Management Approach: Products
More and more people are concerned about the social and ecological effects of their behaviour. The idea of sustainability is gaining in social significance. For many people it is important that products are manufactured under good working conditions and that the natural foundations of life are preserved. Animal welfare, transparency and responsibility for the entire value chain as well as good, healthy and sustainable products – these are the expectations we have at Hochland and which we identified in a stakeholder survey in 2019. Hochland aims to take on responsibility in these areas.
Topics and Challenges
For the products sector Hochland has prioritised the topics of milk and animal welfare, portfolio management for sustainable products and business relationships. For reasons of transparency, Hochland also reports on product safety and product information.
Hochland aims to be a pioneer and leader in sustainable milk and is looking to consolidate its claim to the attribute Leader in Milk. To achieve this, the company develops sustainable products and business models.
For me, our products are not just staple foods, but products to enjoy and appreciate.
Josef Stitzl, Managing Director
Together with its milk producers, Hochland continues to push towards extending agricultural milk production and the consideration of animal welfare. Special types of milk are promoted and suitable concepts and products are developed with regard to ecological compatibility. The company ensures transparency along the entire supply chain through its Milk for Hochland1 programme. Hochland’s purchasing conditions oblige suppliers to comply with social, ecological and quality standards. For all milk suppliers, participation in the Milk for Hochland quality programme and the survey on animal welfare and sustainability2 are fixed components of their contracts. All the raw milk collected is produced without genetic engineering (VLOG) and farmers who supply Hochland Deutschland directly are certified according to the quality standard QM milk3 without exception.
1 Since 2016, all milk producers supplying Hochland Deutschland have committed to participating in the Milk for Hochland programme. In return they receive a supplement to the milk price. As part of the programme, farmers must comply with the requirements of the QM Milk standard, provide evidence of dairy farming without genetic engineering according to the VLOG standard and take part in a survey on animal welfare and sustainability.
The use of medicines in animal breeding and the subject of dehorning are also addressed in the programme.
2 The survey on animal welfare and sustainability was based on a questionnaire developed by the Thuenen Institute and was conducted in summer 2019. The data is evaluated by the Thuenen Institute, an independent research institute of the Federal Ministry of Food and Agriculture. Hochland will use the results of the survey as a basis for its further strategic approach.
3 QM Milch e. V. is a quality management initiative of the German Farmers’ Association, the German Raiffeisen Association and the Dairy Industry Association. Independent checks are carried out on the purity and bacteriological quality of the milk, animal health and welfare and the feed used. Hochland bears the costs of the control measures.
The strategic goal of Hochland is to continuously improve the sustainability of milk and to show this attitude clearly, even if this sometimes provokes resistance from individual interest groups initially. The topic is being advanced by the head of the Sustainability Group Milk and Animal Welfare. He reports directly to management. On several sustainability committees, Hochland maintains an intensive and constant exchange of knowledge on sustainable milk and improving animal welfare. At workshops with farmers, those aspects of Vision 2025 that deal with sustainable milk production were discussed.
Innovation performance and productivity are key strategic parameters for the product area within the corporate strategy. All management systems that ensure continuous improvement are established as certified standards – according to IFS, ISO 50001and other standards.
Hochland evaluates all objectives and measures at least once a year by means of a comprehensive written management review. The steps taken in the context of New Performance Management are evaluated with regard to their effectiveness.
The evaluation of a survey of milk suppliers as part of the Quality Programme Milk for Hochland was available in 2019. The survey gives Hochland insights into the structure of the milk suppliers.
External certification and customer audits took place in each year of the reporting period. Planning and execution of internalaudits for the Heimenkirch and Schongau plants are carried out by operative quality management.
Hochland was awarded the prize for the manufacturer with the greatest sustainable commitment in the dairy industry (Focus 12/2019).
Hochland’s Ambition for the Products Sector
As a Leader in Milk, we develop sustainable products and business models for our customers.
We are continuously pushing to extend agricultural milk production and always take animal welfare into account.
TARGETS FOR THE PRODUCTS SECTOR
|The milk processed by Hochland at the Schongau plant comes exclusively from the region.1|
|Analyse all brand with regard to sustainability aspects and define sustainability compasses as well as derive fields of action and goals.2|
|Reduction of additives in processed cheese products.3|
1 In order to ensure better measurability, Hochland has changed the formulation of this objective as of 2020.
2 Hochland has implemented brand compasses for two brands - followed by a target adjustment from the end of 2017.
3 The target was deleted following strategic reassessment.
|Target not achieved||Target partially achieved||Target largely achieved||Target fully achieved|
|The milk processed at Hochland farms comes from the region of the respective production site – this is guaranteed by strict regional requirements.|
|The creation of the brand compasses for the brands Grünländer and Almette serves as a basis for implementing two specific sustainability programmes – measures for the brands Grünländer and Almette will be implemented within this framework by 2022.|
|Farmers in the Schongau milk catchment area will completely withdraw from year-round tethering by the end of 2021.|
|Hochland is continuously developing new sustainable products in line with the requirements of its partners and consumer wishes (for example, concepts for premium milk or special milk).|
Extensive Agricultural Milk Production
Hochland sees an extensification of dairy farming both as a contribution to animal welfare and to the protection of resources and the environment. The company is therefore committed to strengthening an area-based dairy industry. This type of farming is characterised by a high proportion of self-grown and green fodder and by the fact that it does not use imported fodder. No high-performance cows are used, because a moderate milk yield enables the cows to live longer. Extensive agriculture protects soils from excessive nutrient input from liquid manure and thus contributes to groundwater protection. Hochland deliberately distinguishes itself from the intensive dairy farming that has been strongly propagated until now.
One accusation brought against Hochland by critics is that the extensification of agriculture would mean a step backwards. However, according to Hochland, it is precisely this technical progress that enables farmers to work with significantly lower levels of pesticide use by using digitalisation and precision farming. Fertiliser can also be applied more precisely and economically.
Our claim is to operate responsibly along the entire value chain. With the Milk for Hochland programme our aim is to create transparency in our supply chain.
Hochland processes different raw materials depending on the location. This means that the supply chains also differ. Milk is the most important raw material at the Schongau plant. The Heimenkirch plant processes and refines cheese. During the period under review, a total of between 92,000 and 98,000 tons of raw food products – excluding milk – were delivered annually to both locations. Hochland has been cooperating with some producers of these raw materials since the 1970s and 1980s. A pool of more than 70 suppliers also supplies the German sites with over 2,000 different materials for packaging. Hochland has been working with 83 percent of these suppliers for more than five years.
Meeting and Demanding Standards
Hochland makes rigorous demands not only of itself but also of its suppliers and contractors. This applies to quality management, procedures and processes, occupational safety and compliance with social standards. Purchasing conditions oblige suppliers and contractors to comply with the requirements of the Business Social Compliance Initiative (BSCI), which include the protection of labour rights and the prohibition of forced and child labour. Hochland’s purchasing conditions include social standards of the International Labour Organisation (ILO), environmental management guidelines including the possibility of conducting audits (according to EMAS or ISO 14001), guidelines on energy management and energy audits with the aim of improving energy efficiency (according to ISO 50001 or DIN EN 16247-1). In addition, Hochland regularly carries out its own supplier audits, which are based on the food safety standard ISO 22000. In principle, Hochland’s suppliers should also be certified according to the Global Food Safety Initiative (GFSI). In the absence of such a certificate, Hochland accepts suppliers in individual cases only after carrying out its own risk assessment or auditing.
Where the Milk Comes from
For generations, farmers have supplied milk to local dairies. This tradition of cooperation with regional milk producers is continued at the Schongau location. Since 1988 Hochland has been cooperating with Erstes Bayerisches Butterwerk Schongau eG, and since January 2013 also with the Milk Producers’ Association Pfaffenwinkel eG. Other producer groups for special milk qualities are Allgäuland eG (since January 2019 supplier of regional Alpine milk, milk without genetic engineering), MEG Milchland Baden-Württemberg (for milk without genetic engineering, milk with animal protection label) and MEG Ortenau (for milk without genetic engineering, milk with animal protection label, organic milk). Local procurement ensures short transport routes and contributes to greater delivery reliability.
Hochland has defined requirements for milk quality according to the following standards:
oGT (without genetic engineering), TSL (animal welfare label), Bio. For the majority of the milk and raw materials supplied to Hochland, the standard without genetic engineering, primarily in accordance with the VLOG seal, applies at the time of publication of this report.
At Hochland, we have chosen the label
of the German Animal Welfare Association because it is already established on the market and relatively well known.
Werner Giselbrecht, Commercial Manager
and Head of Milchboard
In addition, Hochland has agreed on further sustainable quality requirements with its milk suppliers: as of January 2019, total herbicides will no longer be used and no residues from food-processing biogas plants (fermentation substrate) will be applied. The ban on fermentation substrates is intended to prevent plastic from entering the environment. Both agreements are part of the Quality Programme Milk for Hochland.
Milk with Animal Welfare Label
Hochland sees itself as a pioneer in cheese made from milk with the animal welfare label. To this end, the company has concluded contracts with farmers from Baden-Württemberg who produce milk in accordance with the requirements of the German Animal Welfare Association. Essential criteria for the award of the animal welfare label are the requirement of open-pen use and a minimum space of six square metres per animal. In 2019, Hochland processed around 20 million litres of milk certified according to the animal welfare label entry level and almost three million litres of milk with an animal welfare label in organic quality.
The Challenge of Freedom from Genetic Engineering
In 2019, the proportion of milk produced without genetic engineering in Germany increased to around 60 percent of the total milk volume. This milk quality is thus on the way to becoming a quasi-standard. On the other hand, the proof of production without genetic engineering is becoming a growing challenge for the industry. This is because genetic engineering techniques (CRISPRS/Cas9, »genetic scissors«) now exist to modify the genetic material in feed crops without it being possible to determine afterwards whether the modification has occurred naturally or through genetic engineering. Since fodder is grown and traded globally, the influence Hochland has here is very small. That is why Hochland is striving to ensure that its milk producers only use feed from Europe in future.
In the case of Hochland, inspections by the KBLV (Food Safety and Veterinary Inspection Authority) are frequent, as are announced and unannounced customer audits. Hochland’s products are also certified according to various standards and labels. Depending on the product, these may be: IFS (International Featured Standards), SQMS (Supplier Quality Management System), Kosher, Halal, Organic seal according to EC Eco Regulation, Bioland seal, Regional Fenster e. V., Geprüfte Qualität Bayern, RSPO (Roundtable on Sustainable Palm Oil), Animal Welfare Label Premium Level, Without Genetic Engineering (VLOG e. V.).
Fair Milk Prices
The international milk market is primarily determined by economic interests. Global trade in milk and in feedstuffs for milk production has effects that are often detached from regional contexts. The work of the milk producers, in turn, has social and ecological significance for the region concerned, which is not included in the farmers’ income. State subsidies provide a certain amount of compensation at this point. The prices paid to milk producers depend on the nature and quality of the milk, the further processing, the respective buyer and consumer demand. Hochland is aware of its responsibility towards its producer partners. In the period under review, Hochland, as an above-average milk payer, was in the top group of milk payers in Germany. Purchase guarantees enable farmers to plan for the long term. Hochland also grants its milk producers a share of the profits.
From the beginning of 2017, a premium of one cent per kilogram of milk was paid under quality programme Milk for Hochland. Since the beginning of 2019, Hochland has also been buying animal welfare label milk and paying a surcharge of three cents per kilogram of milk to farmers for observing the increased requirements. Hochland was a pioneer in implementing a fairer conversion factor (volume/weight) for milk. The company has implemented this conversion factor for its farmers since February 2018.
To further promote both milk quality and animal welfare, Hochland is planning to introduce a further quality level for milk in the near future. The following criteria in particular should apply to Hochland Premium Milk: extensive use of domestic feed, abandonment of high-performance cows, promotion of dual-purpose breeds and other measures to promote biodiversity. In order to implement plans such as these, Hochland will continue to build on a trusting exchange and partnership with farmers in the future.
We can only meet the demands and expectations of our customers with high-quality raw materials. We therefore set our own standards for quality and product safety, which in some areas go beyond the legal requirements.
The Hochlandwerk Schongau is an important production facility for white and cream cheese. Here, milk as the basis of the products has a special significance. Good cooperation with farmers is therefore indispensable for Hochland. Since January 2017, all raw milk collected for the Schongau site has been produced without genetic engineering in accordance with the VLOG seal. All farmers who supply Hochland with milk have been certified according to QM-Milch1 since the end of 2016. In Schongau, Hochland processed between 238,000 and 264,000 tons of milk annually during the period under review.
Hochlandwerk Heimenkirch is not a milk-processing company in the classical sense. In this production facility, cheeses are mainly processed and refined.
Hochland also sets high standards for all other raw materials and additives. The company relies on new technologies and close cooperation with suppliers in order to implement its Group-wide guidelines for handling and minimising additives. Hochland doses additives and flavours as sparingly as possible – only natural flavours are used in the Grünländer and Almette brands. During the period under review, the use of dyes at the Heimenkirch plant was continuously reduced – by about 14 percent, based on the total weight of products manufactured. As part of an extensive project with a retail customer, many recipes and raw materials were converted so that dyes and aromas could either be dispensed with or their use further reduced.
Without Genetic Engineering
In accordance with EU regulations, Hochland does not use any genetically modified ingredients for its products. For the Grünländer brand, Hochland also proves that the entire value chain meets the strict requirements of the EC Genetic Engineering Implementation Act. With controls and complex genetic engineering analyses, the company wants to ensure that, in addition to the ingredients used, animal feed is also free of genetic engineering. At the beginning of 2017, the Schongau plant was completely converted to production without genetic engineering in accordance with the VLOG seal. This applies to both the processed milk and all other ingredients. In 2019, the Heimenkirch plant received 54,000 tons of non-GM raw materials in accordance with the VLOG seal.
Dealing with the Topic of Palm Oil
Hochland is aware of the problems associated with the cultivation of the palm oil plant, such as rainforest clearing. On the other hand, the plant is very high-yielding and can therefore hardly be replaced by more environmentally friendly oil plants from an economic point of view. Only small quantities of palm oil are used at Hochland. In addition, the company has decided to use only sustainably produced palm oil that meets the criteria of the Roundtable on Sustainable Palm Oil (RSPO) organisation. Only RSPO-certified palm oil was used in the reporting period.
Milk from the Alpine Region
The milk for Almette comes from small family farms with an average of 37 cows. By 2021, Hochland and its milk suppliers aim to complete the phase-out of year-round tethering.
100 Percent Natural Ingredients
For Almette Hochland uses only natural ingredients, most of which come from the Alpine region. Only if an ingredient cannot be obtained from the Alpine region even with great effort does Hochland look for alternatives. Hochland transparently displays the origin of the ingredients on its website.
Without Genetic Engineering since 2017
Since 2017 Almette has been produced from milk without genetic engineering. All other ingredients likewise do without genetic engineering.
Hochland reduced the weight of the Almette barrel by one gram at the beginning of 2019. In Germany, Hochland sells around 50 million barrels every year. Since then, Hochland has been able to save 50 tons of plastic per year thanks to the lighter packaging.
Hochland has set itself the further goal of making packaging completely recyclable by 2025.
With Milk from Open Pens
Since July 2019 Grünländer has been produced exclusively with milk from cows in open pens. The cows can move freely at any time and thus maintain social contact with other cows.
Without Genetic Engineering since 2011
Since 2011 Grünländer has been produced from milk without genetic engineering. This makes the brand a Hochland pioneer for the non-genetically modified product standard.
Since the second quarter of 2019, Grünländer ground foil has been made of 54 percent recycled plastic (rPET). Thanks to the changed packaging, Grünländer was able to save more than 200 tons of virgin plastic in 2019; in future it will be possible to save more than 250 tons of virgin PET per year.
Without dairy cows there would be no cheese – for this reason alone, animal welfare is of central importance to us at Hochland. However, the topic poses a challenge for the entire dairy industry, and therefore for us as well, and this should not be underestimated.
It is important for Hochland to constantly improve conditions for animal husbandry. At the same time, the company wants to meet the wishes of consumers and retailers with regard to the quality and price of its products. To this end, Hochland continues to implement measures under the Milk for Hochland programme.
Tethering to be Banned in the Future
Bavaria’s agriculture still has a relatively high proportion of cows which are kept tethered all year round. Hochland, together with another Southern German dairy, was a pioneer in the development of a declaration on combined livestock farming. This was the basis for a joint declaration by all Bavarian dairies on the definition of combined livestock farming. As a result, the trade now also differentiates between year-round tethered and combined husbandry. By the end of 2021, the aim is to phase out year-round tethering in the milk catchment area of the Schongau plant. From 2022 onwards, combined husbandry – with at least six hours of grazing on at least 120 days a year – or open pens will be compulsory for all Hochland dairy farmers. The company promotes the changeover to combined husbandry by providing training and advice for farmers. Hochland sees itself in a pioneering role within the industry in discussing and taking on possible challenges together with its milk producers.
Obligations for Suppliers
Hochland has always taken a clear position: cruelty to animals is unacceptable. This animal welfare aspiration is also reflected in new contractual arrangements with suppliers.
I think the issue of animal welfare will be in the media even more and transparency on ethical issues will become even more important.
Nis Nürnberger, Managing Director
Violations against the animal welfare act that became known in July 2019 have prompted Hochland to revise supply contracts with farmers. The agreements now contain a clause that allows Hochland, as a milk buyer, to take far-reaching measures in the event of proven serious animal welfare violations or justified suspicion.
Our business success is based on the trust shown to us by consumers, the catering trade and the retail trade. We can only justify this trust by means of flawless, high-quality products. That is why we place the highest value on quality and product safety in the entire manufacturing and delivery process.
It goes without saying that Hochland does everything it can to ensure the consistently high quality level of its products. Food safety and product quality are the results of comprehensively planned and controlled processes that begin with the selection and purchase of raw materials and ingredients. Hochland is in close contact with suppliers and dairy farmers to ensure that the raw materials for future products already meet the company’s high standards and the demands of its customers. Hygiene – and therefore consumer safety – is of particular importance in the production process, in which all relevant standards are observed.
Strategic Quality Management
In 2016, all subsidiaries of the Hochland Group developed a joint quality management strategy. In addition to fulfilling legal requirements and industry-relevant standards, Hochland’s strategy is based in particular on a corporate culture in which all employees develop a high level of understanding of food safety and quality and are even more strongly committed to this than before. Hochland has created a Food Safety Team for the Heimenkirch and Schongau plants that is dedicated to protection against manipulation and product safety.
Since then Hochland has continued to advance its quality management strategy. In order to develop the quality culture, questionnaires will be designed to measure what has been achieved. The Hochland Group has defined a framework for internationally practicable supplier management. For Hochland Deutschland this framework also defines a uniform procedure for assessing and selecting suppliers as well as mechanisms to prevent food fraud. In addition, a food safety standard valid throughout the country is being developed which will establish uniform allergen management and a standardised procedure for assessing cross-contamination. Further standards on foreign object management and microbiological environmental controls are planned.
Hochland makes use of several concepts to ensure the safety of the food it produces. With the help of Hazard Analysis and Critical Control Points (HACCP) Hochland is able to identify and avoid potential risks. In addition, the company uses a traceability system based on SAP, which enables it to trace the origin of raw materials seamlessly. With this system, Hochland also maintains an overview of the raw materials and their sources during the processing of semi-finished products and after the delivery of finished products.
Quality management is continuously reviewed at Hochland. The company is also guided by international standards. The Heimenkirch and Schongau plants are certified according to the International Featured Standard Food (IFS Food), since 2006 at a higher level. Hochland has these certificates regularly revalidated; the organisations carry out annual audits for this purpose. Controls for the confirmation of Kosher and Halal products were carried out by the Kosher London Beth Din (KLBD) and the Islamic Information and Documentation Centre Austria (IIDC). Further tests were carried out by the responsible district offices. During the 2017 to 2019 reporting period, the Heimenkirch and Schongau plants were audited a total of 102 times by external auditors.
We actually have very few complaints about our products. – Of course we put a lot of effort into hygiene. We train and also sensitize our employees. We are very active in this area.
Stefan Mayer, Plant Manager Schongau
Hochland also carries out internal controls. During regular plant inspections, the traceability systems, hygiene in production and the structural condition of the production facilities are checked in particular. In the period under review, a total of 464 internal audits and inspections were carried out at the Heimenkirch and Schongau plants.
Hochland’s systematic audit system ensures that hidden defects are identified and remedied. Hochland has also invested in technical systems to detect potential problems earlier. Several camera systems have been installed in Heimenkirch for the hard cheese and processed cheese sectors: these can recognise and check foils as well as the printing and codes on packaging.
Consumers want to know what they are consuming. We think this information is important and are willing to provide more information than required by law through numerous channels.
Hochland maintains an intensive exchange with consumers. This also includes comprehensive product information with details of product safety, ingredients, raw materials and ingredients and their origin. The latter concerns about 290 raw materials and ingredients1 – from more than 100 suppliers2.
1,2 Status September 2019
Contact with Consumers
In order to engage in close dialogue with consumers, Hochland installed a new professional consumer management system in the period under review. The entire communication with end consumers can be seen there for all responsible departments and can be processed in a bundled manner. This includes all general and product-related inquiries, complaints and competition entries. System-supported communication processes have made Hochland’s procedures simpler and clearer, and the number of multiple processing and errors has been reduced. Trained employees answer inquiries and complaints within an average of 48 hours. The quality management team deals with all complaints on a weekly basis and initiates corrective measures.
Hochland strives to view its products holistically from the point of view of sustainability and to share this knowledge with consumers. With this goal in mind, the company has created sustainability compasses for Almette and Grünländer brand products in 2015 and 2016. The compasses record all relevant information about the entire value chain of a product. Hochland can thus both more easily identify potential for improvement in the supply chain and work out sustainability aspects in brand communication more transparently.