economic environmental and sustainability, and the farm combines information from the sub-networks farm economic, farm social and farm environment. Each of the sub-networks has nodes representing sustainability indicators for that particular context. For example, in the dairy industry case study, the nodes relating to social sustainability at the farm level (the farm social sub-network) were health and
Evidence Base
33
safety, community, product, legal and ethics, and employment. If warranted, the factors in the sub-networks can extend to other networks, and so on. Very complex systems can be described in this manner, with measures specific to each variable in each sub-network, allowing a depth of analysis to be explored. For the dairy industry case study, stakeholder engagement was undertaken through three workshops with a range of stakeholders and through ongoing collaboration with key informants: 1. In March 2011 a workshop was held with representatives from QUT and Dairy Australia to develop a framework for a predictive tool for measuring the sustainability of the dairy industry. A collaborative, industry-based approach was selected to maximise industry participation and strengthen industry confidence in and ownership of the process. 2. In June 2011 a workshop was held in Melbourne, Victoria with representatives from QUT, Dairy Australia and the Dairy Manufacturers Group. During the workshop, participants endorsed a triple bottom line approach, i.e. examining the environmental, economic and social impacts relating to farm, factory and market to form the basic framework for the sustainability Bayesian network (Figure I.1) and for the eventual adaptation of the Bayesian network (BN) to develop a Sustainability Scorecard for ongoing industry self-assessment. 3. In March 2012 a workshop was held in Melbourne, Victoria with representatives from Dairy Australia, the Dairy Manufacturing Group and QUT. The participants reviewed the BN structure together with nodes and indicators as developed from a Sustainability Measurement Review, which included: Systematic Review Key Dairy Stakeholder Review 2009 Dairy Sustainability Project 2011 Materiality Survey (Netbalance) 2007/08 Australian Dairy Manufacturing Industry Sustainability Report (DMSC)
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The participants concluded that the BN nodes and indicators would be taken from the Dairy Stakeholders Framework review. Through a targeted exercise the group also identified possible measures for the nodes and indicators. Regular meetings were held with representatives from Dairy Australia to identify and confirm measures for the BN. The principles accepted for indicators and measures were driven by consultation with field experts, and alignment with the SAFE framework and the dairy focus report. Measures deemed to have limited sensitivity or data not representative of the industry were removed by dairy field experts. Through a number of telephone conferences, workshops and general correspondence, Dairy Australia and QUT finalised the measures deemed to be immediately appropriate and relevant to the industry for the working BN model. The challenge with building a Bayesian network is determining the level of detail necessary to assess the critical issues for that industry, to be alert to risks and to be able to assess complex, interacting driving forces within and between the systems. That is, how many layers of nested systems (sub-networks) and how many variables (sub-indicators) for each key indicator (nodes) need to be measured to rigorously assess these variables, while keeping the choice of variables and their measures simple enough to be comprehensible (Johnson and Mengersen, 2012). Bayesian networks can make complex systems and their functioning easier to grasp by breaking them down into their smaller sub-systems to examine smaller problems.
Quantify
The objective of this stage was to select appropriate indicators, including the identification of variables for which proven measures already exist, which could be incorporated into the Bayesian network, e.g., global indices such as the carbon footprint or dairy industry accreditation standards. There are many approaches to measuring sustainability, which have been developed with varying
Evidence Base
35
degrees of rigour, and which need to be examined to assess the value and potential use of these tools as measures on relevant nodes. At the dairy industry stakeholder workshops and in meetings with key informants, initial indicators were put forward and measurement tools identified, which could be incorporated into the network. Two approaches to identifying frameworks and/or tools were used. First, a review of industry measures based on searches of 11 primary electronic English language library databases, most of which are linked to a range of other databases which expanded the scope of searches for this study, was undertaken. These databases were: Academic Search Elite (via EBSCOhost), ASM Handbooks Online, BEDP Environment Design Guide, Compendex (via Engineering Village), CRCnetBASE, EBSCOhost, Ecospecifier, GreenFILE (via EBSCOhost), Informit, ProQuest Research Library, ScienceDirect, Scopus, SpringerLink Online Journals, UlrichsWeb. com, and Web of Knowledge. The search strategy is detailed in Table 4.1 below, which outlines the process that was used to identify the 72 publications. These 72 publications were then used to confirm the comprehensiveness of the nodes, indicators and measurements, as well as the measurements that could be useful for benchmarking or other comparisons, as standardised industry measures or sustainability indices. Overall, this review utilised a total of 357 different library databases to search books, journals, magazines, trade publications, government reports and a range of other documents dating from 1998 to 2011 for relevant data. Publications were included if they defined or evaluated sustainability based on the three TBL dimensions or other similar dimensions and were peer reviewed. They were excluded if they related only to single bottom line dimensions, such as the environment. Second, the industry relevant sustainability frameworks or tools were identified, including:
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Table 4.1 Systematic literature review process

Total items identified by primary searches Total items after first limiter Total items after second limiter Items selected for inclusion in bibliography Bibliography items after first removal of duplicates Final bibliography Review reference list TBL framework utilised 76039 11505 4011 1269 896 690 77 72
Vital Capital Survey Nestle SAFE framework Lactalis / Parmalat / Pauls (under internal corporate review at time of stakeholder review) DairySAT Danone Sustainability Report (performance indicators) Fonterra Sustainability Indicators RISE Unilever Sustainable Code GRI (Global Reporting Initiative)
The QUT team of researchers undertook a systematic review of these tools, which was triangulated with a systematic review of the literature, to identify any further variables or measures which should be considered. We adopted the Bellagio Principles as they are often used as a guiding philosophy when defining indicator criteria and requirements, particularly in sustainability (Meul, Neveens and Reheul, 2009; Hass, Brunvoll and Hoie, 2002; Van Passel, 2007). The Bellagio Principles were agreed upon in 1996 in a meeting of the International Institute for Sustainable Development in Bellagio, Italy, to review the progress achieved in Sustainable Development since the 1987 Brundtland Commission (Hardi and Zdan, 1997).
Evidence Base
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The Bellagio Principles cover ten key issues related to the design and implementation of indicator-based assessments. Specifically, the Bellagio Principles advocate for guiding vision and goals, a holistic perspective, identification of essential elements, adequate scope and practical focus, openness and communication, participation, ongoing assessment, and institutional capacity. Bayesian networks measure very different classes of variables; therefore once each has been measured using the appropriate tool, these need to be transformed into a measure which can be aggregated across nodes to provide a total score. Therefore, after the indicators have been chosen, each indicator is then described by a set of states (e.g., Yes/No, High/Medium/Low, 0-50/50+). The states are then quantified using probabilities (probability that the score reflects sustainable practices/probability) based on evidence in research literature, reports, expert knowledge, etc. In the dairy industry case study, the states of High/Medium/Low were used for all indicators, where these were carefully defined in collaboration with stakeholders. The available information was then used to determine the probability tables for each indicator, for example, the probability of High, Medium or Low labour availability (as part of the employment node of the social farm component of the BN). Although the overall Bayesian network may be quite complex, determining the probabilities for any individual node in the network only depends on the factors that directly impact on that node (i.e., feeding into the node via an arrow in the BN). This greatly simplifies the quantification process. Moreover, the probabilities can be based on a very wide range of information sources, including empirical findings, outputs of simulations, published literature and expert knowledge. The probabilities then filter down to give the overall probability of the final response node, the Overall Sustainability Score. Importantly, all of the probabilities related to these outcomes are determined in light of all of the other factors and all of the information in the BN model, that is, systems are cross-checked for their potential impact on each other. Hence the probability of financial sustainability may be high, but if a measure for a node
38
elsewhere is changed, e.g. the environment was affected by a flood, then the new measure for environment would be taken into account in the revision of the financial sustainability. After the BN is fully quantified, the probability tables can then be used to give sustainability scores for economic, environmental and social impacts in each of the Bayesian networks subsystems, i.e. farm, factory and market. For example, in the dairy case study a total score can be obtained for social sustainability at the farm, factory and market. The quantification of the Sustainability Scorecard is based on the probability outputs of the sustainability Bayesian network. For example, the Scorecard designed for the dairy industry study reports the probabilities of a favourable sustainability score for each of the TBL domains, for each variable. The probabilities are colour-coded in traffic-light form, with shades of green indicating that the factor has a high chance of achieving high sustainability in that TBL domain, shades of orange indicating a medium chance, and shades of red indicating a low chance.
Validate
The Sustainability BN and Scorecard can be validated in two ways: internal validation and stakeholder validation. Internal validation involves cross-checking the Bayesian network probabilities for consistency. For example, if the probabilities for a particular node in the network are changed, the consequent changes in the probabilities of other nodes should conform broadly as expected. Stakeholder validation involves a critical review of the Bayesian network and Scorecard design and outputs from different perspectives and needs.
Internal validation was undertaken by members of the research team who were experts in mathematical modelling. Stakeholder validation was undertaken through the dairy industry stakeholder workshops and through ongoing meetings with stakeholders and experts in the
Evidence Base
39
field. In designing a sustainability Bayesian network to feed into an associated Sustainability Scorecard it is useful to identify the range of different interest groups to ensure stakeholder engagement is representative and constructively explores any conflicting interests by engaging them in collaborative identification of key issues which need to be tested and the measures they will all accept as credible. This supports ownership of the results and a willingness to act on findings.
Evaluate
The Sustainability BN and Scorecard can be used for a wide range of evaluations: Key drivers of sustainability can be identified by interrogating the Bayesian network to assess which factors have most impact on important nodes in the network. Information gaps can be identified by inspecting the information available for designing and quantifying the Bayesian network. Scenario (what if) evaluations can be undertaken by changing the probabilities and the BN in accordance with a specified scenario in inspecting the resultant change in probabilities of nodes of interest. Causal (explaining away) assessments can be undertaken by setting the desired probabilities for target nodes and identifying how the other nodes in the network would need to behave in order to achieve this target.
One of the strengths of a BN is that it is able to operate in a predictive or diagnostic way (what if assessments), as well as an inter-causal way (explaining away). In other words, even though the model is constructed in a top-down manner, the queries can be bottom-up. For example, we can ask the question, For economic sustainability to be High what are the necessary adjustments that need to be made to the economic indicators? or we can ask, If the sustainability score of each of the TBL dimensions improves by
40
10%, what is the predicted improvement in the overall sustainability score? The Sustainability Scorecard aims to capture information which can also be used as a tool to provide alerts to risks and indicators of issues which need to be addressed so that the industry is positioned early, to anticipate and respond to emerging issues, e.g. resulting from climate change, shifting economic (protection) policies in purchasing countries, and resource degradation or loss. Such data assist in the negotiation of risk management strategies and proactive planning for the short, medium and long term. This tool was developed to have the capacity to model scenarios to understand the complex interactions of change in one area with impacts on others, to make optimal decisions and reduce the risk of unintended negative consequences. There was a patchwork of measures already in place for each of the economic, environmental and social impacts for the dairy industry, but these had been addressed separately in the past, often on an issue by issue basis. The Food and Agriculture Organization of the United Nations Report (FAO, 2010) on the greenhouse emissions of the global dairy industry indicated it was responsible for 2.7% of total anthropogenic emissions, and these emissions are rising as the global demand for meat and milk continues to grow. Projected population growth and rising incomes are expected to drive higher total consumption, with meat and milk consumption doubling by 2050 compared to 2000 (FAO, 2006). The four key sustainability challenges confronting dairy, for which the Scorecard needs to support assessment, analysis and problem solving are: Its environmental legitimacy (right to farm, sell). The ongoing social viability of rural communities that form the basis of the industry. The volatile nature of the markets and conditions in which dairy operates. Climate change and carbon trading.
Evidence Base
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Development of the Scorecard to establish a baseline of performance on this range of critical variables means that the industry can then be positioned to work with researchers to model scenarios for problem solving, in order to understand how strategies for improvement in one area might affect risk factors in others.
Adapt
The Bayesian network model is adapted and refined resulting from changes being identified during the development, testing and evaluation of the model. Furthermore, when new information or research becomes available the model needs to be adapted to incorporate this information so that it is a dynamic, living model, reflecting current knowledge and uncertainty (Johnson and Mengersen, 2012). It is advisable to put regular model reviews in place, such as annual reviews to prompt a re-assessment of the state of the art in the sustainability model (Johnson et al., 2010). This final stage of the development cycle ensures that the model reflects current trends, research and information and continues to be an effective tool to guide policy development and evaluation.
5
Conclusion
The concept of sustainability has been described as the most challenging policy concept ever developed (Spangenberg, 2004). There are more than 100 definitions of sustainability and sustainable development (Labuschagne et al., 2005). The most frequently cited definition comes from the pivotal 1987 World Commission on Environment and Development Brundtland Report, development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED, 1987). Within the broader discourse, sustainability has emerged as a metadiscipline, combining information and insights across multiple disciplines and perspectives (Mihelcic et al., 2003), bringing together three things: a critique; a set of principles; and a focus for strategies for change (Gibson, 2001). A systems approach has been proposed to cover the core principles of sustainability and to translate the definition of sustainability to the institutional level (Labuschagne et al., 2004). These systems are multidimensional and influenced by divergent economic, social, and environmental aspects, interactions and responses (Mayer, 2008). Strategies for change require sustainability to be viewed as a dynamic process in which the targets have to be continuously checked and improved (Callens, 1999). In recent years several conceptual sustainability frameworks have been proposed and developed in various disciplines, each with a limited capability to deal comprehensively with sustainability issues and to deliver a unified interpretation (Waheed et al., 2009).
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The existence of multiple meanings was examined by Kidd (1992), who said several branches of thought about sustainability had emerged since the 1950s, many being fundamentally different concepts. Kidd identifies the book Blueprint for Survival (Goldsmith et al., 1972) as being the first time the word sustainability was used in the context of mankinds future. At the same time, the 1972 book Limits to growth (Meadows et al.) warned of the impact of human development in terms of famine and over-population. The current discourse is now focused on the impact of continued development on ecosystems and the consumption of natural resources (Marshall et al., 2005). There are also divergent views on whether sustainability activities can be achieved in isolation by a subset of the populace, or whether it needs to be integrated with other sustainability activities (Seager, 2008). This is based on the proposition of conflicts arising when sustainability solutions proposed by differing subsets of the populace are incompatible: when a sustainable solution for one sector is non-sustainable for another (Gremmen et al., 1997). Within the hundreds of definitions of sustainability, Labuschagne et al. (2005) identify that within most of these definitions is an acceptance of social, environmental and economic goals also referred to as the three pillars or triple bottom line (TBL) objectives of sustainable development. The term TBL was first coined by John Elkington in 1994 to express an expansion of the environmental agenda, which until then had been the main focus of sustainability (Elkington, 2004). The TBL concept emphasised and integrated the three key dimensions of sustainable development, profits, planet and people, and was a way of focusing not just on the economic value of development, but also on the environmental and social value they add or destroy (Elkington, 2004). Progress towards sustainability requires the development of standard measures that allow progress to be tracked or managed (Morrison et al., 2007). However, the dynamic and multi-dimensional nature of sustainability makes it complex and difficult to directly measure results in a range of measurement tools to assess multiple objectives (Lamberton, 2005). The methodology used to measure sustainability remains uncertain, in particular what and how to measure, and the linkages between the indicators used to measure them (Pinter, 2005).
Conclusion
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Sustainability frameworks comprising the TBL dimensions have been developed in abundance, although not necessarily for sustainability assessment purposes (Spangenberg, 2002). What is missing from all of these are: Frameworks with a limited number of selected indicators based on a standardised, transparent and methodologically sound basis. Clearly defined policy targets in each TBL dimension interlinked and, if possible, quantified (Spangenberg, 2002).
The research for this project has identified that there is no uniform way to measure sustainability, no uniform agreement on indicators that could be used for measurement and even less agreement on which metrics should be used to quantify these indicators. This is best demonstrated that of the 72 triple bottom line frameworks, the indicator water occurred in 64 of these frameworks, although there appeared to be no standard metric identified to measure how water was measured. This is an endemic problem with sustainability measurement. This project has developed a Sustainability Scorecard, and in the course of doing so has collected measures which provide a baseline against which to measure change from this time, and to which other measures can be added to build the evidence base where there are currently gaps. While it is outside the scope of the agreed aims and outputs of the present project, we recommend further development of the Scorecard to enhance its utility. The current model was deliberately designed to be generic in perspective, equally balanced between farm, factory and market, as well as social, environment and economic perspectives. Future work could focus on building a set of models to examine outcomes from these different perspectives. The sustainability network and Sustainability Scorecard were designed to facilitate the evaluation of scenarios corresponding to current and projected benchmarks and targets. A more comprehensive evaluation would allow transparent and direct evaluation of multiple impacts. The information used to quantify the
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sustainability network was obtained from a very wide range of sources, which could form the basis of an ongoing repository of data, reports and related literature. In future work, the sustainability model developed in this project could be employed to identify and prioritise capital investment and future research. The sustainability Bayesian network model was constructed using open source software and has been delivered as a software package. A future project could focus on making it easier for a wider range of relevant stakeholders to engage with the model. For example a graphical user interface to the model could be developed and then web-enabled so that stakeholders can readily interact with the model and run scenarios. In the course of developing and quantifying the Bayesian network for the dairy industry, it has become evident that there are areas for which inadequate data exist to make a comprehensive analysis of how dairy is performing in economic, environmental and social sustainability, within the contexts of farm, factory and market. While this book has provided a very important baseline measure across many areas of the dairy industry, an important next step would be to identify existing metrics which may fill the current gaps and/or identify where measures need to be developed. Based on sensitivity analyses (see Point 2, which follows below) the metrics to be developed for more comprehensive data collection could be prioritised, and development of these commenced. Future work could focus on examining the outcomes which could be expected within each of the economic, environmental and social domains if one or more management strategies for improved sustainability were implemented for a specific domain. For example, if a management strategy which is more focused on improving economic sustainability was of interest, then the economic nodes in the network could be analysed in more detail to predict sustainability outcomes for all key indicators, and the model could be updated to incorporate results from the implementation of the management actions. Should the economic domain turn out to be more important in affecting the triple bottom line, then the weights would be updated to reflect the economic aspect of the triple bottom line more strongly
Conclusion
47
than the environmental and social perspectives. The impact of this on the overall sustainability score, and on the scores at farm, factory and market levels, could also be evaluated. These impacts would then be reflected in the scores on the Sustainability Scorecard. This would provide a succinct summary of the outcomes, and allow for direct evaluation and comparison of sustainability from these different perspectives, taking into consideration the complex nature of sustainability in this industry. This could also include assessments of specific scenarios from these different perspectives. For example, what would be the impact of a mandate for a 20% reduction in CO2 from an economic perspective, or a social or environmental perspective, or from the market or farm perspective? Other potential scenarios might include: the impact of a 10% drop in the Australian dollar compared with the US dollar; a 10% increase in commodity prices, increase in milk yield per cow, increased public consumption of milk, etc. These evaluations would also provide insight into whether all of the measures in the current model are required, or whether a network with fewer critical measures can give the same results. If so, then it may be feasible to simplify the sustainability network by deleting superfluous nodes. This would simplify the corresponding Sustainability Scorecard and would also reduce the amount of information required to undertake the sustainability analysis. At the same time, it would also provide the sensitivity analysis to identify the current critical gaps in data. The Bayesian sustainability network and Sustainability Scorecard have been designed to facilitate the evaluation of scenarios corresponding to current and projected benchmarks and targets. While this capability has been illustrated in this book, a more comprehensive evaluation was outside the scope of the current project. Future work could deliver this evaluation. This would involve developing and comparing Scorecards that model the impacts which could be expected if the industry attempted to meet current, committed and best practice benchmarks and targets for environmental, economic and social sustainability in the contexts of farm, factory and market. By providing quantitative summaries of key aspects of sustainability, the Sustainability Scorecard provides transparent and direct evaluation of these impacts.
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Bayesian network models have been widely used as platforms for developing information repositories. The use of a Bayesian network (BN) approach does the following: brings together disparate knowledge; creates a conceptual map of the drivers that can be quantified with data, model outputs, expert knowledge, and other features; can include costs, benefits and utility; allows for the identification of key drivers and critical control points; allows for exploration scenarios of change (what if?); and allows for a better understanding of the impact of management and policy decisions. The information used to quantify the sustainability network was obtained from a very wide range of sources and forms a baseline measure of how sustainably the Australian dairy industry is functioning economically, environmentally and socially in farm, factory and market. If updated data is regularly collected and entered into the network, it is possible to track changes over time, and the BN becomes an ongoing repository of data, reports and related literature that can inform the dairy industry about agreed key factors that are integral to the monitoring and assessment of sustainability. The repository can be used to update the Sustainability Scorecard on a regular basis. It can also be used as a source for quantifying and verifying national and international indicators of sustainability. The Sustainability Scorecard could be employed to identify and prioritise future research. The sustainability Bayesian network and Sustainability Scorecard presented in this project were developed collaboratively with a wide range of stakeholders in the dairy industry. As indicated above, the quantitative information used to complete the model was obtained from a very wide range of sources. This book highlights instances in which information was insufficient or missing for some of the sustainability factors that had been identified as important by the stakeholders. If these gaps are addressed and more comprehensive data is collected, this could provide decision support for the prioritisation of future research. The process needs to be ongoing, with regular evaluation of information gaps based on the growing body of knowledge and emerging issues in sustainability and the impact of climate change on the industry.
Measures for the Bayesian Network
Economic
Measure Economic 1.1.1 Measure Economic 1.2.1 Measure Economic 1.3.1 Measure Economic 2.1.1 Measure Economic 2.2.1 Measure Economic 3.2.1 Measure Economic 3.3.2 Measure Economic 4.1.1 Measure Economic 4.1.2 Measure Economic 4.1.3 Measure Economic 4.2.1 Measure Economic 4.2.2 Measure Economic 4.3.3 Measure Economic 5.1.1 Measure Economic 5.2.1 Measure Economic 5.3.1 Measure Economic 5.3.3 Farm Debt (Debt to Asset Ratio) Farm Assets (Debt to Equity Ratio) Farm Investment (Rate of Return on Farm Assets) Farm Profitability (Interest) Farm Profitability (Income) Productivity (Milk Produced) Management (Skills and Training) Commodity Prices (Farm Gate Milk Price) Commodity Prices (Export and Prices) Commodity Prices (Supermarket Price Wars) Supply (Milk Production) Supply (Volume of Milk Processed) Risks (AUD Exchange Rates) Efficiency (Milk Yield Per Cow) Cost of Water Fodder Costs Product Consumption
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Social
Measure Social 1.1.1 Measure Social 1.1.2 Measure Social 1.2.1 Measure Social 1.2.2 Measure Social 1.3.1a Measure Social 1.3.1b Measure Social 2.1.2 Measure Social 2.2.1 Measure Social 2.2.2 Measure Social 3.1.1 Measure Social 3.2.1 Measure Social 3.2.1 Measure Social 3.2.1 Measure Social 3.3.1 Measure Social 3.3.2 Measure Social 4.1.1 Measure Social 4.2.1 Measure Social 4.2.2 Measure Social 4.3.1 Measure Social 4.3.2 Measure Social 4.3.3 Measure Social 5.2.3 Labour (Work-life balance) Labour (Work-life balance) Training (VET Courses) Training (VET Courses) Management (Attitude to Future) Management (Age Composition) Discrimination (Labour Equity) Compliance (Regulations) Compliance (Regulations) Culture (Family Farming) Value (Residents Perceptions) Value (Wage contribution) Value (Childrens Understanding) Cohesion (Participation) Cohesion (Corporate Social Responsibility) Animal Welfare (Herd Health) Occupational (Farm Injuries) Occupational (Lost Time Injury Frequency) Consumer (Perceptions of Safety) Consumer (Product Recalls) Consumer (Foodborne Illness) Product Consumption
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Environment
Measure Environment 1.1.1 Measure Environment 1.1.2 Measure Environment 1.2.1 Measure Environment 1.2.2 Measure Environment 1.3.1 Measure Environment 2.1.1 Measure Environment 2.1.2 Measure Environment 2.2.2 Water (Consumption and Diversion from Environmental Flows) Water (Recycling) Energy and Emissions (GHG Emissions) Energy and Emissions (Consumption) Land and Soil (Nutrient Management) Water Waste (Fertiliser Use) Water Waste (Cleaning and Treatment) Solid Waste (Packaging)
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Economic Table 1.1.1

Measure Economic - 1.1.1 Boundary FARM Key indicator Economics. Sub-indicator Debt. Measurement Debt to Asset Ratio. This measure quantifies the banks share of the business. It compares total farm debt to total farm assets. Overview Calculations are based on the available data, 1990 -2011. Calculation Data used to calculate Debt to Asset Ratio for Australia (per farm)
FARM DEBT TO ASSET RATIO Total closing capital ($) Farm business debt at 30 June ($) AUSTRALIA 1990 1451465 163803 11% 1991 1439022 174130 12% 1992 1458334 171842 12% 1993 1611332 194740 12% 1994 1586720 205767 13% 1995 1786001 250192 14% 1996 1638548 244301 15% 1997 1803236 297779 17% 1998 1829248 335939 18% 1999 1850406 336276 18% 2000 1731955 328905 19% 2001 1743914 314872 18% 2002 2215422 385121 17% 2003 2682561 411360 15% 2004 2503264 409225 16% 2005 2772158 398944 14% 2006 3280547 512461 16% 2007 3604807 533391 15% 2008 3860552 617614 16% 2009 3918313 700127 18% 2010 3726406 687990 18% 2011 3428701 663825 19% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: Total Farm Debt = Total farm business debt as at 30 June Total Farm Assets = Total closing capital (defined as the closing value of all assets used on the farm including leased equipment but excluding machinery and equipment either hired or used by contractors).
Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Thresholds (level of sustainability)

High Less than 30% Medium 31 60% Low More than 60% Source: University of Vermont Extension and Center for Farm Financial Management Farm Business Succession Resources http://www.cffm.umn.edu/Publications/pubs/FarmMgtTopics/vermont.pdf
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Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Debt to Asset Ratio By State (per farm)

Year AUS NSW VIC QLD SA WA TAS 1990 11% 5% 13% 13% 11% 12% 13% 1991 12% 6% 14% 12% 14% 12% 14% 1992 12% 5% 14% 14% 11% 12% 14% 1993 12% 5% 15% 15% 12% 13% 10% 1994 13% 6% 15% 14% 13% 11% 17% 1995 14% 9% 16% 11% 16% 11% 19% 1996 15% 10% 17% 11% 15% 11% 21% 1997 17% 10% 20% 14% 16% 11% 21% 1998 18% 14% 21% 14% 14% 13% 22% 1999 18% 14% 20% 16% 20% 13% 22% 2000 19% 17% 21% 16% 21% 13% 20% 2001 18% 13% 21% 13% 21% 12% 16% 2002 17% 11% 20% 13% 20% 10% 17% 2003 15% 10% 18% 11% 16% 12% 15% 2004 16% 10% 18% 12% 18% 13% 25% 2005 14% 8% 16% 10% 14% 12% 22% 2006 16% 10% 17% 14% 20% 9% 17% 2007 15% 12% 16% 10% 21% 5% 23% 2008 16% 12% 18% 10% 19% 7% 19% 2009 18% 12% 21% 9% 18% 10% 23% 2010 18% 12% 21% 8% 19% 9% 29% 2011 19% 15% 20% 7% 25% 9% 37% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score HIGH
Raonale Typically debt is comprised of land purchases and borrowings to fund working capital. A higher debt to asset rao can be an indicator of greater nancial risk and lower borrowing capacity. Higher debt levels will require a higher return on assets to service the debt. Trends over the past 20 years of data show a relavely low level of debt to asset balance and hence a high level of sustainability. Probability Distribuon High 99% Medium 1% Low 0%
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Measure Economic - 1.2.1 Boundary FARM Key Indicator Economics Sub-indicator Assets Measurement Debt to Equity Ratio This measure compares the banks ownership to a farms ownership. It also indicates how much the owners have Overview leveraged (i.e. multiplied) their equity in the business. This measure is determined by comparing total farm liabilities to a farms net worth. Calculations are based on the available data, 1990 - 2011. Calculation Data used to calculate Farm Debt to Equity Ratio for Australia (per farm)
AUSTRALIA Total closing capital ($) Leasing charges ($) Owned capital ($) Farm business debt at 30 June ($) Farm equity ($) FARM DEBT TO EQUITY RATIO
1990 1451465 1157 1450308 163803 1286505 13% 1991 1439022 1497 1437525 174130 1263395 14% 1992 1458334 1644 1456690 171842 1284848 13% 1993 1611332 1536 1609796 194740 1415056 14% 1994 1586720 1417 1585303 205767 1379536 15% 1995 1786001 1708 1784293 250192 1534101 16% 1996 1638548 1956 1636592 244301 1392291 18% 1997 1803236 1993 1801243 297779 1503464 20% 1998 1829248 3047 1826201 335939 1490262 23% 1999 1850406 3577 1846829 336276 1510553 22% 2000 1731955 3136 1728819 328905 1399914 23% 2001 1743914 3154 1740760 314872 1425888 22% 2002 2215422 2400 2213022 385121 1827901 21% 2003 2682561 2083 2680478 411360 2269118 18% 2004 2503264 2932 2500332 409225 2091107 20% 2005 2772158 3323 2768835 398944 2369891 17% 2006 3280547 3977 3276570 512461 2764109 19% 2007 3604807 2148 3602659 533391 3069268 17% 2008 3860552 2202 3858350 617614 3240736 19% 2009 3918313 2041 3916272 700127 3216145 22% 2010 3726406 2085 3724321 687990 3036331 23% 2011 3428701 1132 3427569 663825 2763744 24% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: Farm Equity = Owned capital Farm business debt at 30 June. Owned Capital = Total closing capital Leasing charges. Farm Debt to Equity Ratio = Farm business debt at 30 June / Farm equity
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Less than 43% High 43% - 150% Medium More than 150% Low Source: University of Vermont Extension and Center for Farm Financial Management Farm Business Succession Resources http://www.cffm.umn.edu/Publications/pubs/FarmMgtTopics/vermont.pdf
Based on the above thresholds, the summary data has been GREEN shaded for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Debt to Equity Ratio By State (per farm)
Score HIGH
Rationale This ratio expresses the extent to which debt capital is combined with equity capital. It shows the inherent risk to creditors, but at the same time may reveal the farms potential for future growth if operating earnings exceed the fixed commitments associated with debt. Past and current trends suggest a strong equity balance and hence a HIGH sustainability level. Probability Distribution High 99% Medium 1% Low 0%
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Measure Economic - 1.3.1 Boundary FARM Key indicator Economics Investment Subindicator Measurement Rate of Return on Farm Assets (%) Rate of return on farm assets is the return received on all farm investments (including those financed by creditors). Overview This ratio is calculated as the return on farm assets/total farm assets. Calculations are based on the available data, 1990 - 2011. Calculation Data used to calculate Rate of Return on Farm Assets for Australia (per farm)
Family BuildTotal Return NET share of up in on Depreciation Interest closing FARM farm trading farm ($) paid ($) capital assets income stocks INCOME ($) ($) ($) ($) 1990 252064 176423 4025 21108 58558 24593 40789 42362 1451465 1991 239541 172289 4221 22086 49387 23842 34417 38812 1439022 1992 257123 183940 6146 22380 56949 21361 40048 38262 1458334 1993 285571 198720 12311 22273 76889 20418 56651 40656 1611332 1994 294746 207426 14869 22774 79415 17891 55474 41832 1586720 1995 323532 245270 5703 28221 55744 22628 32125 46247 1786001 1996 322616 230907 15344 25709 81344 24358 58361 47341 1638548 1997 325960 246860 8198 28581 58717 25731 40072 44376 1803236 1998 339920 258514 4640 29866 56180 25000 35347 45833 1829248 1999 369710 263473 7056 31882 81411 27001 51655 56757 1850406 2000 359153 262984 6960 29993 73136 24251 46785 50602 1731955 2001 370290 269822 12232 30399 82301 27182 57788 51695 1743914 2002 487623 342002 26399 32254 139766 28059 104189 63636 2215422 2003 390456 347346 -10051 31246 1813 28061 -11653 41527 2682561 2004 393344 319090 676 30179 44751 31594 0 76345 2503264 2005 424340 328321 14791 30075 80735 31448 67416 44767 2772158 2006 482347 383493 17969 34879 81944 37740 57421 62263 3280547 2008 680205 538559 21484 30403 132727 49161 100885 81003 3860552 2009 645279 562181 9300 34448 57950 52722 40834 69838 3918313 2010 525191 445985 14852 33659 60399 48675 44934 64140 3726406 2011 575670 434677 21745 33288 129450 52110 108899 72661 3428701 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Note The 2007 Family Share of farm income was not available data, so $0 was applied to allow for calculation. Calculations Note Net Farm Income = Total cash receipts Total cash costs + Build-up in trading stocks Depreciation Return on Farm Assets = Net Farm Income + Farm Interest Family share of farm income Rate of Return on Farm Assets = Return on farm assets / Total closing capital (Total Farm Assets) AUSTRALIA Total cash receipts ($) Total cash costs ($) RATE OF RETURN ON FARM ASSETS 3% ASSETS 3% 3% 3% 3% 3% 3% 2% 3% 3% 3% 3% 3% 2% 3% 2% 2% 2% 2% 2% 2%
Source: Australian Government, Dept of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
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More than 8% High 4% - 8% Medium Less than 4% Low University of Vermont Extension and Center for Farm Financial Management Farm Business Succession Resources http://www.cffm.umn.edu/Publications/pubs/FarmMgtTopics/vermont.pdf
Based on the above thresholds, the summary data has been GREEN shaded for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Rate of Return on Farm Assets By State (per farm)
Year AUS NSW VIC QLD SA WA 1990 3% 2% 3% 3% 3% 5% 1991 3% 2% 3% 3% 3% 3% 1992 3% 2% 3% 3% 3% 2% 1993 3% 2% 3% 3% 3% 2% 1994 3% 3% 3% 3% 3% 2% 1995 3% 2% 3% 3% 3% 2% 1996 3% 3% 3% 3% 4% 2% 1997 2% 3% 2% 3% 3% 2% 1998 3% 2% 3% 2% 3% 2% 1999 3% 3% 3% 3% 4% 2% 2000 3% 3% 3% 4% 4% 2% 2001 3% 2% 3% 3% 3% 2% 2002 3% 2% 3% 2% 4% 2% 2003 2% 1% 1% 2% 3% 1% 2004 3% 2% 3% 3% 4% 3% 2005 2% 1% 2% 2% 2% 1% 2006 2% 1% 2% 2% 2% 1% 2008 2% 2% 2% 2% 3% 1% 2009 2% 3% 2% 2% 3% 2% 2010 2% 2% 2% 1% 2% 1% 2011 2% 2% 2% 0% 4% 1% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp TAS 6% 7% 4% 4% 4% 2% 2% 3% 3% 3% 4% 3% 4% 1% 3% 2% 3% 2% 2% 2% 2%
Score LOW
Rationale Rate of return is defined as the ratio of money gained or lost (whether realised or unrealised) on an investment relative to the amount of money invested. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 0% Medium 10% Low 90%
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Measure Economic - 2.1.1 Boundary FARM Key indicator Profitability Interest Sub - indicator Measurement Interest / Expense Ratio This measure shows how much of gross farm income is used to pay for interest on borrowed capital. Overview Calculations are based on the available data, 1990 - 2011. Calculation Data used to calculate Interest Expense Ratio for Australia (per farm)
INTEREST - EXPENSE RATIO Total cash receipts ($) Interest paid ($) AUSTRALIA 1990 252064 24593 10% 1991 239541 23842 10% 1992 257123 21361 8% 1993 285571 20418 7% 1994 294746 17891 6% 1995 323532 22628 7% 1996 322616 24358 8% 1997 325960 25731 8% 1998 339920 25000 7% 1999 369710 27001 7% 2000 359153 24251 7% 2001 370290 27182 7% 2002 487623 28059 6% 2003 390456 28061 7% 2004 393344 31594 8% 2005 424340 31448 7% 2006 482347 37740 8% 2007 443544 36706 8% 2008 680205 49161 7% 2009 645279 52722 8% 2010 525191 48675 9% 2011 575670 52110 9% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: Interest expense ratio = Interest paid/total cash receipts
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Less than 5% High 5% - 10% Medium More than 10% Low University of Vermont Extension and Center for Farm Financial Management Farm Business Succession Resources http://www.cffm.umn.edu/Publications/pubs/FarmMgtTopics/vermont.pdf
Based on the above thresholds, the summary data has been GREEN shaded for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Interest Expense Ratio By State (per farm)
Score MEDIUM
Rationale This ratio relates the interest expense to a farms ability to generate income. From the available data the trend has remained reasonably constant, but it is important to note that an upward trend will lead to eventual financial stress. Current levels show a medium level of sustainability. Probability Distribution High 5% Medium 88% Low 7%
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Measure Economic - 2.2.1 Boundary FARM Key indicator Profitability Sub-indicator Income Measurement Net farm income ratio Overview This measure compares profit (excluding unpaid labour and management) to gross farm income. For a farm to be sustainable it has to be profitable, and expenses need to be contained. The net farm income ratio provides a means to assess the profitability of farms and also to observe how this ratio is changing over time. Calculations are based on the available data, 1990 - 2011. Calculation Data used to calculate Net Farm Income Ratio for Australia (per farm)
Total cash Total cash Build-up in trading Depreciation NET FARM NET FARM receipts ($) costs ($) stocks ($) ($) INCOME INCOME RATIO 23% 1990 252064 176423 4025 21108 58558 21% 1991 239541 172289 4221 22086 49387 22% 1992 257123 183940 6146 22380 56949 1993 285571 198720 12311 22273 76889 27% 27% 1994 294746 207426 14869 22774 79415 1995 323532 245270 5703 28221 55744 17% 25% 1996 322616 230907 15344 25709 81344 18% 1997 325960 246860 8198 28581 58717 1998 339920 258514 4640 29866 56180 17% 22% 1999 369710 263473 7056 31882 81411 2000 359153 262984 6960 29993 73136 20% 2001 370290 269822 12232 30399 82301 22% 29% 2002 487623 342002 26399 32254 139766 2003 390456 347346 -10051 31246 1813 0% 11% 2004 393344 319090 676 30179 44751 2005 424340 328321 14791 30075 80735 19% 17% 2006 482347 383493 17969 34879 81944 1% 2007 443544 418448 4814 27413 2497 2008 680205 538559 21484 30403 132727 20% 2009 645279 562181 9300 34448 57950 9% 2010 525191 445985 14852 33659 60399 12% 22% 2011 575670 434677 21745 33288 129450 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: Net Farm Income = Total cash receipts Total cash costs + Buildup in trading stocks Depreciation Net Farm Income Ratio = Net farm income / Total cash receipts AUSTRALIA
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More than 20% High 10% - 20% Medium Less than 10% Low University of Vermont Extension and Center for Farm Financial Management Farm Business Succession Resources http://www.cffm.umn.edu/Publications/pubs/FarmMgtTopics/vermont.pdf
Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Net Farm Income Ratio By State (per farm)
Year AUS NSW VIC QLD SA WA TAS 1990 23% 20% 25% 19% 15% 22% 28% 1991 21% 17% 22% 17% 20% 25% 23% 1992 22% 22% 24% 15% 18% 25% 23% 1993 27% 32% 28% 16% 25% 24% 29% 1994 27% 31% 28% 19% 20% 26% 34% 1995 17% 18% 17% 15% 14% 19% 19% 1996 25% 26% 27% 19% 20% 21% 22% 1997 18% 27% 15% 22% 16% 19% 14% 1998 17% 17% 14% 26% 18% 20% 15% 1999 22% 22% 21% 26% 23% 19% 21% 2000 20% 23% 18% 27% 18% 21% 21% 2001 22% 21% 25% 10% 15% 15% 27% 2002 29% 24% 32% 13% 25% 23% 28% 2003 0% 2% -4% 2% 9% 18% 18% 2004 11% 13% 11% 12% 12% 13% 11% 2005 19% 15% 21% 21% 16% 12% 17% 2006 17% 12% 18% 22% 6% 21% 18% 2007 1% 3% -3% 12% -6% 20% 10% 2008 20% 16% 19% 28% 17% 20% 22% 2009 9% 17% 3% 22% 17% 26% 14% 2010 12% 22% 9% 19% 12% 15% 1% 2011 22% 18% 26% 17% 18% 9% 21% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score MEDIUM
Rationale Financial efficiency ratios can be used to show how effectively your business uses assets to generate income. Past performance of the business could well indicate potential future accomplishments. It also answers the questions: Are you using every available asset to its full potential? What are the effects of production, pricing, financing and marketing decisions on gross income? Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 39% Medium 51% Low 10%
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Measure Economic - 3.2.1 Boundary FARM Key indicator Workforce Sub - indicator Productivity Measurement Milk production In the past two decades the amount of milk produced has increased significantly due to the adoption of intensive Overview production practices and increasing demand. Calculations are based on the available data, 1990 - 2011. Calculation Data used - Milk Production
AUSTRALIA Milk Produced (Litres) 1990 426869 1991 445330 1992 472254 1993 491054 1994 541258 1995 594412 1996 61781 3 1997 650498 1998 684012 1999 769041 2000 805177 2001 811252 2002 994404 2003 909664 2004 961132 2005 975079 2006 1081596 2007 1044473 2008 1136925 2009 1247346 2010 1204820 2011 1205639 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Milk Produced = Total volume of milk sold during the survey year.
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Milk producon per farm per year by State

Year AUS NSW VIC QLD SA WA TAS 1990 426869 369771 467184 321326 382252 525969 443601 1991 445330 393658 483736 327723 387713 565448 474697 1992 472254 407674 512857 340798 454657 601274 489004 1993 491054 476761 506708 381410 495740 630348 535595 1994 541258 479917 578404 406439 526825 657658 589549 1995 594412 520534 653830 399385 580874 679997 618951 1996 617813 543825 679303 397282 620461 719565 646667 1997 650498 596136 702487 439895 654046 752340 688362 1998 684012 609967 737601 470621 708731 834575 697500 1999 769041 676112 848655 492810 749229 857331 790336 2000 805177 751280 866963 480490 912496 993892 839465 2001 811252 704946 880768 478862 969495 891326 871187 2002 994404 816062 1082912 579549 1175026 1068619 1136278 2003 909664 784057 959849 538153 1336470 1078702 959586 2004 961132 878302 985659 615093 1355551 1147257 1083942 2005 975079 885658 1015155 567019 1341175 1188146 1075477 2006 1081596 1162482 1061387 754624 1535440 1340373 1173396 2007 1044473 1047337 1029707 672749 1566258 1258183 1251854 2008 1136925 1156053 1117161 689689 1647498 1441233 1453845 2009 1247346 1276929 1193320 844759 1874453 1746114 1697834 2010 1204820 1279768 1149022 824600 1760045 1692367 1595088 2011 1205639 1258633 1158757 776041 1766845 1810570 1559933 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) hp://abare.gov.au/ame/agsurf/agsurf.asp
Milk producon per year by State (year to year % change)

Year AUS NSW VIC QLD SA WA TAS 1991 4.3% 6.5% 3.5% 2.0% 1.4% 7.5% 7.0% 1992 6.0% 3.6% 6.0% 4.0% 17.3% 6.3% 3.0% 1993 4.0% 16.9% -1.2% 11.9% 9.0% 4.8% 9.5% 1994 10.2% 0.7% 14.1% 6.6% 6.3% 4.3% 10.1% 1995 9.8% 8.5% 13.0% -1.7% 10.3% 3.4% 5.0% 1996 3.9% 4.5% 3.9% -0.5% 6.8% 5.8% 4.5% 1997 5.3% 9.6% 3.4% 10.7% 5.4% 4.6% 6.4% 1998 5.2% 2.3% 5.0% 7.0% 8.4% 10.9% 1.3% 1999 12.4% 10.8% 15.1% 4.7% 5.7% 2.7% 13.3% 2000 4.7% 11.1% 2.2% -2.5% 21.8% 15.9% 6.2% 2001 0.8% -6.2% 1.6% -0.3% 6.2% -10.3% 3.8% 2002 22.6% 15.8% 23.0% 21.0% 21.2% 19.9% 30.4% 2003 -8.5% -3.9% -11.4% -7.1% 13.7% 0.9% -15.6% 2004 5.7% 12.0% 2.7% 14.3% 1.4% 13.0% 2005 1.5% 0.8% 3.0% -7.8% -1.1% 3.6% -0.8% 2006 10.9% 31.3% 4.6% 33.1% 14.5% 12.8% 9.1% 2007 -3.4% -9.9% -3.0% -10.8% 2.0% -6.1% 6.7% 2008 8.9% 10.4% 8.5% 2.5% 5.2% 14.5% 16.1% 2009 9.7% 10.5% 6.8% 22.5% 13.8% 21.2% 16.8% 2010 -3.4% 0.2% -3.7% -2.4% -6.1% -3.1% -6.1% 2011 0.1% -1.7% 0.8% -5.9% 0.4% 7.0% -2.2% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) hp://abare.gov.au/ame/agsurf/agsurf.asp
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High Medium Low Milk production increase > 2% Milk production growth +/-2% Milk production decreases > 2%
Threshold Rationale Australia's estimated resident population (ERP) reached 22.3 million at 30 June 2011, increasing by 2.9 million people, or 15%, since 30 June 2001.1 The thresholds have been set by expert opinion and were based on considering the year-on-year changes and the magnitude of these changes in the context of population growth rates. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score HIGH Rationale Over the past 20 years farmers have made significant changes to management practices and adopted a range of new technologies. Some of these changes include replacing or modifying dairy sheds, vats and milking machines. The adoption of new dairy shed technology has enabled dairy farmers to generally increase milk production, which in turn has directly impacted on the levels of profitability. Probability Distribution High 68% Medium 17% Low 15%
1
ABS (2011)3218.0 - Regional Population Growth, Australia, 2011. Accessed August 2012 from: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3218.0Main%20Features42011?opendocument&tabname=Summary&prodno= 3218.0&issue=2011&num=&view=
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Measure Economic - 3.3.2 Boundary FACTORY Key indicator Workforce Sub-indicator Management Measurement Skills and Training Overview The National Centre for Dairy Education (NCDEA) was formed as a national alliance of registered training organisations (RTOs) to provide vocational education and training (VET) to the Australian dairy industry. Employees across the dairy supply chain require specific skills and knowledge in order for Dairy Australia to continue to produce and deliver a sustainable product. VET courses are available to factory hands and process workers. Continued staff training may contribute to increases in productivity, lower employee turnover and increased efficiency, all of which may have an impact on economic sustainability. Calculations are based on the available data, 2000-2010. Calculation VET Course Commencements 000 (Labourers: Factory process workers)
YEAR Commencements 1 year rolling average 2000 14.1 2001 12.9 13.5 2002 14.8 13.9 2003 15.4 15.1 2004 13.7 14.6 2005 13.2 13.5 2006 12.6 12.9
1
2007 11.0 11.8
2008 11.2 11.1
2009 11.3 11.3
2010 13.3 12.3

High Medium Low VET Course Commencements Number of total enrolments generally increased Number of total enrolments generally unchanged Number of total enrolments generally decreased
Threshold Rationale This metric reflects the trend in enrolments in courses suitable for people interested in a career in manufacturing. The levels of the thresholds have been set by expert opinion and were based on considering the changing trends in actual enrolment numbers. Notably, there is uncertainty in this measurement as it reflects all enrolments in factory process workers. Availability of segregated data that shows direct involvement with the dairy industry would improve validity. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
YEAR Commencements 1 year rolling average 2000 14.1 2001 12.9 13.5 2002 14.8 13.9 2003 15.4 15.1 2004 13.7 14.6 2005 13.2 13.5 2006 12.6 12.9 2007 11.0 11.8 2008 11.2 11.1 2009 11.3 11.3 2010 13.3 12.3
Score MEDIUM
Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 30% Medium 40% Low 30%
Sources: 1 NCVER (2010) Australian vocational education and training statistics: Apprentices and trainees. Accessed June 2012 from: http://www.ncver.edu.au/publications/2387.html
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Measure Economic - 4.1.1 Boundary FARM Key indicator Market Sub-indicator Commodity Prices Measurement Farm gate price for milk and milk solids. Commodity prices are those prices generally associated with the purchase of a commodity, e.g. milk. Prices paid Overview for Farmgate milk and milk solids will give a key indication of the economic condition of the industry. Calculation Calculations are based on the data 2006 - 2011. Farmgate milk prices (cents/litre)
AUS NSW VIC QLD SA 2006 33.1 34.3 32.9 36.6 32.0 2007 33.2 35.7 32.0 38.8 32.6 2008 49.6 48.6 50.0 51.8 48.6 2009 42.4 52.4 39.1 57.2 44.6 2010 37.3 48.7 33.9 55.8 34.6 2011 43.2 48.3 42.0 53.1 38.0 Source: Dairy Australia http://www.dairyaustralia.com.au/Statistics-and-markets/Prices/Farmgate-Prices.aspx Year WA 29.1 32.4 41.4 49.0 42.4 43.4 TAS 33.6 36.5 50.2 41.3 34.6 43.2
Calculations are based on the data 2006 - 2011. Farmgate milk solids prices ($/kg)
AUS NSW VIC QLD SA 2006 4.5 4.8 4.4 5.0 4.5 2007 4.5 5.0 4.3 5.4 4.6 2008 6.7 6.7 6.7 7.1 6.8 2009 5.7 7.3 5.1 7.9 6.2 2010 5.0 6.7 4.5 7.6 4.7 2011 5.8 6.7 5.6 7.3 5.4 Source: Dairy Australia http://www.dairyaustralia.com.au/Statistics-and-markets/Prices/Farmgate-Prices.aspx Year WA 4.1 4.6 5.8 6.8 6.0 6.0 TAS 4.4 4.8 6.6 5.4 4.5 5.6
Source: Dairy Australia http://www.dairyaustralia.com.au/Statistics-and-markets/Prices/Farmgate-Prices.aspx
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Source: Dairy Australia http://www.dairyaustralia.com.au/Statistics-and-markets/Prices/Farmgate-Prices.aspx
Thresholds (level of sustainability) Milk cents/litre High More than $0.45 Medium $0.30 to $0.45 Low Less than $0.30
$/kg milk solids More than $6.00 $5.00 to $6.00 Less than $5.00
Threshold Rationale The thresholds have been set by expert judgement. A milk price of less than 30c per litre, and a price of milk solids of less than $5.00 per kilogram were deemed to be economically unsustainable. More than 45c per litre for fresh milk and more than $6.00 per kg for milk solids were considered to have a high level of economic sustainability. Prices in between were taken to have medium sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Score MEDIUM
Rationale Farmgate Milk Prices (cents/litre)

Year 2006 2007 2008 2009 2010 2011 AUS 33.1 33.2 49.6 42.4 37.3 43.2 NSW 34.3 35.7 48.6 52.4 48.7 48.3 VIC 32.9 32.0 50.0 39.1 33.9 42.0 QLD 36.6 38.8 51.8 57.2 55.8 53.1 SA 32.0 32.6 48.6 44.6 34.6 38.0 WA 29.1 32.4 41.4 49.0 42.4 43.4 TAS 33.6 36.5 50.2 41.3 34.6 43.2
Farmgate Milk Solids Prices ($/kg)

Year 2006 2007 2008 2009 2010 2011 AUS 4.5 4.5 6.7 5.7 5.0 5.8 NSW 4.8 5.0 6.7 7.3 6.7 6.7 VIC 4.4 4.3 6.7 5.1 4.5 5.6 QLD 5.0 5.4 7.1 7.9 7.6 7.3 SA 4.5 4.6 6.8 6.2 4.7 5.4 WA 4.1 4.6 5.8 6.8 6.0 6.0 TAS 4.4 4.8 6.6 5.4 4.5 5.6
Based on the above thresholds it was considered that this indicator had a Medium sustainability level. The farmgate value is the net value of the product when it leaves the farm and is often understood as the price of the product at which it is sold by the farm (the farmgate price). This price does not include the costs incurred with shipping, handling, storage, marketing, and profit margins, and are therefore typically lower than the price paid by consumers. Milk prices have remained relatively stagnant over a prolonged period, although they significantly fluctuated upwards in the 2007/08 period. There has also been little growth in prices for much of the period, which should be considered as being negative to milk producers given the increase in the costs of production, such as electricity, fuel, rates, insurance and machinery costs. In calculating the probability distributions, both fresh milk and milk solids were given equal importance in their contribution to the economic sustainability of dairy farming. Probability Distribution High 18% Medium 44% Low 38%
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Measure Economic - 4.1.2 Boundary FACTORY Key indicator Market Sub-indicator Commodity Prices Measurement Export and Prices Overview This indicator is designed to measure community perceptions of the dairy industry and whether the industry is considered to play an important part in food security. In lieu of specific survey data of peoples perceptions of the dairy industry, an alternative means of assessing the industry relevance is to examine the economic data to ascertain whether market forces (demand) give insight into ongoing relevance. Calculations will be based on the below data over the 4 years covered by the data. Calculation Australias dairy at a glance1 Measure Milk production (million litres) Value at farmgate ($ billion) Export value ($ billion) % of world dairy trade % of milk production exported Domestic demand (million litres) Thresholds (level of sustainability)
High Medium Low Change in Consumption Generally increasing Generally unchanged Generally decreasing
2007/08 9582 3.2 2.5 12% 50% 4791
2008/09 9388 4.0 2.9 9% 45% 5163
2009/10 9023 3.4 2.4 10% 45% 4962
2010/11 9101 3.9 2.75 8% 43% 5187
Threshold Rationale The assessment of the overall sustainability level for the value of dairy takes into account the changes over the data period. If the trend is generally increasing then the metric is considered to have a High level of sustainability, if it is largely unchanged then it is considered to have a Medium level of sustainability and if it is generally decreasing over time it is considered to have a Low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Measure Milk production (million litres) Value at farmgate ($ billion) Export value ($ billion) % of world dairy trade % of milk production exported Domestic demand (million litres) Score LOW 2007/08 9582 3.2 2.5 12% 50% 4791 2008/09 9388 4.0 2.9 9% 45% 5163 2009/10 9023 3.4 2.4 10% 45% 4962 2010/11 9101 3.9 2.75 8% 43% 5187
Rationale Consumption and demand data has been used as an indicator of public acceptance of dairy and dairy products. Data indicating export value also gives insight into the relevance of the industry to the national economy. Based on the above thresholds it was considered that this indicator currently has a Low sustainability level. Probability Distribution High 44% Medium 6% Low 50%
Source: 1 Dairy Australia (2008,09,10,11). Dairy in Focus.
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Measure Economic - 4.1.3 Boundary MARKET Market Key indicators Sub-indicator Commodity Prices Measurement Supermarket Price War A Parliamentary enquiry investigating the impact of supermarkets decision to significantly cut the price of milk Overview on the dairy industry is currently underway. This enquiry will unveil whether the supermarkets are profiting at the expense of other stakeholders in the dairy value chain. The preliminary report states that as total milk production has decreased significantly in the last decade, concerns about the impacts of these price cuts were also discussed with reference to the decision of farmers to remain in the industry, as well as the likelihood of the next generation entering the industry. Below is a preliminary calculation comparing farm gate milk prices; additional data (not yet available) is required in order to capture the full effect of the supermarkets decision. Calculations are based on the available data, 2004-10. Calculation Trends in typical factory paid prices for drinking milk (cents/litre)1
NSW VIC QLD SA WA TAS 2004-05 32.9 31.5 35.0 30.1 27.3 30.9 2005-06 34.3 32.9 36.6 32.0 29.1 33.6 2006-07 35.7 32.0 38.8 32.6 32.4 36.5 2007-08 48.6 50.0 51.8 48.6 41.4 50.2 2008-09 52.4 39.1 57.2 44.6 49.0 41.3 2009-10 48.7 33.9 55.8 34.6 42.4 34.6
Thresholds
High Medium Low Change Increase No change Decrease
Threshold Rationale This metric begins to create a picture of how the supermarket price war may affect the dairy industry. The levels of the thresholds have been set by expert opinion and were based on considering the year-on-year changes, the magnitude of the changes, and the actual farm gate milk prices over the six years of data. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
NSW VIC QLD SA WA TAS 2004-05 32.9 31.5 35.0 30.1 27.3 30.9 2005-06 34.3 32.9 36.6 32.0 29.1 33.6 2006-07 35.7 32.0 38.8 32.6 32.4 36.5 2007-08 48.6 50.0 51.8 48.6 41.4 50.2 2008-09 52.4 39.1 57.2 44.6 49.0 41.3 2009-10 48.7 33.9 55.8 34.6 42.4 34.6
Score HIGH
Rationale Price wars will squeeze out marginal players and change the composition of the market. Fewer competitors seek to enter an unattractive market that is dependent on low prices for success, whilst smaller competitors exit the market as a result of their inability to make a profit. This grab for market share by the two big supermarkets could have a devastating impact on dairy farmers and future sustainability. Based on the above thresholds it was considered that this indicator had a high sustainability level over the time period for which the data was gathered. However, the trend is clearly negative, which is reflected in the predicted probabilities for 2012/13, which has an expected Low sustainability level. Probability Distribution High 63% Medium 13% Low 24%
Note: The probability distribution for the years 2004 2010 indicates that the sustainability score is High (63%). However, taking into account the most current data (2009-10), it would suggest that the current score should be Low, as shown in the Score column on the left of this table. Sources: 1 Parliament of Australia (2011) Second Interim Report: The impacts of supermarket price decisions on the dairy industry. Accessed June 2012 from:http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/dairy_industry_supermarket_2011/ second_interim_report/index.htm
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Measure Economic - 4.2.1 Boundary FARM Key indicator Market Sub-indicator Supply Measurement Milk Production 1 Overview As fresh drinking milk is an important component of a balanced diet and is considered one of the worlds most 1 complete foods, ensuring the same amount of milk connues to be produced per capita is vital to economic sustainability. Thus, this measurement compares the milk producon rates against naonal populaon stascs in order to beer understand producon sustainability within the industry. Calculations are based on the available data from Dairy Australia and ABS, 2005/06 to 2010/11. Calculation Milk production (million litres) by state2 State 2005/06 2006/07 NSW 1,197 1,105 VIC 6,651 6,297 QLD 597 537 SA 646 655 WA 377 350 TAS 622 642 AUSTRALIA 10,089 9,583 Population (at end Jun qtr)3 2005/06 AUSTRALIA 20,605,500 2007/08 1,049 6,102 486 606 319 662 9,223 2008/09 1,065 6,135 513 628 340 708 9,388 2009/10 1,074 5,790 529 605 350 673 9,023 2010/11 1,044 5,914 485 572 362 722 9,101
2006/07 21,017,200
2007/08 21,374,000
2008/09 21,874,900
2009/10 22,342,400
2010/11 22,620,600
Total Australian milk production as a percentage of the Australian population.2,3 AUSTRALIA 2005/06 0.050% 2006/07 0.046% 2007/08 0.043% 2008/09 0.043% 2009/10 0.040% 2010/11 0.040%

High Medium Low % Change relationship More than 0.0405% 0.0405% - 0.0395% Less than 0.0395%
Threshold Rationale The thresholds have been set on the assumption that there are no fundamental reasons motivating a change in consumer behaviour regarding the consumption of milk products. The oldest available population and milk production data is dated 1979 (population = 14,418,2004 and milk production = 5,432 million litres). Thus, historically total milk production was approximately 0.038% of the total population. However, it was determined that a level of 0.040% was an acceptable target to aim for taking into consideration health advice about the intake of sufficient calcium, of which milk is an important source. Based on this value, the total milk production percentage is deemed to be at a medium level of sustainability if it can be rounded to 0.040%. Similarly, percentages more than this are considered to be at a high level of sustainability and percentages less than 0.040% as a low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Total Australian milk production as a percentage of the Australian population.2,3 2005/06 2006/07 2007/08 2008/09 2009/10 AUSTRALIA 0.050% 0.046% 0.043% 0.043% 0.040% 2010/11 0.040%
Score HIGH
Rationale Australias population continues to grow due to natural increase (the number of births minus the number of deaths) and net overseas migration. While the annual population growth rate has tapered since its peak in 2008, projections suggest a steady ongoing growth.5,6 Considering dairy products contribute significantly to the nutritional intake of Australians, production levels increase at a sustainable rate inline with population changes. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 67% Medium 33% Low 0%
Sources: http://www.dairyaustralia.com.au/Dairy-food-and-recipes/Dairy-Products/Milk/Nutritional-Information.aspx http://www.dairyaustralia.com.au/Statistics-and-markets/Production-and-sales/Milk.aspx ABS. 3101.0 - Australian Demographic Statistics. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/second+level +view?ReadForm&prodno=3101.0&viewtitle=Australian%20Demographic%20Statistics~Sep%202011~Latest~29/03/2012&&tabname=Past %20Future%20Issues&prodno=3101.0&issue=Sep%202011&num=&view=& 4 ABS (1979)3101.0 Australian Demographic Statistics Quarterly http://www.ausstats.abs.gov.au/ausstats/free.nsf/0/91CDBD7E3BC6A5F1CA2576EF0013178A/$File/31010_06_1979.pdf 5 ABS (2011)3101.0 - Australian Demographic Statistics, June 2011. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3101.0Main%20Features3Jun%202011?opendocument&tabname=Summ ary&prodno=3101.0&issue=Jun%202011&num=&view= 6 ABS (2008)3222.0 Population Projections, Australia, 2006-2101. Accessed May 2012 from:http://www.abs.gov.au/Ausstats/abs@.nsf/mf/ 3222.0
1 2 3
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Measure Economic - 4.2.2 Boundary FACTORY Key indicator Market Sub-indicator Supply Measurement Volume of milk processed (Company) Overview Murray Goulburn is Australias major exporter of dairy products making an esmated AUD 6 billion contribuon to the Australian economy annually. As a co-operave, Murray Goulburn processes about one third of the naons milk supply into products which are sold in both internaonal and domesc markets. Calculations are based on the available data years 2002 2011 Murray Goulburn Co-Operative Co. Limited Calculation Annual Reports. Milk processed (million litres) by Murray Goulburn Co-Operative. 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 3,635 3,506 3,548 3,599 3,335 3,250
2008/09 3,512
2009/10 3,104
2010/11 2,946
Total Australian milk production as a percentage of the Australian population.2,3 2005/06 2006/07 2007/08 2008/09 2009/10 AUSTRALIA 0.050% 0.046% 0.043% 0.043% 0.040% Thresholds (level of sustainability)
High Medium Low % Change relationship More than 0.0405% 0.0405% - 0.0395% Less than 0.0395%
2010/11 0.040%
Threshold Rationale The thresholds have been set on the assumption that there are no fundamental reasons motivating a change in consumer behaviour regarding the consumption of milk products. The oldest available population and milk production data is dated 1979 (population = 14,418,2004 and milk production = 5,432 million litres). Thus, historically total milk production was approximately 0.038% of the total population. However, it was determined that a level of 0.040% was an acceptable target to aim for taking into consideration health advice about the intake of sufficient calcium, of which milk is an important source. Based on this value, the total milk production percentage is deemed to be at a Medium level of sustainability if it can be rounded to 0.040%. Similarly, percentages more than this are considered to be at a High level of sustainability and percentages less than 0.040% as a Low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score HIGH Rationale Murray Goulburn is a key representative example of part of the supply chain process. As a major player in both domestic and international markets, their impact within the dairy industry itself and the Australian economy is considerable. Despite slightly lower process figures in the year ending 2010/11, trends, along with steady ongoing population growth, suggest a sustained positive economic impact to continue. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 67% Medium 33% Low 0%
Sources: http://www.dairyaustralia.com.au/Dairy-food-and-recipes/Dairy-Products/Milk/Nutritional-Information.aspx http://www.dairyaustralia.com.au/Statistics-and-markets/Production-and-sales/Milk.aspx 3 ABS. 3101.0 - Australian Demographic Statistics. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/second+level +view?ReadForm&prodno=3101.0&viewtitle=Australian%20Demographic%20Statistics~Sep%202011~Latest~29/03/2012&&tabname=Past %20Future%20Issues&prodno=3101.0&issue=Sep%202011&num=&view=& 4 ABS (1979)3101.0 Australian Demographic Statistics Quarterly http://www.ausstats.abs.gov.au/ausstats/free.nsf/0/91CDBD7E3BC6A5F1CA2576EF0013178A/$File/31010_06_1979.pdf 5 ABS (2011)3101.0 - Australian Demographic Statistics, June 2011.Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3101.0Main%20Features3Jun%202011?opendocument&tabname=Summ ary&prodno=3101.0&issue=Jun%202011&num=&view= 6 ABS (2008)3222.0 Population Projections, Australia, 2006-2101. Accessed May 2012 from:http://www.abs.gov.au/Ausstats/abs@.nsf/mf/ 3222.0
1 2
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Measure Economic - 4.3.3 Boundary MARKET Key indicator Market Sub-indicator Risks Measurement AUD Exchange Rates Overview Recent appreciaon of the Australian dollar over other world currencies has placed signicant downward pressure on Australian dollar returns for exported dairy products. Factors external to the dairy industry, including the European debt crisis, Asian growth and US economic condions have all contributed to market volality. Calculations are based on the sample data years 2001 2011. Calculation
June 2001 0.5175 December 2001 0.5142 June 2002 0.5695 December 2002 0.5634 June 2003 0.6646 December 2003 0.7385 June 2004 0.6935 December 2004 0.7667 June 2005 0.7665 December 2005 0.7418 June 2006 0.7409 December 2006 0.7866 June 2007 0.8416 December 2007 0.8732 June 2008 0.9518 December 2008 0.6689 June 2009 0.8050 December 2009 0.9189 June 2010 0.8507 December 2010 0.9819 June 2011 1.0614 Source: Global View Historical Forex Data http://www.global-view.com/forex-trading-tools/forex-history/
Source: Global View Historical Forex Data http://www.global-view.com/forex-trading-tools/forex-history/
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June 2001 0.5175 December 2001 0.5142 June 2002 0.5695 December 2002 0.5634 June 2003 0.6646 December 2003 0.7385 June 2004 0.6935 December 2004 0.7667 June 2005 0.7665 December 2005 0.7418 June 2006 0.7409 December 2006 0.7866 June 2007 0.8416 December 2007 0.8732 June 2008 0.9518 December 2008 0.6689 June 2009 0.8050 December 2009 0.9189 June 2010 0.8507 December 2010 0.9819 June 2011 1.0614 Source: Global View Historical Forex Data http://www.global-view.com/forex-trading-tools/forex-history/

High Medium Low % Change relationship Less than 0.60 0.60 0.80 More than 0.80
Threshold Rationale Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Rationale Currency rate fluctuations can return positive revenues, but can also be a serious threat to competitiveness. The majority of the dairy trade is denominated in US dollars, therefore the USD-Australia exchange rate is critical to dairy industry trading. With the US interest rates being held at close to 0% since the financial crisis, the AUD has appreciated dramatically and the revenues of Victorian farmers in particular have been significantly impacted given they are typically both the largest producers and exporters of dairy products Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 19% Medium 43% Low 38%
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Measure Economic - 5.1.1 Boundary FARM Key indicator Physicals Sub-indicator Efficiency Measurement Milk Yield per Cow Improved herd genetics, as well as advances in pasture management and supplementary feeding regimes, have seen Overview the average annual yield per cow increase significantly over the past two decades. This increase has had a direct positive impact on the bottom line profitability of farms. Calculations are based on the available data, 1990 - 2011. Calculation Data used to calculate Milk Yield per Cow for Australia (per farm)
AUSTRALIA Dairy Cows per Farm (No. Cows) Milk Produced per Farm (Litres) Milk Produced per Dairy Cow (Litres) (Litres) 1990 113 426869 3778 1991 116 445330 3839 1992 120 472254 3935 1993 122 491054 4025 1994 126 541258 4296 1995 145 594412 4099 1996 148 617813 4174 1997 159 650498 4091 1998 161 684012 4249 1999 165 769041 4661 2000 165 805177 4880 2001 170 811252 4772 2002 197 994404 5048 2003 188 909664 4839 2006 209 1081596 5175 2007 200 1044473 5222 2008 215 1136925 5288 2009 219 1247346 5696 2010 216 1204820 5578 2011 219 1205639 5505 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: No Dairy Cows data for 2004 and 2005. Dairy Cows per Farm = Number of dairy cows on hand at 30 June. Milk Produced per Farm = Total volume of milk sold during the survey year
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High Medium Low NSW 5000 or more Between 4500 & 5000 4500 or less VIC 5000 or more Between 4500 & 5000 4500 or less QLD 4500 or more Between 4000 & 4500 4000 or less SA 6000 or more Between 5500 & 6000 5500 or less WA 6000 or more Between 5500 & 6000 5500 or less TAS 5000 or more Between 4500 & 5000 4500 or less
Threshold Rationale Despite the availability of the technology resulting in increased milk yields, there are limiting factors affecting milk production. Two key factors likely to affect the average yield are the physical location of the farm and the breed of the cow. As is evident in the graph above, although there is a generally consistent upward trend across all States, there is a marked difference between some of them. Queensland cows tend to underperform, whereas South Australian cows fairly consistently outperform the other states. For this reason the thresholds set by expert judgement differ for some States, as shown in the Thresholds Table above. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Milk Yield per Cow (Litres/Cow) By State
Year AUS NSW VIC QLD SA WA TAS 1990 3778 3590 3768 3570 4067 4495 3961 1991 3839 3714 3779 3641 3997 4875 4128 1992 3935 3706 3885 3664 4457 4734 4144 1993 4025 4110 3839 4015 4721 5043 4120 1994 4296 4173 4222 4278 4878 5138 4303 1995 4099 4198 3915 4204 5329 4928 4211 1996 4174 4089 4068 4138 5171 5291 4340 1997 4091 4351 3860 4271 5031 5153 4357 1998 4249 4656 4031 4482 5289 5639 3897 1999 4661 4663 4689 4323 5276 5134 4366 2000 4880 4943 4898 4215 5849 5123 4513 2001 4772 4700 4866 3925 5703 5468 4090 2002 5048 4916 5084 4493 5817 5654 4715 2003 4839 5058 4872 3790 6159 5560 3854 2006 5175 5407 5078 4439 6506 6177 4930 2007 5222 5211 5174 4577 6265 5935 5238 2008 5288 5558 5245 4311 6312 5883 5211 2009 5696 5804 5682 4827 6600 6084 5567 2010 5578 5925 5446 4998 6902 5897 5371 2011 5505 5721 5440 5039 6544 6657 5065 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score
Raonale Combining this increase in yield per cow with a signicant increase in average herd size, the average milk producon per farm has increased from 250,000 litres to 1.32 million litres over 30 years. Probability Distribuon High 33% Medium 21% Low 46% Source: Dairy Australia
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Measure Economic - 5.2.1 Boundary FARM Key indicator Physicals Sub-indicator Resource Measurement Cost of Water In the past two decades the cost of water has increased significantly due to the value placed on irrigation by Overview government entities. Calculations are based on the available data, 1990 - 2011. Calculation Data used Water Charges per Farm
Water Charges ($) AUSTRALIA 1990 2349 1991 3254 1992 3209 1993 3134 1994 3781 1995 5568 1996 4511 1997 5134 1998 5053 1999 6025 2000 5379 2001 5582 2002 6092 2003 8877 2004 6975 2005 6680 2006 6791 2007 6784 2008 7311 2009 8268 2010 10041 2011 7835 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Water Charges = Water expense per farm for the survey year.
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Water Charges per Farm per Year ($)

AUS NSW VIC QLD SA WA TAS 1990 2349 674 3418 1 2411 5718 107 1991 3254 1230 4772 576 2274 4353 331 1992 3209 1113 4508 787 2586 6499 115 1993 3134 1011 4382 531 2865 6967 67 1994 3781 1357 5285 509 3537 8191 174 1995 5568 1973 8447 486 2148 8195 174 1996 4511 2086 6505 316 3420 6550 452 1997 5134 2316 7472 458 3318 7224 143 1998 5053 2285 7277 265 4561 6757 27 1999 6025 2545 8870 773 4106 4250 1354 2000 5379 5090 6869 1185 3905 4864 1909 2001 5582 3566 7381 1289 5645 5693 566 2002 6092 2769 8247 1293 5750 5690 1436 2003 8877 7667 11964 1146 3572 4969 850 2004 6975 5917 8762 1687 5526 6350 939 2005 6680 4837 8698 337 5782 5098 2241 2006 6791 3112 9043 59 3804 8675 75 2007 6784 2913 8706 253 5892 11196 0 2008 7311 6991 8559 976 8337 9209 875 2009 8268 12895 9007 1270 8641 7234 276 2010 10041 14223 11481 836 6666 10023 704 2011 7835 8452 9168 1234 5939 10189 1074 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Year

High Medium Low Water cost generally decreasing Water cost generally unchanged taking inflation rate into account Water cost generally increasing
Threshold Rationale The thresholds have been set by expert opinion and were based on considering the year-on-year changes and the magnitude of these changes. The cost of water is considered to have a Medium level of sustainability if it has been increased by the inflation rate or lessened. If there has been a decrease of any magnitude it is deemed to be at a High level of sustainability, and a Low sustainability reflects any increase larger than the inflation rate. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Inflation Rate 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 3.2% 1.0% 1.8% 1.9% 4.6% 2.6% 0.3% 0.9% 1.5% 4.5% 4.4% 3.0% 2.8% 2.3% 2.7% 3.5% 2.3% 4.4% 1.8% 2.8% 3.4%
Year
AUS 38.5% -1.4% -2.3% 20.6% 47.3% -19.0% 13.8% -1.6% 19.2% -10.7% 3.8% 9.1% 45.7% -21.4% -4.2% 1.7% -0.1% 7.8% 13.1% 21.4% -22.0%
NSW 82.5% -9.5% -9.2% 34.2% 45.4% 5.7% 11.0% -1.3% 11.4% 100.0% -29.9% -22.3% 176.9% -22.8% -18.3% -35.7% -6.4% 140.0% 84.5% 10.3% -40.6%
VIC 39.6% -5.5% -2.8% 20.6% 59.8% -23.0% 14.9% -2.6% 21.9% -22.6% 7.5% 11.7% 45.1% -26.8% -0.7% 4.0% -3.7% -1.7% 5.2% 27.5% -20.1%
QLD 57600% 36.6% -32.5% -4.1% -4.5% -35.0% 44.9% -42.1% 191.7% 53.3% 8.8% 0.3% -11.4% 47.2% -80.0% -82.5% 328.8% 285.8% 30.1% -34.2% 47.6%
SA -5.7% 13.7% 10.8% 23.5% -39.3% 59.2% -3.0% 37.5% -10.0% -4.9% 44.6% 1.9% -37.9% 54.7% 4.6% -34.2% 54.9% 41.5% 3.6% -22.9% -10.9%
WA -23.9% 49.3% 7.2% 17.6% 0.0% -20.1% 10.3% -6.5% -37.1% 14.4% 17.0% -0.1% -12.7% 27.8% -19.7% 70.2% 29.1% -17.7% -21.4% 38.6% 1.7%
TAS 209.3% -65.3% -41.7% 159.7% 0.0% 159.8% -68.4% -81.1% 4914.8% 41.0% -70.4% 153.7% -40.8% 10.5% 138.7% -96.7% -100.0% N/A -68.5% 155.1% 52.6%
Score
Rationale The rising cost of water has had a significant economic impact on dairy farming. Periods of drought and lower than average rainfall over the past decade have led to a decrease in the availability of water for irrigation. As such water scarcity has changed past patterns of feeding dairy cows, farmers have had to substitute water for bought-in feed and grain, which is costly in drought years and impacts directly on a farms profitability. Water is essentially a tradeable commodity and water scarcity will be reflected in increased water market prices. Probability Distribution High 44% Medium 5% Low 51%
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Measure Economic - 5.3.1 Boundary FARM Key indicator Physicals Sub-indicator Inputs Measurement Fodder Costs to Total Cash Costs Ratio For many dairy farmers, the purchase of fodder has accounted for the largest item of expenditure over the past Overview decade. In response to improved seasonal conditions the ratio of fodder costs to total cash costs will likely decline. Conversely, costs will increase in response to adverse seasonal conditions, a result of both reliance on fodder and the fluctuation in price based on supply and demand elements. Calculations are based on the available data, 1990 - 2011. Calculation Data used to calculate Fodder Cost to Total Cash Cost Ratio for Australia (per farm)
Total Cash Costs Fodder Costs ($) Fodder Costs to Total Cash Costs Ratio AUSTRALIA 1990 24120 176423 14% 1991 25939 172289 15% 1992 32286 183940 18% 1993 33616 198720 17% 1994 37069 207426 18% 1995 53498 245270 22% 1996 53765 230907 23% 1997 60891 246860 25% 1998 61123 258514 24% 1999 61088 263473 23% 2000 62000 262984 24% 2001 64833 269822 24% 2002 95982 342002 28% 2003 118680 347346 34% 2004 95234 319090 30% 2005 86896 328321 26% 2006 106075 383493 28% 2007 152479 418448 36% 2008 201408 538559 37% 2009 194437 562181 35% 2010 133673 445985 30% 2011 119365 434677 27% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: Fodder Costs = Expenditure on fodder during the survey year. Total Cash Costs = Sum of payments made by the farm business for permanent and casual hired labour (excluding operators or managers, partners and family labour), materials, services, produce purchased for resale, livestock purchases and transfers onto the property, interest and payments to sharefarmers. Capital and household expenditures are excluded from total cash costs.

High Medium Low less than 20% 20% to 25% more than 25%
79
Threshold Rationale Maintaining a cost ratio of less than 20% was deemed to indicate a High economic level of sustainability, 20% to 25% a Medium level of sustainability and more than 25% a Low level of sustainability. All States with the exception of Tasmania are currently in a sustained Low level of economic sustainability for this indicator. Fodder costs are becoming a large proportion of the total cash costs. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Fodder Costs to Total Cash Costs Ratio By State (per farm)
Score LOW
Raonale The level of total costs will directly impact many aspects of dairy farming and levels of sustainability. Given that fodder costs account for a large proporon of total expenditure, any reducon in costs will likely have a posive eect on protability levels. Probability Distribuon High 25% Medium 23% Low 52%
80

Measure Economic - 5.3.3 Boundary MARKET Key indicator Physicals Sub-indicator Inputs Measurement Product Consumption Overview Measuring the per capita consumpon of dairy products indicates whether dairy products are an important part of Australias lifestyle. This in turn will assist Dairy Australia in understanding whether their products are successfully marketed to the Australian community. The level of product consumpon will have a direct economic impact on the boom line protability across various sectors of the dairy industry. Calculations will be based on the most recent available data 2000-01 to 2010-11. Calculation Per capita consumption major dairy products1
Year Milk (l) Cheese (kg) Butter/Blends (kg) Yogurt (kg) 00/01 100.3 11.3 3.3 5.3 01/02 98.5 11.6 3.4 5.6 02/03 98.3 12.1 3.4 5.8 03/04 99.0 11.5 3.7 6.1 04/05 100.2 11.3 3.9 6.6 05/06 100.5 11.7 3.8 6.7 06/07 103.4 12.0 3.8 7.1 07/08 103.0 12.5 4.1 6.9 08/09 102.6 12.9 4.0 6.7 09/10 102.4 12.9 3.8 7.1 10/11 103.0 12.7 3.7 7.2
Per capita consumption major dairy products1 (rolling average)

Year Milk (l) Cheese (kg) Butter/Blends (kg) Yogurt (kg) 00/01 01/02 99.4 11.5 3.4 5.5 02/03 98.4 11.9 3.4 5.7 03/04 98.7 11.8 3.6 6.0 04/05 99.6 11.4 3.8 6.4 05/06 100.4 11.5 3.9 6.7 06/07 102.0 11.9 3.8 6.9 07/08 103.2 12.3 4.0 7 08/09 102.8 12.7 4.1 6.8 09/10 102.5 12.9 3.9 6.9 10/11 102.7 12.8 3.8 7.2

Threshold Rationale The assessment of the overall sustainability level for each of the dairy products takes into account the general trend in consumption over time. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Score MEDIUM
Rationale While the per capita consumption figures for dairy products currently show a higher level of consumption across all products compared to consumption levels 10 years ago, there have been small decreases in levels of consumption in recent years, perhaps suggesting some instability in the marketing of dairy products. Based on the data above and the sustainability thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 33% Medium 60% Low 7% Source: 1 Australian Dairy Industry In Focus 2011; 2007 Table 11. Per capita consumption of major dairy products (litres/kg).
81
Social Table 1.1.1

Measure Social 1.1.1 Boundary FARM Key indicator Employment Sub-indicator Labour Measurement Work-life Balance While the work-life dichotomy is a complex paradigm explored in depth across academic literature, from even a Overview basic perspective there are significant social impacts that must be considered under the scope of social sustainability. The social risk of an inequitable work life balance, where the worker is working significant proportions of time at the detriment of a satisfying out-of-work life, can result in stress, reduced well-being and an adverse affect on the performance of central life roles,1 which can have compounding negative effects on both family and community. Calculations are based on the available data, 1996-2002. Calculation One-third of dairy farmers in a business partnership work alone on their farm. Dairy farmers work long hours, almost double the average Australian worker, with three-quarters of owner-managers working more than 45 hours a week in 2006.2
Average hours worked per week by owner managers in dairy cattle farming3 State NSW VIC QLD SA WA TAS 1996-97 64 65 69 63 61 59 1997-98 61 62 66 63 69 62 1998-99 57 63 67 64 63 64 1999-00 62 64 65 59 60 53 2000-01 63 65 61 62 63 51 2001-02 64 65 60 60 65 49
Thresholds
High Medium Low Average hours worked per week Up to 45 46 to 59 60 and over
Threshold Rationale The Australian Governments Fair Work Australia initiative stipulates that a full-time employee should work on average no more than 38 hours a week.4 While this recommendation was factored into the threshold, so too was the nature of the data survey of farmers who report on their hours worked. Lifestyle factors of famers were considered in the sense that farmers work in their home environment with potential leisure time activities, lunch breaks etc. incorporated into the work day but not necessarily considered in survey completion. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and REDfor a Low level of sustainability. State NSW VIC QLD SA WA TAS Score LOW 1996-97 64 65 69 63 61 59 1997-98 61 62 66 63 69 62 1998-99 57 63 67 64 63 64 1999-00 62 64 65 59 60 53 2000-01 63 65 61 62 63 51 2001-02 64 65 60 60 65 49
Rationale In order to achieve social sustainability the dairy industry needs to promote work-life balance. The data selected, while presenting issues of currency, highlights the long working hours of dairy farmers. Based on the above thresholds it was considered that this indicator currently has a Low sustainability level. Probability Distribution High 0% Medium 17% Low 83%
Sources: 1 Reed, K., Blunsdon, B., Blyton, P. and Dastmalchian, A. (2005) Introduction: Perspectives on work-life balance, Labour & Industry 16(2):514. 2 Dairy Australia (2011) Dairy People Factfinder, prepared by Dairy Australias The People in Dairy program, September2011. 3 Australian Farm Survey Report (1998; 1999; 2000; 2001; 2002; 2003) Accessed May 2012 from: http://www.daff.gov.au/abares/publications_remote_content/publication_series/farm_survey_results 4 Australian Government: Fair Work Ombudsman (2010)Conditions of Employment: Hours of work. Accessed May 2012from: http://www.fairwork.gov.au/employment/conditions-of-employment/pages/hours-of-work.aspx
82
Social Table 1.1.2

Measure Social 1.1.2 Boundary FACTORY Key indicator Employment Sub-indicator Labour Measurement Work-life Balance While the work-life dichotomy is a complex paradigm explored in depth across academic literature, there are Overview significant social impacts from even a basic perspective that must be considered under the scope of social sustainability. The social risk of an inequitable work-life balance, where the worker is working significant proportions of time at the detriment of a satisfying out-of-work life, can result in stress, reduced well-being and an adverse effect on the performance of central life roles,1 which can have compounding negative effects on both family and community. Calculations are based on the most recent data, February 2009 February 2012. Calculation No. of manufacturing employees (000) by average no. of hours worked per week2 Total Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb Hours 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 Worked 40.2 28.5 39.9 40.3 28.9 29.7 37.0 38.8 30.0 35.6 30.0 34.1 38.5 0 8.4 9.7 9.2 7.0 5.2 8.5 8.0 6.7 5.2 7.1 4.9 5.7 6.7 1-15 26.6 39.2 34.0 56.1 19.6 25.5 22.5 57.8 29.5 28.2 19.9 47.6 23.2 16-29 48.0 65.0 58.5 65.6 35.3 59.0 55.1 54.7 46.0 61.0 38.8 47.4 33.2 30-34 251.6 214.3 243.9 212.1 234.8 212.4 214.1 213.9 224.4 214.0 222.1 187.7 208.6 35-39 188.4 191.8 199.0 163.9 201.1 174.8 180.3 158.4 182.1 187.9 179.3 166.7 182.8 40 66.4 64.6 58.3 59.1 64.8 58.3 58.6 54.7 61.9 52.1 58.4 44.4 73.6 41-44 106.2 102.8 98.1 92.9 110.7 104.5 109.3 107.0 118.7 93.1 92.8 101.8 112.3 45-49 98.8 91.8 88.6 93.3 99.3 93.8 91.5 96.1 97.8 95.3 100.9 101.2 95.5 50-59 63.8 53.8 55.6 66.4 67.7 68.6 73.8 66.5 68.9 70.5 61.9 69.9 64.6 60+ 898.4 861.5 885.1 856.7 867.4 835.1 850.2 854.6 864.5 844.8 809 806.5 839 TOTAL Percentage of total employees for data collection month by average no. of hours worked per week Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Total 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 Hours Worked 4.5 3.3 4.5 4.7 3.3 3.6 4.4 4.5 3.5 4.2 3.7 4.2 0 0.9 1.1 1.0 0.8 0.6 1.0 0.9 0.8 0.6 0.9 0.6 0.7 1-15 3.0 4.6 3.8 6.5 2.3 3.1 2.6 6.8 3.4 3.3 2.5 5.9 16-29 5.3 7.5 6.6 7.7 4.1 7.1 6.5 6.4 5.3 7.2 4.8 5.9 30-34 28.0 24.9 27.6 24.8 27.0 25.4 25.2 25.0 25.9 25.3 27.4 23.3 35-39 41.7 41.4 43.5 44.5 37.3 40.2 39.6 43.5 38.7 40.9 39 40 Subtotal 21.0 22.3 22.5 19.1 23.2 20.9 21.2 18.5 21.1 22.2 22.1 20.7 40 7.4 7.5 6.6 6.9 7.5 7.0 6.9 6.4 7.2 6.2 7.2 5.5 41-44 28.4 29.8 29.1 26 30.7 27.9 28.1 24.9 28.3 28.4 29.3 26.2 Subtotal 11.8 11.9 11.1 10.7 12.8 12.5 12.9 12.5 13.7 11.0 11.5 12.6 45-49 11.0 10.7 10.0 10.9 11.4 11.2 10.7 11.3 11.3 11.3 12.5 12.5 50-59 7.1 6.2 6.3 7.9 7.8 8.2 8.7 7.8 8.0 8.4 7.7 8.7 60+ 29.9 28.8 27.4 29.5 32.0 31.9 32.3 31.6 33.0 30.7 31.7 33.8 Subtotal 100 100 100 100 100 100 100 100 100 100 100 100 TOTAL Thresholds
High Medium Low Average hours worked per week Up to 39 40 to 44 45 and over
Feb 2012
4.6 0.8 2.7 3.9 24.9 36.9 21.8 8.8 30.6 13.4 11.4 7.7 32.5 100
Threshold Rationale The Australian Governments Fair Work Australia initiative stipulates that a full-time employee should work on average no more than 38 hours a week.3 Thus, this measure was considered highly sustainable if the vast majority worked within these guidelines. The data source had 38-hour average within the interval 35-39, so the thresholds were adjusted to consider a High level of sustainability to be a working week, which is on average 39 hours or less. Based on the above thresholds, the Table above has been shaded GREEN for average hours worked which were assessed to have a High level of sustainability; ORANGE for Medium sustainability and RED for a Low level of sustainability. Score HIGH Rationale In order to achieve social sustainability, the dairy industry needs to promote work -life balance. The data selected, while presenting issues validity due to the broad scope (all manufacturing industries, not just sairy), highlights the long working hours of manufacturing employees. Based on the above thresholds it was considered that this indicator currently has a Low sustainability level. Probability Distribution High 41% Medium 28% Low 31%
Sources: 1 Reed, K., Blunsdon, B., Blyton, P. and Dastmalchian, A. (2005) Introduction: Perspectives on work - life balance,Labour & Industry 16 (2):514. 2 ABS (2012)6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Feb 2012 Table 11: Employed Persons by Actual hours worked, Industry and Sex. Accessed June 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Feb%202012 3 Australian Government: Fair Work Ombudsman (2010) Conditions of Employment: Hours of work. Accessed May 2012 from: http://www.fairwork.gov.au/employment/conditions-of-employment/pages/hours-of-work.aspx
83
Social Table 1.2.1

Measure Social 1.2.1 Boundary FARM Key indicator Employment Sub-indicator Training Measurement VET (Vocational Education and Training) Courses Overview With an ageing populaon and a comparavely ageing farming workforce, there are signicant measures that need to be taken in order to ensure young farmers are encouraged and supported. Industry-based programs oer avenues to kick-start young farmers careers. These programs are important for the social sustainability of rural communies as they provide incenves which target reducon in youth outmigraon. Calculations are based on the available data, 2003-2008. Calculation VET* Course Enrolments and Apprentices in Training1
Course Enrolments 2003 Total Enrolments all courses 2,057,200 % of Total Enrolments 4.90 Enrolments 2005 Total Enrolments all courses % of Total Enrolments 5.27 Enrolments 2008 Total Enrolments all courses 2,072,300 % of Total Enrolments
VET 100,800 99,600 1,888,700 83,700 4.13 Agriculture, Environmental and Related Studies 6,100 397,100 1.54 5,400 389,000 1.39 7,800 426,700 1.83 Apprentice Skilled Animal and Horticultural Workers *Includes all VET delivery by TAFE and other government providers, multi-sector higher education institutions, registered community providers, and publicly-funded delivery by private providers. Fee-for-service VET delivery by private providers has been excluded. School students undertaking VET in schools have also been excluded.

High Medium Low % Change in Enrolments % of total enrolments generally increased % of total enrolments generally unchanged % of total enrolments generally decreased
Threshold Rationale This metric reflects the trend in enrolments in courses suitable for people interested in a career in farming and sets this in the context of the total number of courses being offered by these educational institutions. The levels of the thresholds have been set by expert opinion and were based on considering the combination of trends in actual enrolment numbers as well as the proportion of the total enrolments at the institution. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Course Enrolments 2003 Total Enrolments all courses 2,057,200 % of Total Enrolments 4.90 Enrolments 2005 Total Enrolments all courses 1,888,700 % of Total Enrolments 5.27 Enrolments 2008 Total Enrolments all courses 2,072,300 % of Total Enrolments 4.13
VET Agriculture, Environmental and Related Studies Apprentice Skilled Animal and Horticultural Workers
100,80 0
99,600
83,700
6,100
397,100
1.54
5,400
389,000
1.39
7,800
426,700
1.83
Score MEDIUM
Rationale Representing the third largest rural industry, dairy is an important industry to Australia and to rural communities.2 Thus, the sustainability of the dairy industry is directly connected to the sustainability of rural communities. In order to sustain the dairy industry, a steady flow of young farmers ready to commit to a viable dairy family business is vital. The data selected for this indicator provides details of the uptake of specific training opportunities within the agricultural sector. Opportunities such as VET courses and apprenticeships offer support to potential and future farmers, enabling them to equip themselves with the knowledge, connect with support networks, and consequently successfully run a farming business and engage in the local farming community. Although this data is not specific to the dairy industry, the assumption is that dairy farming is likely to behave in a similar manner to the rest of the agricultural sector, and therefore we can use this as an indicatorto reflect the trends for dairy farming. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (expert judgement) High 20% Medium 60% Low 20%
Sources: ABS. Year Book Australia. Accessed May 2012, from: http://www.abs.gov.au/ausstats/abs@.nsf/7d12b0f6763c78caca257061001cc588/8E514B055741BBBFCA257236000320FB http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3CEC19BC86237D8FCA256F7200832FFF http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/FBC2FEEBF38C6DD6CA25773700169C92 2 Dairy Australia (2007-2012) Australias Dairy Industry. Accessed May 2012 from:http://www.dairyaustralia.com.au/Education-andCareers/Primary-School-Resources/Australias-Dairy-Industry.aspx
1
84
Social Table 1.2.2

Measure Social 1.2.2 Boundary FACTORY Key indicator Employment Sub-indicator Training Measurement VET (Vocational Education and Training) Courses Overview Employees across the dairy supply chain require specic skills and knowledge in order for Dairy Australia to connue to produce and deliver a sustainable product. Government instuons oer VET courses to factory hands and process workers. To maintain social sustainability of dairy employment engagement with training in the form of VET courses should be encouraged and supported. Calculations are based on the available data, 2000-2010. Calculation VET Course Commencements 000 (Labourers: Factory process workers) 1

High Medium Low VET Course Commencements Number of total enrolments generally increased Number of total enrolments generally unchanged Number of total enrolments generally decreased
Threshold Rationale This metric reflects the trend in enrolments in courses suitable for people interested in a career in manufacturing. The levels of the thresholds have been set by expert opinion and were based on considering the changing trends in actual enrolment numbers. Notably, there is uncertainty in this measurement as it reflects all enrolments in factory process workers. Availability of segregated data that shows direct involvement with the dairy industry would improve validity. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Score MEDIUM
1
Sources: NCVER (2010) Australian vocational education and training statistics: Apprentices and trainees. Accessed June 2012 from: http://www.ncver.edu.au/publications/2387.html
85
Social Table 1.3.1a

Measure Social 1.3.1a Boundary FARM Key indicator Employment Sub-indicator Management Measurement Attitude to Future This measurement considers farm managers attitudes towards the future of the dairy industry. A positive outlook Overview by farmers and farm managers directly impacts the likelihood of their future involvement in the industry and subsequently their ability to provide employment opportunities within rural communities. Calculations are based on the available data, 2007-08 and 2008-09. Calculation Farmers outlook on the future of the dairy industry1,2
REGION QLD and North Coast NSW Southern and Central NSW Northern VIC and Riverina Western VIC TAS WA SA Gippsland AUSTRALIA % very positive 2007-08 2008-09 26 31 24 19 31 21 30 26 11 22 13 0 6 2 19 0 2 7 % fairly positive 2007-08 2008-09 48 35 52 62 50 48 31 51 60 55 45 31 18 36 29 17 81 41 % neutral 2007-08 2008-09 14 15 10 17 15 2 22 22 26 17 38 11 35 30 22 32 2 18 % fairly negative 2007-08 2008-09 10 13 0 2 14 0 2 1 0 3 3 19 26 14 5 30 5 15 % very negative 2007-08 2008-09 2 7 0 0 4 29 15 0 3 4 2 39 15 18 26 21 10 19
Thresholds
High Medium Low Change in % +ve Increase Little Change (0-5%) Decrease Change in % -ve Decrease Little Change (0-5%) Increase
Threshold Rationale This metric reflects the perceptions of farmers towards the future of the dairy industry. The levels of the thresholds have been set by expert opinion and were based on considering the changes in attitudes over the two survey periods. The changes were considered year on year for each of the categories, in addition to overall movement in between negative and positive perceptions. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
REGION QLD and North Coast NSW Southern and Central NSW Northern VIC and Riverina Western VIC TAS WA SA Gippsland AUSTRALIA % very positive 2007200808 09 26 31 % fairly positive 2007200808 09 48 35 % neutral 2007200808 09 14 15 % fairly negative 2007200808 09 10 13 % very negative 2007200808 09 2 7 Sustainability assessment
24 19 31 21 30 26 11 22
13 0 6 2 19 0 2 7
52 62 50 48 31 51 60 55
45 31 18 36 29 17 81 41
10 17 15 2 22 22 26 17
38 11 35 30 22 32 2 18
0 2 14 0 2 1 0 3
3 19 26 14 5 30 5 15
0 0 4 29 15 0 3 4
2 39 15 18 26 21 10 19
Score LOW
Rationale While this calculation is based on survey data, thus providing only a sample of opinions, the data suggests that farmers are more concerned about the future. This measure indicates a general increase in negativity about the future, and further investigation is required to fully understand the changes within the industry that have led to these shifts in attitude and subsequently what actions are required in order to create more positive perceptions of the future. The trends observed are only between two time periods, 2007-08 and 2008-09, and additional years would better reflect sustained changes in trends. In ascertaining the levels of sustainability, both the nature of the change (increase / decrease) and the magnitude of the change are taken into account. The expert-adjusted probabilities take into account the lack of data. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution (adjusted by expert judgement) High 5% Medium 35% Low 60%
1
Sources: Dharma, S. (2009) Australian Dairy 09.1 ABARE. Accessed June 2012 from:http://adl.brs.gov.au/data/warehouse/pe_abarebrs99014476/dairy_10_1.pdf Dharma, S. and Martin, P. (2010) Australian Dairy 10.1. ABARE.Accessed June 2012 from:http://adl.brs.gov.au/data/warehouse/pe_abarebrs99001653/ad09.1_dairy_report.pdf
86
Social Table 1.3.1b

Measure Social 1.3.1b Boundary FARM Key indicator Employment Sub-indicator Management Measurement Age Composition This measurement considers the age composition of farmers. Population ageing has given rise to a host of issues, Overview including the pressures placed on workforce management... the largest age cohort, the baby boomers, is fast approaching retirement age.1 As the number of young farmers is rapidly declining in Australia, falling by 60% in just 25 years, farmers are increasingly w orking into retirement age.2 The 2006 Australian census shows that 175,000 farmers and farm managers were reportedly getting older and working beyond retirement age at the time of data collection.3 Calculations are based on the available data, 2006. Calculation Industry of employment by age by state4 55-64
AFF* (%) Other+ (%) Difference (%) AFF* (%)
65-74
Other+ (%) Difference (%) AFF* (%)
75+
Other+ (%) Difference (%)
NSW VIC QLD SA WA TAS NT OTHER

+ *
21.45 21.55 20.50 20.08 19.12 17.63 14.13 0.00
12.45 12.27 12.23 13.14 12.70 13.22 10.88 13.52
9.00 9.28 8.27 6.94 6.42 4.41 3.25 -13.52
10.68 10.32 8.95 7.63 8.25 6.64 5.12 0.00
1.87 1.76 1.59 1.62 1.69 1.64 1.35 1.51
8.81 8.56 7.36 6.01 6.56 5.00 3.77 -1.51
3.88 3.59 2.60 2.30 2.37 2.13 1.05 0.00
0.30 0.26 0.22 0.23 0.21 0.24 0.16 0.00
3.58 3.33 2.38 2.07 2.16 1.89 0.89 0.00
Agriculture, Forestry and Fishing Includes all other industries (mining; manufacturing; electricity, gas, water and waste services; construction; wholesale trade; retail trade; accommodation and food services; transport, postal and warehousing; information media and telecommunications; financial and insurance services; rental, hiring and real estate services; professional, scientific and technical services; administrative and support services; public administration and safety; education and training; healthcare and social assistance; arts and recreation services; other services.
Thresholds
High Medium Low Difference Negative change in any age group Little Difference (0-5% for 55-74 age group, or 0-2% for 75+) More than 5% (55-74), or 2% (75 +) difference
Threshold Rationale This metric reflects the age of farmers, grouped with respect to retirement age. Currently the retirement age is 67 years for males and females. The Table above reflects pre-retirement (55 64), retirement (65 74) and postretirement (75+) age groups. The levels of the thresholds have been set by expert opinion and were based on considering the percentage of older workers in the agriculture, forestry and fishing sectors as compared to all other employment industries. Additionally, when assessing the differences, more emphasis was given to discrepancies in the higher age groups, since the expected employment percentages were much smaller. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score LOW Rationale Increasing the Australian working-age population, lifting labour force participation rates, and raising productivity have been identified by the Australian Treasury as critical in addressing the economic challenges posed by an ageing population (Australian Treasury 2010). While there is an economic incentive to lift labour force participation rates, there are also benefits to the individual. Labour force participation can lead to greater individual wellbeing in terms of financial security, self-esteem and social engagement.5 Although there is consensus about the benefits to Australia to keep people employed for longer to sustain an ageing population, having an ageing workforce on dairy farms may be a pre-cursor to an unsustainable dairy farming industry, which will have not only economic sustainability implications, but social implications for farming families and communities. Nonetheless the current characteristics of the age structure of the agricultural sector relative to the other industries (as shown in the Table above) give a good indication of how the overall structure varies across industries. While this calculation is based on broad data of the entire agriculture, forestry and fishing sectors, this measure indicates that dairy farmers falling into this category work until an older age than other industries. Further investigation is required to specifically analyse workers in the dairy industry in order to fully understand the sustainability of the dairy farm workforce. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 9% Medium 29% Low 62%
Sources: Patrickson, M. and Ranzijn, R. (2005) Workforce ageing: The challenges for 21st century management,International Journal of Organisational Behaviour, 10(1): 729-739. Accessed August 2012 from: http://www.usq.edu.au/extrafiles/business/journals/HRMJournal/InternationalArticles/Volume10Ageing/PatricksonRanzijnVol10 -4.pdf 2 NSW Farmers Association (nd)Young farmers finance Scheme. Accessed August 2012 from: http://www.nswfarmers.org.au/__data/assets/pdf_file/0004/69628/YOUNG_FARMER_FINANCE_SCHEME_short_doc.pdf 3 Depczynski, J. and Fragar, L. (nd) Australian Farmers a high risk population for rural health. Accessed June 2012 from: http://farmsafewa.org/me dia/1285/Australian%20Farmers%20-%20A%20high%20risk%20population%20for%20rural%20health.pdf 4 ABS (2006) Census Tables Cat. No. 2068.0. Industry of Employment by Age by Sex (State) Based on Place of Usual Residence 5 ABS. 2012. Labour Force Survey. Accessed August 2012 from: http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/4125.0~Jan%202012~Main%20Features~Labour%20force~1110
1
87
Social Table 2.1.2

Measure Social 2.1.2 Boundary FACTORY Key indicator Legal & Ethics Sub-indicator Discrimination Measurement Labour Equity In the latest census of all Australians conducted in 2006, women made up 46.1% of all workers.1 As gender Overview equality continues to grow across the Australian labour force, for the dairy industry to be socially sustainable it needs to ensure that labour equity is established. Calculations are based on the available data, 2006. Calculation Product Manufacturing Employment by Gender 20062 Dairy Food State No. No. % % No. No. % Males % Males Females Males Females Males Females Females NSW 84 41 67.2 32.8 1,462 893 62.1 37.9 VIC 188 69 73.2 26.8 1,232 880 58.3 41.7 QLD 66.7 33.3 541 452 54.5 45.5 38 19 SA 17 10 63.0 37.0 235 153 60.6 39.4 WA 34 22 60.7 39.3 225 196 53.4 46.6 Tas 7 3 70.0 30.0 33 22 60.0 40.0 Thresholds
High Medium Low Males (%) Less than 55.00% 55.00 to 65.00% More than 65.00% Females (%) More than 45.00% 35.00 to 45.00% Less than 35.00%
Threshold Rationale The threshold levels have been chosen based on the percentage of women in the Australian labour force as reported by the 2006 census. To achieve labour equity, the theoretical percentage should be 50%; however it is deemed to be more realistic and sustainable to aim for 40%, and therefore percentages in the range 35% to 45% are considered to have Medium sustainability, and the percentages outside that range to be either Low or High levels of sustainability as outlined in the Table above. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. State NSW VIC QLD SA WA Tas Score LOW No. Males 84 188 38 17 34 7 Dairy No. % Females Males 41 67.2 69 73.2 66.7 19 10 63.0 22 60.7 3 70.0 % Females 32.8 26.8 33.3 37.0 39.3 30.0 No. Males 1,462 1,232 541 235 225 33 Food No. % Males Females 893 62.1 880 58.3 452 54.5 153 60.6 196 53.4 22 60.0 % Females 37.9 41.7 45.5 39.4 46.6 40.0
Rationale The ethical stance of an industry provides details of how socially important its contribution is. The data selected for this indicator provides details of the gender equity within the dairy workforce, specifically in factories. Data from the food manufacturing industry is included for a comparative overview of how equitable dairy is against a similar industry. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 0% Medium 33% Low 67%
Sources: 1 Pocock, B. (2007) The regulation of womens employment in Australia: What lessons for China? Womens Labour Rights Workshop, Fujian Province 20-23 November 2007. 2 ABS Census (2006)2068.0 - Industry of Employment
88
Social Table 2.2.1

Measure Social 2.2.1 Boundary FARM Key indicator Legal and Ethics Sub-indicator Compliance Measurement Regulations Dairy Australia states that the National Dairy Food Safety Regulatory Framework is an integrated system Overview involving federal and state regulatory agencies, dairy farmers, dairy companies and Dairy Australia. International Codes and Standards provide a basis for this framework. As part of this framework, industry quality assurance programs require all sectors of the supply chain to take responsibility for food safety. Potential risks are monitored and the industry regularly updated.1 This measurement highlights the number of pre-farm and on-farm regulations in place. Calculations are based on the available data from State Departments of Primary Industries. Calculation Federal and State Regulators Domestic Dairy Industry1 Federal Regulators State Regulators Type PRE-FARM Animals FSANZ SDFAs, SDPIs FSANZ SDFAs, SDPIs, EPAs, SDoH Water FSANZ, APVMA SDFAs, SDPIs Feed Agricultural and FSANZ, APVMA SDFAs, SDPIs, EPAs Vet Chemicals FSANZ SDFAs, SDPIs, EPAs Fertilisers ON-FARM FSANZ, APVMA SDFAs, SDPIs, EPAs, SDoH Feed FSANZ SDFAs, SDPIs, EPAs, SDoH Water Agricultural FSANZ, APVMA SDFAs, SDPIs, EPAs, SDoH Chemicals FSANZ SDFAs, SDPIs, EPAs, SDoH Fertilisers Veterinary FSANZ, APVMA SDFAs, SDPIs, SDoH Chemicals FSANZ SDFAs, SDPIs, SDoH Animals Premises and FSANZ SDFAs, SDoH Equipment Milking Practices FSANZ SDFAs, SDoH Cleaning FSANZ, APVMA SDFAs, SDoH FSANZ SDFAs, SDoH Milk Storage Skills and FSANZ SDFAs, SDPIs, SDoH Knowledge Traceability FSANZ SDFAs, SDPIs, SDoH TOTAL KEY Australian Pesticide and Veterinary Authority Environmental Protection Authorities Food Standards Australia New Zealand State Dairy Food Authorities State Departments of Primary Industries/Agriculture State Departments of Health
Level of Regulation Highly regulated Sufficiently regulated Inadequately regulated
TOTAL 3 5 4 5 4 6 5 6 5 5 4 3 3 4 3 4 4 73
APVMA EPA FSANZ SDFAs SDPIs SDoH Thresholds

High Medium Low
Threshold Rationale The metric provides information on the regulatory framework which is in place for quality assurance and consistency in dairy farming, but does not contain detail on compliance with these regulations. Nonetheless, the existence and extent of these regulations are used as a proxy for the compliance sustainability indicator. The High, Medium, and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for States having a High level of sustainability; ORANGE for Medium sustainability and RED for a Low level of sustainability. Based on the above thresholds it was considered that this indicator currently has a High sustainability level. Probability Distribuon (expert judgement) High 95% Medium 5% Low 0%
1
Score HIGH
Sources: Dairy Australia (2007-2012)Dairy Food Regulatory Framework,Accessed June 2012 from:hp://www.dairyaustralia.com.au/Industryoverview/Food-safety-and-regulaon/Regulatory-Framework.aspx
89
Social Table 2.2.2

Measure Social 2.2.2 Boundary FACTORY Legal and Ethics Key indicators Sub-indicator Compliance Measurement Regulations Dairy Australia states that the National Dairy Food Safety Regulatory Framework is an integrated system Overview involving federal and state regulatory agencies, dairy farmers, dairy companies and Dairy Australia. International Codes and Standards provide a basis for this framework. As part of this framework, industry quality assurance programs require all sectors of the supply chain to take responsibility for food safety. Potential risks are monitored and the industry regularly updated.1 This measurement highlights the number of regulations in place associated with the transport and manufacture of dairy products. Calculations are based on the available data from State Departments of Primary Industries. Calculation Federal and State Regulators Domestic Dairy Industry1 Federal Regulators State Regulators Type TRANSPORT Milk/Traceability FSANZ SDFAs, SDoH MANUFACTURE FSANZ Milk SDFAs, SDoH FSANZ SDFAs, SDoH Ingredients FSANZ SDFAs, EPAs, SDoH Water FSANZ SDFAs, EPAs, SDoH Packaging Material Equipment FSANZ SDFAs, SDoH FSANZ SDFAs, EPAs, SDoH Cleaning Skilled Staff FSANZ SDFAs, SDoH FSANZ SDFAs, SDoH Traceability TOTAL KEY Environmental Protection Authorities Food Standards Australia New Zealand State Dairy Food Authorities State Departments of Health
TOTAL 2 6 5 6 5 5 4 3 3 39
EPA FSANZ SDFAs SDoH Thresholds

High Medium Low
Level of Regulation Highly regulated Sufficiently regulated Inadequately regulated
Threshold Rationale The metric provides information on the regulatory framework which is in place for quality assurance and consistency in dairy manufacturing, but does not contain detail on compliance with these regulations. Nonetheless, the existence and extent of these regulations are used as a proxy for the compliance sustainability indicator. The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for States having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score HIGH Based on the above thresholds it was considered that this indicator currently has a High sustainability level. Probability Distribution (expert judgement) High 80% Medium 20% Low 0%
1
Sources: Dairy Australia (2007-2012) Dairy Food Regulatory Framework, Accessed June 2012 from: http://www.dairyaustralia.com.au/Industryoverview/Food-safety-and-regulation/Regulatory-Framework.aspx
90
Social Table 3.1.1

Measure Social 3.1.1 Boundary FARM Key indicator Community Sub-indicator Culture Measurement Family Farming This indicator considers succession planning and the role of family farms. The ABS reports that while farms were Overview traditionally family businesses that were engaged in passing on the farm to successive generations, a number of social and economic impacts have created a shift in this trend. Namely, since the 1950s, the introduction of new technologies, the globalisation of commodity markets, and the removal of protective tariffs, have contributed to the restructuring of the agricultural industry. As larger farms are now more economically viable than smaller farms, a number of properties have amalgamated, resulting in farming families leaving the industry. From a social sustainability perspective this amalgamation typically results in the outmigration of farming families and consequently a decline in population in Australias rural and regional towns.1 Calculations are based on the available data, 2001 and 2006. According to the ABS, the number of farming Calculation families in Australia decreased by 22% between 1986 and 2001.2 The 2006 National Dairy Farmers Survey found that only 46% of farmers intended to pass their farms onto family, suggesting a further decline is expected.3
Number of Farming Families1,2 Year 1986 Australia 145,000 Number of Farming Families by State2 State/Year 2001 NSW 32,802 VIC 27,972 QLD 23,062 SA 12,846 WA 12,059 TAS 3,442 NT 441 ACT 128 Thresholds
High Medium Low % Change More than 5.0 -5.0 to 5.0 Less than -5.0
1991 120,000
1996 114,700
2001 112,300
2006 102,600
2006 30,216 25,658 20,045 11,809 10,994 3,340 435 119
% Change -7.9 -8.3 -13.1 -8.1 -8.8 -3.0 -1.4 -7.0
Type of Change Increase No change Decrease
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement. Having sustainable dairy farming family businesses requires current family businesses to continue to operate in subsequent years. If there is no change (or minimal change, factoring in sample error) in the number of family businesses, this indicator is considered to be at a Medium level of sustainability. If more families are attracted into dairy farming (i.e. a percentage increase) then this is a highly sustainable indicator. Alternatively, any decrease in the number of farming families would indicate Low sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. State/Year NSW VIC QLD State/Year NSW VIC QLD SA WA TAS NT ACT 2001 32,802 27,972 23,062 2001 32,802 27,972 23,062 12,846 12,059 3,442 441 128 2006 30,216 25,658 20,045 2006 30,216 25,658 20,045 11,809 10,994 3,340 435 119 % Change -7.9 -8.3 -13.1 % Change -7.9 -8.3 -13.1 -8.1 -8.8 -3.0 -1.4 -7.0
91
Score LOW
Rationale Changes in the number of farming families can socially impact the broader community through outmigration and the decrease in rural and regional populations. The data selected for this indicator provides details of the changes experienced by State. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 0% Medium 25% Low 75%
ABS (2003) 4102.0 Australian Social Trends, 2003. Accessed May 2012 from:http://abs.gov.au/AUSSTATS/abs@.nsf/7d12b0f6763c78caca257061001cc588/cdcd7dca1f3ddb21ca2570eb00835393!OpenDocument 2 ABS (2006)7104.0.55.001 Agriculture in Focus: Farming Families, Australia, 2006. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/7104.0.55.001Main%20Features22006?opendocument&tabname=Summary &prodno=7104.0.55.001&issue=2006&num=&view= 3 Dairy Australia (2011)Dairy People Factfinder, Prepared by Dairy Australias The People in Dairy Program, September 2011.
1
92
Social Table 3.2.1

Measure Social 3.2.1 Boundary FARM Key indicator Community Sub-indicator Value Measurement Residents Perceptions Overview This measurement explores rural residents percepons towards the agriculture industry. With pressures for land, resources and declining on-farm incomes compounded by the deregulaon of the dairy industry and compeon from internaonal trade the agricultural landscape is in transion, and so too are rural 1 communies. These issues have led to the sale of family farms and the outmigraon of residents. Thus, it is important that rural farmers are valued and supported by local residents. Calculations are based on the available data from a case-study survey in the Northern Rivers region of NSW, Calculation 2004. Responses to value statement by place of residence1 Question Residential Strongly location of the disagree respondent (%) 1.3 Town There is too much urban 0.0 Village development occurring on good 1.4 Rural agricultural land. 1.3 Agriculture and related industries Town 0.0 are important to the region. Village 0.0 Rural 1.3 Town Rural residential development 0.0 Village should not occur on good 0.0 Rural agricultural land. 0.7 Town In agricultural areas farming 1.5 Village practices undertaken responsibly 1.4 Rural should have precedence over residential uses.
Total respondents = 291 (Town = 151; Village = 66; Rural = 74) 2
Disagree (%) 12.6 9.1 6.8 0.7 0.0 0.0 8.0 7.6 5.5 5.4 1.5 4.1
Not sure (%) 13.9 13.6 10.8 3.3 3.0 1.4 11.3 12.1 11.0 14.1 13.6 6.8
Agree (%) 45.0 53.0 28.4 52.3 65.2 45.9 44.0 45.5 32.9 46.3 60.6 47.3
Strongly agree (%) 27.2 24.2 52.7 42.4 31.8 52.7 35.3 34.8 50.7 52.6 15.8 31.6

High Medium Low Value Farming highly valued (majority agree of sample or strongly agree) No strong opinion on value of farming (majority of sample not sure) Farming not valued (majority of sample disagree)
Threshold Rationale The data available for this metric was taken from a survey conducted in 2004 on residents in a specific geographic area in NSW, the Northern Rivers, with a total population of 296,677 (2012) covering an area of 20732.6 km. The limited scope and numbers in this survey increases the uncertainty of these results being representative of dairy farming regions in general. However, this metric combined with other metrics to inform the community indicator of social sustainability gives an insightful view into the perceptions of a specific region incorporating both farming communities and urban areas. From the Table above it is clear that similar views are held by the disparate communities (rural, village and urban), but the intensity of these opinions differs across the residential communities. The survey questions considered here cover the value attached to productive farming land, the contribution of farming to the region and the juxtaposition of farming and residential use. The thresholds are purposefully vague to capture some of the uncertainty in using this survey to represent sustainability for the community sub-indicator of social sustainability for dairy farms. Expert judgement was used in determining and applying the thresholds. A Medium level of sustainability was considered to be when the majority of the respondents across all residential locations had neither a positive nor a negative perception of the value of farming to calculate this, the not sure column is used supplemented with a proportion of the percentages on either side of the column. For a Low sustainability level, the general view ofthe respondents is that farming has no community value, and for High sustainability farming is highly valued. Based on the above thresholds, the table has been shaded GREEN for questions having a High level of sustainability; ORANGE for Medium sustainability and RED for a Low level of sustainability.
Question
There is too much urban development occurring on good agricultural land. Agriculture and related industries are important to the region. Rural residential development should not occur on good agricultural land. In agricultural areas farming practices undertaken responsibly should have precedence over residential uses. Score HIGH
Residential location of the respondent Town Village Rural Town Village Rural Town Village Rural Town Village Rural
Strongly disagree (%) 1.3 0.0 1.4 1.3 0.0 0.0 1.3 0.0 0.0 0.7 1.5 1.4
Disagree (%) 12.6 9.1 6.8 0.7 0.0 0.0 8.0 7.6 5.5 5.4 1.5 4.1
Not sure (%) 13.9 13.6 10.8 3.3 3.0 1.4 11.3 12.1 11.0 14.1 13.6 6.8
Agree (%) 45.0 53.0 28.4 52.3 65.2 45.9 44.0 45.5 32.9 46.3 60.6 47.3
Strongly agree (%) 27.2 24.2 52.7 42.4 31.8 52.7 35.3 34.8 50.7 52.6 15.8 31.6
Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 85% Medium 12% Low 3%
1
Sources: Gibson, C., Dufty, R.and Drozdezewki, D. (2005) Resident Attitudes to Farmland Protection Measures in the Northern Rivers Region, New South Wales, Australian Geographer 36(3): 369-383.
93
Social Table 3.2.2

Measure Social 3.2.2 Boundary FACTORY Key indicator Community Sub-indicator Value Measurement Wage Contribution The rising cost of living continues to be both an economic and social issue for many Australians. From a social Overview sustainability perspective it is important that the dairy industry ensures the wage increases they offer their employees remain in line with inflation rates in order to curb the impact of rising living costs on employees and their families. Calculations are based on the most recent data, 2001 to 2011. Calculation Average weekly full-time total earnings all manufacturing employees1 Year 2001 2002 2003 2004 2005 2006 2007 2008 $* 817 892 961 1002 1033 1075 1107 1170
*Rounded to the nearest dollar
2009 1181
2010 1219
2011 1266
Percentage change in average weekly full-time total earnings all manufacturing employees Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 %* 2.3 9.2 7.2 4.1 1.1 3.9 2.9 5.4 0.9 3.1
*Rounded to the nearest decimal
2011 3.7
Inflation rates for Australia2 Year 2001 2002 2003 %* 4.4 3.0 2.8
*Rounded to the nearest decimal
2004 2.3
2005 2.7
2006 3.5
2007 2.3
2008 4.4
2009 1.8
2010 2.8
2011 3.4
Thresholds
High Medium Low % Change Greater than inflation rate Same as inaon rate (within 0.5%) Less than inflation rate
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Year %* Score Based on the above thresholds it was considered that this indicator had a High sustainability level. HIGH Probability Distribution High 46% Medium 27% Low 27%
ABS(2012)6302.0 Average Weekly Earnings, Australia, Feb 2012 - Table 10I: Average Weekly Earnings, Industry, Australia (Dollars) Original Persons, Total Earnings. Accessed June 2012, from: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6302.0Feb%202012?OpenDocument 2 Rate Inflation (2012) Australia Historical Inflation Rates. Accessed June 2012 from:http://www.rateinflation.com/inflation-rate/australiahistorical-inflation-rate.php?form=ausir
1
2001 2.3
2002 9.2
2003 7.2
2004 4.1
2005 1.1
2006 3.9
2007 2.9
2008 5.4
2009 0.9
2010 3.1
2011 3.7
94
Social Table 3.2.3

Measure Social 3.2.3 Boundary MARKET Key indicator Community Sub-indicator Value Measurement Childrens Understanding This measurement explores the level of understanding held by a sample of school-age children about farming and Overview farm products with a specific focus on the dairy industry. Measuring childrens understanding provides a sense of the value placed on dairy by the community. Community education is an important means to ensuring the industry is valued by the next generation. Calculation is based on the available data, 2002 2010. Calculation Results of the Food, Fibre and the Future survey of a sample of Australian Grade 6 and Grade 10 students1 Grade 6 Students Grade 10 Students Survey Question True False True False N % N % N % N % Farming is necessary to grow enough food. 177 90 20 10 (T) Sustainable farming keeps the soil fertile. (T) Milk that is straight from the cow has no bacteria in it. (F) Homogenised milk has no bacteria in it. (F) Is yoghurt a plant or animal product? Which breed is a type of cow grown in Australia to produce milk? Angora Fresian (T) Hereford Landrace Cheese can be made from.... Milk from cows Milk from sheep Milk from goats All of the above (T) None of the above Thresholds (level of sustainability)
High Medium Low More than 75% 50% to 75% Less than 50%
539 72 36 131 64 255 Plant 81 N 96 174 211 66 -
87
80 -
13
Plant 51 27 N 28 64 65 66 N 70 0 16 100 2
Animal 139 73 % 14 33 33 20 % 37 9 53 1
39 13
395 61 Animal 525 87 % 18 32 39 12
Threshold Rationale The thresholds are based on the percentage of correct answers across both grades and questions. Not all questions were weighted equally. This data is from a single sample and any predictions based on such a small sample should be treated with caution. Nonetheless the detailed information obtained in such a survey is very valuable and gives an insight into commonly held beliefs by school children, which may be indicative of those held by other school children. Based on the above thresholds, the summary data has been shaded GREEN for high percentages of correct answers resulting in a High level of sustainability; ORANGE for Medium level of sustainability and RED for a Low level of sustainability. Survey Question N Farming is necessary to grow enough food. (T) Sustainable farming keeps the soil fertile. (T) Milk that is straight from the cow has no bacteria in it. (F) Homogenised milk has no bacteria in it (F) Is yoghurt a plant or animal product? Which breed is a type of cow grown in Australia to produce milk? Angora Fresian (T) Hereford Landrace Cheese can be made from.... Milk from cows Milk from sheep Milk from goats All of the above (T) None of the above Grade 6 Students True False % N % 90 72 36 131 20 64 255 Plant 81 N 96 174 211 66 13 10 539 39 Grade 10 Students True False % N % 87 80 395 61 Animal 525 87 % 18 32 39 12 13
177
Plant 51 27 N 28 64 65 66 N 70 0 16 100 2
Animal 139 73 % 14 33 33 20 % 37 9 53 1
95
Score HIGH
Rationale The Food, Fibre and the Future survey was developed by the Australian Council for Education Research in recognition that while primary industry plays a vital role in Australians economy and society...the gap between rural and urban communities is growing, contributing to a lack of understanding of where food and other basic necessities of life come from.1 This survey and the data presented in this measurement provide a representation of the understanding and misconceptions held by children about farming and dairy products. The restricted sample size (35 primary schools and 36 secondary schools participated in the survey), results in issues of validity and uncertainty inherent in the conclusions of the thresholds and performance of this indicator. While the questions used for this measure results in a High sustainability level the data suggests that there remains a disconnect between the community and the industries that sustain them,1 which warrants further investigation. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 40% Medium 35% Low 25%
1
Sources: Hillman, K. and Buckley S. (2011) Food, Fibre and the Future: Report on surveys of students and teachers knowledge and understanding of Primary Industries, Australian Council for Educational Research. Accessed May 2012 from: http://www.primaryindustrieseducation.com.au/resources/reports/foodfibrefuture.pdf
96
Social Table 3.3.1

Measure Social 3.3.1 Boundary FARM Key indicator Community Sub-indicator Cohesion Measurement Participation Overview This measurement explores the level of parcipaon of farmers in their community through assessment of the naonal Landcare program, which holds a strong farming membership. Landcare is a naonal network of thousands of locally based community groups who care for the natural resources of our country. Australia is proud to boast more than 4000 community Landcare groups, 2000 Coastcare groups and many thousands of volunteers across the country. Through Australias people and communies, the Landcare movement is making a 1 big dierence in caring for our country. This measurement calculates the funding allocated to Landcare by the Australian Government. The Australian Governments Caring for our Country iniave supports naonal, regional and local Landcare acvies with funding allocated for projects to improve land management, skills and knowledge and to support engagement iniaves, including 56 regional Landcare facilitators, large-scale partnership funding and community grants programs, the Australian Landcare Council, the Naonal Landcare Facilitator and Landcare Australia Limited.The Australian Government set aside $187 million for Landcare over ve years from the over $2 billion invested in Caring for our Country. This is for conservaon acvies on private land on farms, in water catchments and at the regional level. Caring for our Country Landcare encourages collecve acon by landholders, businesses and communies. This partnership between government and the 4 community is crical to sustainable management of our rural environment and natural resources. Calculations are based on the available data 2009/10 and 2011/12 Calculation
2009/2010 Month July August September October November December January February March April May June TOTAL Landcare Funding $241,120 $1,681,782 $8,590,756 $9,795,328 $922,193 $5,611,241 $2,860,000 $113,725 $9,397,491 $2,518,324 $143,715 $929,528 $42,805,203 Total $1,541,485 $1,849,982 $9,864,559 $13,228,762 $3,689,110 $5,659,641 $3,963,614 $5,327,154 $9,958,783 $6,316,430 $4,992,183 $19,373,269 $85,764,971 Ratio of funding 0.16 0.91 0.87 0.74 0.25 0.99 0.72 0.02 0.94 0.40 0.03 0.05 0.50 Landcare Funding $0 $2,200,000 $0 $14,774,341 $4,902,502 $194,319 $3,462,769 $819,550 $15,950 $0 $0 $0 $26,369,431 2011/2012 Total $968,086 $3,294,497 $174,000 $23,129,842 $6,238,667 $712,969 $4,588,266 $1,564,882 $25,518,140 $20,325,778 $4,333,507 $38,335,963 $129,184,596 Ratio of funding 0.00 0.67 0.00 0.64 0.79 0.27 0.75 0.52 0.00 0.00 0.00 0.00 0.20
Thresholds (level of sustainability) expert judgement

High Medium Low Proportion of DAFF funding allocated to Caring for our Country 30 % of total funding 16% - 30% of total funding 0% - 15% of total funding
Threshold Rationale The assessment of the overall sustainability level for contributions towards Landcare is determined by the level of change in funding over periods of available data. Allowance is made for the fact that Landcare is just one of several initiatives being funded by the Department of Agriculture, Fisheries and Forestry (DAFF). Other important programs include Australias Farming Future and various Climate Change initiatives. Funding for Landcare 4 was pledged for 5 years. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score LOW Rationale The extent and duration of funding for initiatives such as Landcares Caring for our Country is a reflection of the success of the programs, as well as community interest and participation in these programs. Based on the above thresholds it was considered that this indicator had a Low sustainability level. The probabilities have a high degree of uncertainty due to the limited available data. This is evident in the probability distribution. Probability Distribution High 50% Medium 13% Low 37%
1
Sources: Landcare Australia: About. Accessed May 2012 from:http://www.landcareonline.com.au/?page_id=2 2 The Australian Landcare Council (2011)Operating environment in 2011 for volunteer Landcare and related groups in each of the states and territories across Australia. Accessed August 2012 from:http://www.daff.gov.au/__data/assets/pdf_file/0008/2108708/landcare2012.pdf 3 http://www.daff.gov.au/__data/assets/excel_doc/0005/1885163/grants-2009-2010.xls and http://www.daff.gov.au/__data/assets/excel_doc/0004/2172667/grants-2011-12.xls 4 Department of Regional Australia, Local Government, Arts and Sport. Accessed 8 August 2012 from:http://grants.myregion.gov.au/grant/caring-our-country-landcare
97
Social Table 3.3.2

Measure Social 3.3.2 Boundary FACTORY Key indicator Community Sub-indicator Cohesion Measurement Corporate Social Responsibility Dairy manufacturers strive to ensure they are socially responsible. Many farms provide operational services and Overview processes at the local level creating thousands of jobs and economically stimulating rural communities throughout Australia. On top of this, many expand their corporate citizenship by giving back to their communities through donations and corporate sponsorship. While the nature of these community partnerships is not easily accessible, some key dairy manufacturers proudly advertise these collaborations allowing a broad measurement of dairy manufacturerscorporate social responsibility. Critically, it must be recognised that some companies may choose not to advertise such partnerships on their website or may be engaged in assisting other parts of the community (e.g. local sporting groups) that are not necessarily publicised. Calculations are based on the most recent data, 2012. Calculation Number of dairy manufacturers advertising support for Australian community programs1 Total Dairy Total Dairy Manufacturers Advertising Community Support Percentage of Manufacturers Partners Total 11 5 45.5 Thresholds
High Medium Low Percentage participation in community programs More than 60% 40% to 60% Less than 40%
Threshold Rationale Striving for all dairy manufacturers to participate in community programs is the ultimate goal for this measure, but participation by the majority of manufacturers is a desirable outcome. Participation by 40% to 60% of Dairy manufacturers is considered to have a Medium sustainability level, less than 40% Low sustainability and more than 60% a High level of sustainability. The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM The data available to assess the state of the dairy industry are based on only one count, which is the most recent information regarding support for community programs. It is therefore not possible to calculate a probability distribution over the various levels of sustainability. The current assessment was adjusted by expert opinion to provide an initial distribution across the levels, and this can be updated as more data becomes available. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (expert judgement) High 25% Medium 50% Low 25%
1 http://www.dairyaustralia.com.au/Industry-overview/About-the-industry/Partners-in-the-Dairy-Industry/Dairy-Product-Manufacturers.aspx
98
Social Table 4.1.1

Measure Social 4.1.1 Boundary FARM Key indicator Health and Safety Sub-indicator Animal Welfare Measurement Herd Health The health of the dairy herd, understood through the occurrences of disease, and the actions taken to prevent Overview disease transferring into the food chain provides important information on health and safety measures implemented by the dairy industry. The ABARE data on herd health of dairy cattle provides a sample of information that allows important understanding of the health and safety measures implemented by the industry. Calculations are based on the available data, 1991 2009. Calculation
Herd health Australian dairy farms1

Year Farms which used a defined mastitis control program Heifers Farms vaccinating Milkers against leptospirosis Dry cows by stock types Occurrence of the Grass tetany following diseases Milk fever in the dairy herd Leptospirosis (no.) Clinical mastitis Bloat Abortion 91/92 56% 52% 52% 47% 1 8 0 8 3 2 93/94 69% 55% 46% 45% 1 9 0 8 2 2 95/96 85% 60% 51% 50% 1 10 0 10 1 2 97/98 74% 60% 54% 52% 1 11 0 11 2 2 99/00 70% 72% 65% 62% 1 11 0 12 2 3 01/02 80% 73% 65% 62% 2 12 0 18 2 3 04/05 60% 72% 58% 57% 1 13 0 18 1 3 06/07 41% 71% 57% 57% n/a 08/09 51% 86% 79% 75% n/a

Farms which used a defined mastitis control program More than 70% 60% to 70% Less than 60% Farms vaccinating against leptospirosis by stock types (all stock) More than 70% 60% to 70% Less than 60% Occurrence of grass tetany Occurrence of milk fever Occurrence of clinical mastitis
High Medium Low
Less than 1 1 to 2 More than 2
Threshold Rationale: The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Year Farms which used a defined mastitis control program Heifers Farms Milkers vaccinating Dry cows against leptospirosis by stock types Occurrence of the Grass tetany following Milk fever diseases in the Clinical dairy herd (no.) mastitis 91/92 56% 52% 52% 47% 93/94 69% 55% 46% 45% 95/96 85% 60% 51% 50% 97/98 74% 60% 54% 52% 99/00 70% 72% 65% 62% 01/02 80% 72% 58% 57% 04/05 60% 72% 58% 57% 06/07 41% 71% 57% 57% 08/09 51% 86% 79% 75%
1 8 8
1 9 8
1 10 10
1 11 11
1 11 12
2 12 18
1 13 18
n/a n/a n/a
n/a n/a n/a
99
Score MEDIUM
Rationale The purpose of this indicator is to identify the measures of social responsibility the dairy industry has implemented in order to ensure herd health and subsequently safe dairy products. Most of the herd diseases (above) are confined to cattle and pose no risk to humans. While leptospirosis can have significant impacts on humans, the literature does not indicate whether it can be passed via dairy products. Although expert advice is necessary to establish the validity of assumptions for this indicator, ahead of this the underlying assumptions enable thresholds to be established that give meaning to the data. Validity may be enhanced through obtaining further data for 06/07 and 08/09 periods. Addionally, ABARE reports that the socially opmal level of disease control is determined by measuring the costs and benets against the risk/probability of disease, a plausible explanaon for the drop in disease control 2 measures for mass since 01/02. The Victorian State Government Department of Primary Industries reports that despite the success of the 1998 implemented mass management program Countdown Downunder, which resulted in declining cell counts...drought condions in 2003 forced farmers to reduce expenditure on mass management. Thus, valid predicted probability of this measurement is dicult. Based on the above thresholds it was considered that this indicator currently has a Medium sustainability level. Probability Distribution High 21% Medium 54% Low 25% In calculating the probability distribution for animal health using the data available for herd health, equal weight was assigned to each of the diseases reported and the preventative actions taken by dairy farmers to maintain the health of the herd.
Sources: Lubulwa, M. and Shafron, W. (2007) Australian Dairy Industry: Technology and Farm Management Practices , 2004-05, ABARE Research Report 07.9, prepared for Dairy Australia, Canberra, April 2007. Mackinnon, D., Oliver, M. and Ashton, D. (2010) Australian dairy industry: technology and management practices, 200809, ABAREBRS research report 10.11, Canberra, November 2010. 3 Abdalla, A., Rodrigues, G. and Heaney, A.(2000) The economic value of animal disease control measures in Australia. ABARE Animal Health in Australia Securing Our Future Conference, Canberra, 2-3 November 2000. 4 State Government Victoria DPI (2011) Innovation doubles milk production: A review of pre-farm gate RD&Es contribution 19802010. Retrieved May 2012 from:http://www.dpi.vic.gov.au/agriculture/dairy/dairy-science-and-research/dairy-megaevaluation/innovation-doubles-milk-production
1 2
100
Social Table 4.2.1

Measure Social 4.2.1 Boundary FARM Key indicator Health and Safety Sub-indicator Occupational Measurement Farm Injuries In Australia, there are about 85 farm injury deaths per year. And for every 1000 farms, between 200 and 600 Overview injuries need hospital treatment each year. But that's a small portion of the total number of injuries that actually occur. There are many injuries including back injury, cuts and fractures which are not reported to either hospitals, workers' compensation sources or insurance providers.1 A 2003 ABC report described the agriculture industry to be one of the most dangerous work places, with truck driving and underground mining the only professions to surpass farming in the Queensland Division of Workplace Health and Safety 1996 study. Within the agriculture industry those working in dairy and beef cattle farming have the highest injury and fatality risks.1 Calculations are based on the available data, 19891992, 20032006. Calculation Non-intentional on-farm fatalities by jurisdiction, Australia, 1989-19922 and 2003-20063
State/Territory NSW VIC QLD SA WA TAS NT 1989 40 33 37 13 10 6 3 1990 44 29 35 9 15 7 4 1991 58 31 37 9 16 10 0 1992 43 27 37 10 14 7 3 2003 33 17 31 6 6 8 3 2004 18 26 26 6 13 6 3 2005 20 5 22 6 3 5 1 2006 17 17 13 9 0 5 1
Average no. of on-farm fatalities over two data periods and percentage change
State/Territory NSW VIC QLD SA WA TAS NT Mean 1989-1992 46.25 29.50 36.50 10.25 13.75 7.50 2.50 Mean 2003-2006 22.00 16.25 23.00 6.75 5.50 6.00 2.00 % Change -52.43 -44.92 -36.99 -34.15 -60.00 -20.00 -20.00
Thresholds
High Medium Low Fatalities Number of fatalities low and decreasing Number of fatalities relatively low and generally unchanged or decreasing slightly Number of fatalities are high and / or increasing
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement and have been set to acknowledge a downward trend in fatalities to indicate that the level of sustainability is increasing, but also taking into account the actual numbers. In other words, although a decrease in fatalities is indicative of a High sustainability level, the actual number may still be unacceptably high. A zero fatality is the only real acceptable level, but the nature of the work in agriculture is known to be dangerous.1 Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
State/Territory NSW VIC QLD SA WA TAS NT Mean 1989-1992 46.25 29.50 36.50 10.25 13.75 7.50 2.50 Mean 2003-2006 22.00 16.25 23.00 6.75 5.50 6.00 2.00 % Change -52.43 -44.92 -36.99 -34.15 -60.00 -20.00 -20.00
Score MEDIUM
Rationale While Australian farming represents approximately 4 percent of the work force, injuries on farms account for around 20 percent of all work-related injuries.3 While elimination of all workplace injuries and fatalities remains the key goal, the data for this measurement, with the calculation based on the percentage change and actual numbers, identifies a continued reduction in the rates of deaths on farms, several states still have an unacceptably high number of fatalities. Thus, based on the above thresholds it was considered that this indicator currently has a Medium sustainability level. Probability Distribution High 7% Medium 57% Low 36%
Sources: Lavelle, P. (2003) Farm safety. Accessed May 2012 from:http://www.abc.net.au/health/library/stories/2003/04/17/1829466.html Franklin, R., Mitchell, R., Driscoll, T. and Fragar, L. (1999) Farm-related fatalities in Australia, 1989-1992. Accessed May 2012 from:http://www.aghealth.org.au/tinymce_fm/uploaded/Research%20Reports/farm_rel_fatalites_aus_89_92.pdf 3 Herde, E. and Lower, T. (2011)Farm injury related deaths in Australia, 2003-2006. Accessed May 2012 from:http://www.aghealth.org.au/tinymce_fm/uploaded/fs_docs/farm_injury_related_deaths_australia_200306.pdf
1 2
101
Social Table 4.2.2

Measure Social 4.2.2 Factory Boundary Key indicator Health and Safety Sub-indicator Occupational Measurement Lost Time Injury Frequency Rates (LTIFR) According to the Australian Standards,A lost-time injury is defined as an occurrence that resulted in a fatality, Overview permanent disability or time lost from work of one day/shift or more.1 Safe Work Australia calculates LTIFR as the number of lost-time injuries per million hours worked.1 While this measure directly impacts the economic sustainability of the dairy industry by indicating lost time in manufacturing processes, it is also has social consequences when considering the impact of workplace injuries on the employees and their dependents. Calculations are based on the available data, 2000-01 to 2009-10. Calculation National LTIFR* - Dairy Product Manufacturing1 Year 200020012002200301 02 03 04 Frequency+ 16.6 13.7 11.4 13.0 1 year rolling 15.2 12.6 12.2 average
+
200405 10.8 11.9
200506 15.8 13.3
200607 14.5 15.2
200708 10.6 12.6
200809 12.3 11.5
200910 10.5 11.4
* Scope: All accepted workers' compensation claims with more than one week lost excluding travel to and from work. Frequency rates are expressed as a rate per million hours worked.
Thresholds (level of sustainability) Change in Frequency Rate Generally decreasing frequency rate over time High Frequency rate generally unchanged over time Medium Generally increasing frequency rate over time Low Threshold Rationale Because of the difficulties experienced in collecting consistent national data, Safe Work Australia generally reports on serious claims: accepted workers compensation claims involving one or more weeks off work, a permanent disability or fatality.1 In the absence of guidelines suggesting an acceptable LTIFR rate, the levels of the thresholds are purposely vague, based on the change in the frequency rate of lost time injuries for the period of data available rather than a set frequency rate. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Year Frequency+ 1 year rolling average Score MEDIUM 200001 16.6 200102 13.7 15.2 200203 11.4 12.6 200304 13.0 12.2 200405 10.8 11.9 200506 15.8 13.3 200607 14.5 15.2 200708 10.6 12.6 200809 12.3 11.5 200910 10.5 11.4
1
Sources: Safe Work Australia(2012)Lost time injury frequency rates (LTIFR. )Accessed June 2012 from:http://www.safeworkaustralia.gov.au/sites/SWA/AboutSafeWorkAustralia/WhatWeDo/Statistics/Pages/LostTimeInjuryFrequencyRates.aspx
102
Social Table 4.3.1

Measure Social 4.3.1 Boundary FARM Key indicator Health and Safety Sub-indicator Consumer Measurement Perceptions of Safety Bovine Johnes Disease is a relatively common dairy cattle disease.1 Although some researchers are convinced Overview of a link between BJD in cattle and humans (transferred via milk), further research is required in order to confirm any such connection. Despite this, uncertainty speculation of any such connection can damage the publics perception of milk safety.2 Thus, the hypothesised link suggests the need to apply the precautionary principle, in order to ensure social sustainability of the public perceptions of dairy safety. Calculations are based on the available data, 2010-2011. Calculation Cattle herds infected with Johnes disease3
State NSW VIC QLD SA TAS WA 31 Mar 2010 117 964 60 16 0 30 Jun 2010 117 970 59 16 0 30 Sep 2010 115 937 57 16 0 31 Dec 2010 102 890 57 16 0 31 Mar 2011 105 894 1 60 16 0 30 Jun 2011 111 896 1 47 14 0 30 Sep 2011 115 911 2 60 14 0
Thresholds
Change High* Medium Low
Generally decreased Generally unchanged Generally increased
* Scores of zero received a threshold of high
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement. Taking into account the fact that this is a common disease which is already present in many States, evidence that the disease is being curtailed is considered to enhance the consumers perception of safety in milk production on dairy farms. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
State NSW VIC QLD SA TAS WA 31 Mar 2010 117 964 60 16 0 30 Jun 2010 117 970 59 16 0 30 Sep 2010 115 937 57 16 0 31 Dec 2010 102 890 57 16 0 31 Mar 2011 105 894 1 60 16 0 30 Jun 2011 111 896 1 47 14 0 30 Sep 2011 115 911 2 60 14 0
Score HIGH
Rationale According to the Animal Health Surveillance reports issued quarterly,Johnes disease occurs primarily in dairy cattle and sheep, and to a lesser extent in beef cattle, goats, deer and camelids. Cattle strains are endemic in southeastern Australia, but surveillance programs have not identified infection to be endemic in Queensland, Western Australia or the Northern Territory, and active measures are taken to stamp out any incursions.3 Despite ongoing measures to eradicate this disease from Australian farms, the disease remains prevalent within Victorian and New South Wales herds. While this impacts animal welfare and on-farm economic loss, until research can confirm BJD does not transfer to humans via milk then the publics perception of dairy safety is at risk. Based on the above thresholds it was considered that this indicator currently has a High sustainability level. Probability Distribution High 43% Medium 24% Low 33% In calculating the existing probability distribution, the assumption is that the contribution of each State to customer perception of safety is equal, and that the magnitude of the changes are not as important as whether the trend is increasing or decreasing.
Sources: Dairy Australia (2008)Pathways to Progress with BJD for Veterinarians. Accessed June 2012 from:http://www.dairyaustralia.com.au/bjd Animal Health Australia (2000) An assessment of the risks of introducing bovine Johnes disease into cattle herds grazing pastures treated with recycled water, biosolids and other waste materials. Accessed June 2012 from:http://www.animalhealthaustralia.com.au/wpcontent/uploads/2011/04/bjd_effluentuse_0900.pdf 3 Animal Health Australia (2012) Animal Health Surveillance Quarterly Report. Accessed June 2012 from:http://www.animalhealthaustralia.com.au/programs/disease-surveillance/national-animal-health-information-system/animal-healthsurveillance-quarterly-report/
1 2
103
Social Table 4.3.2

Measure Social 4.3.2 Factory Boundary Key indicator Health and Safety Sub-indicator Customer Measurement Product Recalls Controlling the safety of milk and dairy products relies on using raw materials (milk and non-dairy ingredients) of Overview good quality, ensuring correct formulation, effective processing, prevention of recontamination and maintenance of temperature throughout the cold chain. Two critical steps in controlling pathogens in milk and dairy products are effective pasteurisation, followed by good manufacturing practices to ensure post-pasteurisation contamination does not occur.1 Despite these measures, microbiological hazards continue to occur with milk and dairy products including Salmonella, Listeria monocytogenes, pathogenic Escherichia coli, Staphylococcus aureus, Campylobacter spp., Yersinia enterocolitica and Enterobactersakazakii. When such contaminations occur the affected products are recalled and reported to the public by the Australian Competition and Consumer Commission (ACCC). Calculations are based on the available data, 1999-2012. Calculation Number of Occurrences of Dairy Product Recalls - product type and year2
Product 1999 2000 2001 Milk 2 2 2 Cheese 3 2 3 Yoghurt 0 1 0 Cream 1 0 0 Ice Cream 1 1 0 Custard 0 0 1 Other 0 0 1 TOTAL 7 6 7 *Incomplete data retrieved June 2012 2002 0 6 0 0 0 0 0 6 2003 1 2 0 0 1 0 0 4 2004 0 1 1 1 0 1 0 4 2005 3 4 0 0 0 0 0 7 2006 1 3 0 1 0 0 0 5 2007 2 3 1 0 0 0 2 8 2008 1 3 1 0 0 0 0 5 2009 1 4 0 0 0 1 0 6 2010 0 3 1 1 0 0 0 5 2011 4 2 0 0 0 0 0 6 2012 2 2 0 0 0 0 0 4*

High Medium Low High Medium Low Change in Occurrences General decrease in number of occurrences over time Number of occurrences generally unchanged over time General increase in number of occurrences over time Total number of recalls 0 to 2 3 to 5 More than 5
Threshold Rationale The levels of the thresholds have been set by expert opinion and were based on the change in the number of occurrences of product recalls of the period of data available (first Table), as well as the actual number of recalls in that year (second Table). The ultimate goal is to achieve zero recalls in all dairy products during a calendar year. From the data it is clear that a number of recalls (at least 4 occurrences) have been observed each year since 1999. Therefore, in assessing the sustainability levels for the various years, the actual number of recalls in a year for each of the products, the number of products that had recalls, and the general trend over time are taken into account. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Product Milk Cheese Yoghurt Cream Ice Cream Custard Other TOTAL 1999 2 3 0 1 1 0 0 7 2000 2 2 1 0 1 0 0 6 2001 2 3 0 0 0 1 1 7 2002 0 6 0 0 0 0 0 6 2003 1 2 0 0 1 0 0 4 2004 0 1 1 1 0 1 0 4 2005 3 4 0 0 0 0 0 7 2006 1 3 0 1 0 0 0 5 2007 2 3 1 0 0 0 2 8 2008 1 3 1 0 0 0 0 5 2009 1 4 0 0 0 1 0 6 2010 0 3 1 1 0 0 0 5 2011 4 2 0 0 0 0 0 6 2012 2 2 0 0 0 0 0 4*
Score LOW
Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 15% Medium 31% Low 64%
1
NSW Food Authority (2009)Food Safety Risk Assessment of NSW Food Safety Schemes. Accessed June 2012 from:http://www.foodauthority.nsw.gov.au/_Documents/science/Food_Safety_Scheme_Risk_Assessment.pdf ACCC (2012) Product Safety Recalls Australia: Dairy & Eggs. Accessed June 2012 from:http://www.recalls.gov.au/content/index.phtml/itemId/952826/fromItemId/952823
104
Social Table 4.3.3

Measure Social 4.3.3 Market Boundary Key indicator Health and Safety Sub-indicator Customer Measurement Foodborne Illness After mandatory pasteurisation for milk was introduced in Australia, the most significant human diseases Overview disseminated by the consumption of raw milk were eradicated from dairy cow herds (tuberculosis and brucellosis). There have been few reported failures leading to incidents of foodborne illness attributed to dairy products in the market place in recent years. However, there are some pathogenic microorganisms that have been found in dairy products that pose a risk to public health and safety. Calculation Calculations are based on the available data, 1995-2008. Summary of foodborne illness outbreaks attributed to dairy products and foods including dairy as an ingredient Hazard Australian outbreaks (1995-2008) Cases Hospitalisations Deaths Salmonella spp. 0 7 226 5 Campylobacter 6 85 0 0 Norovirus 3 123 0 0 Clostridium perfringens 1 27 0 0 Chemical contamination 1 23 0 0 Cryptosporidium 1 8 3 0 Staphylococcus aureus 1 2 0 0 Unknown 6 86 1 0 Foodborne illness outbreaks attributed to milk, dairy products and dairy products used as an ingredient by year and location Year State Agent Number of Number affected Total affected by Hospitalisations year 1998 SA S. Oranienburg 102 111 WA Campylobacter 9 1999 SA S. Typhimurium 12 66 VIC S. Typhimurium 54 2000 SA Campylobacter 12 37 VIC Campylobacter 25 ACT Unknown 2 QLD Cryptosporidium 3 8 VIC Unknown 12 84 VIC Campylobacter 12 WA Unknown 1 50 2002 NSW S. Typhimurium 29 VIC S. Typhimurium 10 64 VIC Norovirus 25 2003 NSW Norovirus 67 QLD Sorbic Acid 1 23 QLD Norovirus 31 148 SA Campylobacter 14 VIC Campylobacter 13 2004 SA S. Typhimurium 5 13 13 2005 QLD S. aureus 2 2 2006 SA S. Typhimurium 6 6 2007 NSW Unknown 9 19 VIC Unknown 10 2008 SA Unknown 5 5 These foods were prepared in a number of settings including farm, restaurant, camp, bakery, manufacturer and childcare with a number of contributing factors including temperature misuse, inadequate handling, inadequate environment, raw materials and inadequate processes. 2001

High Medium Low Five or fewer outbreaks, or a very substantial decline in number and severity of outbreaks in previous time period. Outbreaks generally under control, or more than five but fewer than ten, or a marked decline in number of severity of outbreaks from previous time period. More than ten outbreaks, or an increase in number and severity of outbreaks.
Threshold Rationale The thresholds have been set by expert judgement, taking into account the total number affected, the severity of the outbreaks, and the year-to-year changes. Although zero illnesses is the desired level, the experts deemed that a level of five or fewer across all states would qualify for a high level of sustainability regarding foodborne illness outbreaks. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score LOW Rationale Although the data spansten years, current data is unavailable. Therefore, it is unknown whether the trends observed over time continued into 2012. This increases the uncertainty in probabilities calculated only from the available data and they have been adjusted by expert judgement. Based on the above thresholds it was considered that this indicator had a Low sustainabil ity level. Probability Distribution 18% High 36% Medium 46% Low
http://www.foodauthority.nsw.gov.au/_Documents/science/Food_Safety_Scheme_Risk_Assessment.pdf
105
Social Table 5.2.3

Measure Social 5.2.3 Boundary MARKET Key indicator Product Sub-indicator Marketing Measurement Product Consumption Measuring the per capita consumption of dairy products indicates whether dairy products are an important part of Overview Australias lifestyle and community, which assists Dairy Australia in understanding whether their products are successfully marketed to the Australian community. Calculations are based on the most recent available data 2000 -01 to 2010-11. Calculation Per capita consumption major dairy products1
Per capita consumption major dairy products1 (rolling average)

Year Milk (l) Cheese (kg) Butter/Blends (kg) Yogurt (kg) 00/01 01/02 99.4 11.5 3.4 5.5 02/03 98.4 11.9 3.4 5.7 03/04 98.7 11.8 3.6 6.0 04/05 99.6 11.4 3.8 6.4 05/06 100.4 11.5 3.9 6.7 06/07 102.0 11.9 3.8 6.9 07/08 103.2 12.3 4.0 7 08/09 102.8 12.7 4.1 6.8 09/10 102.5 12.9 3.9 6.9 10/11 102.7 12.8 3.8 7.2

Threshold Rationale The assessment of the overall sustainability level for each of the dairy products takes into account the general trend in consumption over time. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Score MEDIUM
Rationale While the per capita consumption figures for dairy products currently show a higher level of consumption across all products compared to consumption levels ten years ago, there have been small decreases in levels of consumption in recent years suggesting instability in the marketing of dairy products. Based on the data above and the sustainability thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 33% Medium 60% Low 7% Source:
1
Australian Dairy Industry In Focus 2011 (2007)Table 11. Per capita consumption of major dairy products (litres/kg).
106
Environment Table 1.1.1

Measure Environment 1.1.1 Boundary FARM Resources Key indicator Water Sub-indicator Consumption and Diversion from Environmental Flows Measurement Understanding water consumption on dairy farms provides insight into the impact of the Overview industry on natural resources. The amount of water used for irrigating pastures for grazing and fodder production has a relationship to the environment through possible reduction of the amount of water available for environmental flows and possible increase in the amount of effluents and nutrients that flow into waterways. During periods of high water availability for irrigating pastures for grazing and fodder production it is assumed that similar higher volumes of water are available for environmental flows, which are essential for the health of waterways. During periods of low water availability for irrigating pastures for grazing and fodder production it is assumed that lower volumes of water would be available for environmental flows. In this case low environmental flows may result in increased salinity and increased build up of effluents, nutrients and wastes in waterways, which may otherwise be flushed from waterways during periods of high environmental flows. Calculations are based on the available data 2005-06 to 2009-10. Calculation Agricultural land in Australia1,2
2002-03 Agricultural establishments (no.) Agricultural establishments irrigating (no.) Area of agricultural land (000 ha) Area irrigated (000 ha) Volume applied (000 ML) Application rate (ML/ha) 132 983 2003-04 130 526 2004-05 129 934 2005-06 154 681 2006-07 150 817 2007-08 140 704 2008-09 135 996 2009-10 134 553
43 774
40 400
35 244
44 826
41 787
39 637
39 940
40 816
439 531 2 378 10 403 4.4
440 110 2 402 40 441 4.3
445 149 2 405 10 084 4.2
434 924 2 546 10 737 4.2
425 449 1 922 7 636 4.0
417 287 1 850 6 284 3.4
409 028 1 760 6 500 3.7
398 580 1 840 6 596 3.6
Thresholds
High Medium Low Change in application rate Generally decreasing trend Generally unchanged Generally increasing trend
Threshold Rationale As Australia was drought stricken for much of the data collection period3 the threshold focuses on the reduction of water usage through changes in the application rate. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
2002-03 Application rate (ML/ha) 4.4 2003-04 4.3 2004-05 4.2 2005-06 4.2 2006-07 4.0 2007-08 3.4 2008-09 3.7 2009-10 3.6
107
Score HIGH
Rationale There are issues of validity with this measurement due to the broad scope of data, covering all agricultural establishments. The ABS provides limited data that specifically considers pasture for grazing (2005-06) and more specifically pasture for dairy cattle (2006-07). Further data collection is required in order to inform this measure on a comparative basis. Additionally, region-specific data is needed to cross-reference against average rainfall data in order to analyse the supply of water against the industrys consumption to ascertain overall sustainability of use. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 72% Medium 14% Low 14%
Sources: ABS (2011)4618.0 Water use on Australian farms 2009-10. Accessed June 2012 from:http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/6C064B505C1AAEB4CA25788C001802C1/$File/461 80_2009-10.pdf 2 ABS (2011)4618.0 Water use on Australian farms 2004-05. Accessed June 2012 from:http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/22F0E63FEA4A8B63CA2571B500752B52/$File/4618 0_2004-05.pdf 3 Australian Government (2008)Natural disasters in Australia. Accessed June 2012 from:http://australia.gov.au/about-australia/australian-story/natural-disaster
1
108

Measure Environment 1.1.2 Boundary FACTORY Resource Efficiency Key indicator Water Sub-indicator Recycling Measurement Prolonged drought throughout Australia reduced water availability to many dairy farmers Overview and manufacturers, leading to reduced raw milk production with flow-on effects in dairy processing efficiencies. These flow-on effects have led to dairy manufacturers increased pursuit of a range of water recycling and reuse opportunities.1 Calculations are based on th e available data, 2007-08. Calculation Dairy manufacturers use of recycled water1 Sources of recycled water 2007/08 (%) Condensate (cow water) 48.3 Reverse osmosis 40.0 Clean-in-place final rinse water 7.1 Clean-in-place wash water 2.2 Process hot water recovery 1.3 Other 1.0 Thresholds High Medium Low
n/a n/a n/a
Threshold Rationale The threshold levels were not set for one set of data. Instead, the experts were asked to assess the data collected and interpret the data in terms of level of sustainability with the assistance of the information contained in the Australian Dairy Manufacturing Industry Sustainability Report. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Rationale The Australian Dairy Manufacturing Industry Sustainability Report conducted a site survey with dairy manufacturers. While the data collection period was limited, the participants represented 91% of milk production in Australia contributing to the validity of the data. Critically, advances in water recovery and recycling and water treatment have led to an increase in overall energy consumption, an impact that needs to be considered in order to assess the overall sustainability of water recycling.1 The paucity of data meant that the judgement of the data to be in accordance with the thresholds was challenging and subject to a high degree of uncertainty. This uncertainty is also reflected in the fairly flat probability distribution for this measurement. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (expert judgement) High 20% Medium 45% Low 35%
1
Sources: Australian Dairy Manufacturing Industry Sustainability Report 92007/08). Accessed June 2012 from:http://dmsc.com.au/wp-content/uploads/2011/03/admsr0708.pdf
109

Measure Environment 1.2.1 Boundary FARM Key indicator Resource Efficiency Sub-indicator Energy and Emissions Measurement GHG Emissions With an increasing focus on the environmental impacts of global greenhouse gas emissions, the Overview dairy industry must ensure they consider their contribution to GHG emissions and how they impact air quality. The Australian Department of Agriculture, Fisheries and Forestry (DAFF) highlights the importance of understanding and addressing the environmental impact of livestock. Direct livestock emissions account for around 10 per cent of Australias greenhouse gas emissions. Methane and nitrous oxide are significant greenhouse gases as they have much greater global warming potential than carbon dioxide. Reducing methane and nitrous oxide emissions from livestock will help reduce Australias overall greenhouse gas emissions and mitigate future climate change.1 Calculations are based on the available data, 2005-06 to 2009-10. Calculation Reference case emissions from agricultural activities - predictions2
Levels (Mt CO2-e) 200809 200910(z) 201415(z) 201920(z) 202930(z) Average annual growth rate % 2008201420192008-09 09 to 15 to 20 to to 202920142019202930(z) 15(z) 20(z) 30(z) 0.70 1.05 1.04 0.95 -0.40 0.19 0.24 0.05
Total Agriculture Dairy Cattle Enteric Fermentation Dairy Cattle Manure Management
73.1 6.3
73.1 6.1
76.2 6.1
80.3 6.2
89.1 6.3
0.5
0.5
0.5
0.5
0.5
-0.40
0.19
0.24
0.05
(z) - ABARES projection with 2008-09 as the base year
Thresholds
High Medium Low Annual Emissions Decreasing trend (-0.20% or less) Generally unchanged (between -0.20% and 0.20%) Increasing trend (greater than 0.20%)
Threshold Rationale The thresholds have been set by expert opinion and are using the ABARES projected data for 2009 to 2030. If the expected growth rate is expected to remain largely unchanged (i.e. less than 0.2% change) then this is considered to be at a Medium level of sustainability. The challenge is to decrease the emissions from dairy cattle, and if a sustained decrease is projected (more than 0.2%) then this is taken to be at a High level of sustainability. A projected increase of more than 0.2% indicates a Low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 25% Medium 50% Low 25%
Sources: DAFF(2012)Livestock Emissions. Accessed June 2012 from:http://www.daff.gov.au/climatechange/australias-farmingfuture/livestock-emissions 2 ABARE (2011)Reference case projections of Australian agricultural activity and greenhouse gas emissions: 2007-08 to 2029-30. Accessed June 2012 from:http://www.climatechange.gov.au/publications/projections/~/media/publications/projections/abares-agriculturemodelling-pdf.pdf
1
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Measure Environment 1.2.2 Boundary FACTORY Key indicator Resource Efficiency Sub-indicator Energy and Emissions Measurement Consumption Australian manufacturing is moving to a clean energy future as $1 billion in funding will be Overview provided to the industry to improve energy efficiency and reduce pollution.1 While these national steps are important for Australias environmental sustainability goals each manufacturing industry has the responsibility to individually assess and address their energy consumption with the goal to reduce and minimise consumption. Calculations are based on the available data, 2008-09 to 2009-10. Calculation Australias total final energy consumption, by sector2 2008-09 Share 2009-10 PJ 2008-09 PJ % Mining 341 9.3 340 Manufacturing, 1007 27.6% 1036 construction Transport 1404 38.4 1416 Commercial 310 8.4 309 Residential 435 11.9 440 Other 157 4.3 162 TOTAL 3653 100.0 3703 Thresholds
High Medium Low % Share & %Growth of energy consumption Generally increasing Largely unchanged Generally decreasing
Growth 2009-10 % -0.4 2.9 0.9 -0.2 1.2 3.2 1.4
Share 2009-10 % 9.2 28.0 38.2 8.3 11.9 4.4 100.0
Threshold Rationale In assessing the sustainability of this metric, the levels need to be assessed in terms of actual energy usage as well as the share of the overall energy consumption. These two percentages determine whether the energy consumption for the dairy industry is generally increasing, decreasing or in the main unchanged. These trends were assessed using expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Rationale The broad scope of data representation in this measure presents significant issues of validity. Additional data, separation of the two distinct sectors of manufacturing and construction, and dividing manufacturing by industry will enable industries to better assess their energy consumption status and trends. The probability distribution reflects this lack of information with the probabilities spread fairly evenly across the three levels of sustainability. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 30% Medium 40% Low 30%
Sources: Australian Government (2012) Clean Energy Future. Accessed June 2012 from:http://www.cleanenergyfuture.gov.au/australian-manufacturing-moving-to-a-cleaner-future/ 2 ABARE (2011)Energy update 2011. Accessed June 2012 from:http://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdf
1
111

Measure Environment 2.1.1 Boundary FARM Key indicator Waste Sub-indicator Water Waste Measurement Fertiliser Use Overview The way dairy farmers use their land can have signicant environmental impacts. Applicaon of nitrogen (N) ferliser to increase the amount of pasture grown is an accepted management pracce on many dryland and irrigated dairy farms, despite growing environmental concerns about surface and groundwater polluon.1 Thus, this measurement considers the use of ferlisers by comparing the economic value of ferlisers used on Australian dairy farms. Calculations are based on the available data from 2003/04 to 2009/10. Calculation Selected cost estimates of fertiliser use on Australian dairy farms2
2003/04 Number of farms Fertiliser cost per farm Total fertiliser cost 10,178 $21,022 2004/05 10,112 $21,689 2005/06 9361 $22,320 2006/07 9081 $22,620 2007/08 8106 $35,570 2008/09 7500 $35,640 2009/10 7514 $30,300
$213,961,916
$219,319,168
$208,937,520
$205,412,220
$288,330,420
$267,300,000
$227,674,200

High Medium Low % Change in total fertiliser cost Increase (5% or greater) Minimal Change (-4% to 4%) Decrease (-5% or greater)
Threshold Rationale From an environmental perspective, assuming the cost of fertiliser is fixed, the less spent on fertiliser means the less fertiliser applied to dairy pastures, thus reducing the risk of environmental damage. The thresholds were set to capture the general trends of fertiliser costs over time, which should provide a reasonable proxy for the use of fertilisers on dairy farms. Based on the above thresholds, the data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for years having a Low level of sustainability.
2003/04 Total fertiliser cost % change $213,961,916 2004/05 $219,319,168 2.5 2005/06 $208,937,520 -4.7 2006/07 $205,412,220 -1.7 2007/08 $288,330,420 40.4 2008/09 $267,300,000 -7.3 2009/10 $227,674,200 -10.8
Score MEDIUM
Rationale The data used for this does not take into account fluctuations in price and would need to be checked against other data to provide greater insight into quantities and types of commodities used in the dairy farming process which impact on the environment. Information on quantities of fertiliser used on dairy farms, rather than cost, would have provided a better insight into temporal trends of fertiliser use. While the thresholds show a decrease in cost, the substantial increase in expenditure over the 2007/08 period must be taken into account, the data explicitly showing that fertiliser purchases have increased in recent years and subsequently so too has the risk of environmental impacts. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (adjusted with expert opinion) High 15% Medium 55% Low 35%
Source 1 State Governement of Victoria DPI (2012)Nitrogenous Fertiliser. Accessed June 2012 from:http://www.dpi.vic.gov.au/agriculture/dairy/pastures-management/fertilising-dairy-pastures/chapter-12 2 ABARE: Australian Dairy: 04.1; 05.1; 06.1; 07.2; 08.1; 09.1; 10.1. Australian Bureau of Agricultural and Resource Economics and Sciences: Australian Dairy: Financial performance of dairy producing farms 2008-09 to 2010-11.
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Measure Environment 2.1.2 Boundary FACTORY Waste Key indicator Water Waste Sub-indicator Cleaning and Treatment Measurement Dairy manufacturing has committed to sustainable improvement in environmental Overview management by investing in improving environmental performance of manufacturing processes.1 A key performance indicator is chemical use as dairy manufacturers use a wide range of chemicals for water and wastewater treatment, maintaining boilers and cooling towers and cleaning processing equipment.1 The reduction of chemical use is an important measure of sustainable resource use. Calculations are based on the available data 2004-05 and 2007-08. Calculation Number of manufacturing sites reporting chemical use1 Chemical 2004/05 (tonnes) Sodium hydroxide (NaOH) 20 Nitric acid (HNO3) 24 Sodium hypochlorite (NaOCI) 16 Phosphoric acid (H3PO4) 16 Sulphuric acid (H2SO4) 11 Thresholds
High Medium Low n/a n/a n/a
2007/08 (tonnes) 40 37 26 21 19
Threshold Rationale The threshold levels were not set explicitly, but rather the data, which showed a marked increase from the 2004/05 to 2007/08 reporting periods, were assessed by experts in the context of existing programs being put in place to reduce chemical usage and other factors that would have an influence on the need to increase chemical usage, for example the installation of waste water systems. Score Low Rationale The Australian Dairy Manufacturing Industry Sustainability Report conducted a site survey with dairy manufacturers. While the data collection periods were limited, the participants represented 91% of milk production in Australia contributing to the validity of the data. Despite this, the report recognises that few co nclusions can be drawn with certainty from these findings. Some manufacturers were unsure of how to correctly report chemical usage, while a number of sites were unable to report all of their chemical consumption. Thus, further data collection is required. Moreover the interpretation of this measurement needs take into account initiatives by some of the major stakeholders to reduce chemical usage, and the fact that changes to production volumes, product lines and cleaning regimes will also be reflected in the overall cleaning chemical usage reported above. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 5% Medium 30% Low 65%
1
Sources: Australian Dairy Manufacturing Industry Sustainability Report (2007/08) Accessed June 2012 from:http://dmsc.com.au/wp-content/uploads/2011/03/admsr0708.pdf
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Measure Environment 2.2.2 Boundary FACTORY Key indicator Waste Sub-indicator Solid Waste Measurement Packaging While the design and supply of packaging materials tends to be handled on a company-wide basis with Overview individual sites having little influence,1 many companies actively support the reduction of packaging. The Australian Dairy Manufacturing Industry Sustainability Report states that 88% of surveyed companies are signatories to the National Packaging Covenant a voluntary scheme to reduce packaging. 1 This measure considers the commitment of dairy manufacturers to the reduction of packaging. Calculation Dairy Australia Manufactures - Annual Reports to the Australian Packaging Covenant2 Manufacturer 2005-06 2006-07 2007-08 2008-09
Bega Cheese Ltd Bulla Dairy Foods Burra Foods Dairy Farmers DeCicco Foods Fonterra Brands Murray Goulburn Co-Operative National Foods Parmalat Tatura Milk Industries Warrnambool Cheese & Butter Factory Company YES YES NO NO NO YES NO YES YES NO YES YES YES NO NO NO NO YES YES YES NO YES YES YES NO NO NO YES YES YES YES NO YES YES YES NO NO NO YES YES YES YES NO YES
Number of manufacturing sites aware of packaging reduction initiatives1

Lightweighting Reduction in transport packaging Move to bulk units Reuse of packaging Increased recycled content Increased recyclability Use of fewer input materials into packaging Change in supply chain relationships 8 2 9 8 5 8 4 5

High Medium Low Substantial majority of companies submitting annual reports to National Packaging Covenant and very good awareness of packaging reduction initiatives across all activities. Majority of companies submitting annual reports to National Packaging Covenant and good awareness of packaging reduction initiatives across all activities. Fair number of companies submitting annual reports to National Packaging Covenant and vague awareness of packaging reduction initiatives across all activities
Threshold Rationale The threshold levels were chosen based on expert opinion regarding the perception of the degree of participation and commitment to the reduction of packaging based on the limited information available. This perception is motivated by the percentage of surveyed companies being signatories to the voluntary National Packaging Covenant and awareness of packaging reduction initiatives. Based on the above thresholds, the probability distribution has been calculated for this metric, taking into account the uncertainty in the quality and quantity data available. Rationale The Australian Dairy Manufacturing Industry Sustainability Report conducted a site survey which found that twenty-one sites, representing 55% of milk production had packaging reduction initiatives in use at their site. From the limited data available, the most successful initiatives appeared to be moving to bulk units for packaging and changes in supply chain relationships. While this data is informative, it is collected via survey and is thus not representative of the actions of all manufacturers. Probability Distribution High 25% Medium 55% Low 20%
Source: 1 Australian Dairy Manufacturing Industry Sustainability Report (2007/08) Accessed June 2012 from: http://dmsc.com.au/wpcontent/uploads/2011/03/admsr0708.pdf 2 Australian Packaging Covenant. Accessed June 2012 from:http://www.packagingcovenant.org.au/search.php
Score MEDIUM
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