Modern Dairy Forest Protection Policy

Forests are the source of life, an important component of maintaining the ecological balance of the earth, and a valuable resource for human survival and development.

Modern Dairy adheres to the sustainable development concept of “coexistence with nature”, attaches great importance to the ecological function and climate effect of forests, resists any commercial activities that cause damage to forests, and regards forest protection as an important measure for Modern Dairy to implement a green strategy. We look forward to working with upstream and downstream partners in the industry chain to achieve harmonious development of business and nature.

Our company manages its own farm operation sites, strives to eliminate the risk of forest destruction caused by its own operation, and actively monitors and manages dairy and soybean meal products that involve forest development risks in the industry chain. We promise to do our best to achieve “zero forest destruction” by 2030, eliminate the forest development risk of the supply chain, and contribute to forest protection.

1. Basis for Policy Formulation

Modern Dairy strictly abides by and follows the requirements of laws and regulations such as the “Forest Law of the People’s Republic of China” and the “Implementation Regulations of the Forest Law of the People’s Republic of China”, refers to authoritative documents such as the “Glasgow Leaders’ Declaration on Forests and Land Use”, and combines Modern Dairy’s related business to formulate the “Modern Dairy Forest Protection Policy” (hereinafter referred to as “this Policy”).

2. Scope

Applicable to the farms under Modern Dairy.
Applicable to all soybean meal, beef products and other feed raw and auxiliary materials that may cause forest destruction, as well as dairy cows and other breeding animals purchased or produced by Modern Dairy.
Applicable to Modern Dairy’s raw material (including raw milk, feed) procurement department, raw material suppliers, feed processing plants and plantations.

3. Risk Identification and Response

Modern Dairy continuously carries out forest destruction risk analysis including itself and the industry chain and carries out response measures for the identified forest destruction risks.

4. Operation Site Management

Modern Dairy abides by the laws, regulations, rules and standards such as the “Forest Law of the People’s Republic of China” and the “Implementation Regulations of the Forest Law of the People’s Republic of China”, as well as the relevant laws and regulations of the countries and regions where the business is carried out, and strives to ensure that there is no forest destruction risk in the development, operation and exit of all farms and other construction sites of Modern Dairy.

5. Our Commitment

5.1 Biodiversity protection

We are committed to achieving zero deforestation, minimizing disturbance from operations, avoiding negative impacts on threatened and protected species and their habits, resolving complaints and conflicts through open, transparent, and consultative procedures, recognizing legal and customary land rights, implementing nature-based solutions, supporting landscape restoration and long-term protection of natural ecosystems. We are also responding to and supporting the United Nations Sustainable Development Goals.

5.2 Land management

We abide by the laws and regulations in any land development project and ensure that the land use rights are legal and compliant. We only carry out land development after obtaining the land permit. In the case of land contracting and transfer, we must sign relevant agreements with the villagers of the relevant community, clarify the rights and obligations of both parties, respect and protect the rights of the residents, and avoid disputes. We carry out “public participation” activities in the early stage of project construction (during the environmental assessment procedure) in accordance with the provisions of the “Environmental Protection Law of the People’s Republic of China”, and issue “public participation questionnaires” to enable community villagers to fully understand the project situation.

We promise to strive to eliminate deforestation, protect the rights and livelihoods of local communities, and implement remediation, restoration, and compensation projects for past harms, including reclaiming habitat and disturbed land.

5.3 Supply Chain Management

We respond to and support the United Nations Sustainable Development Goals. Modern Dairy pays attention to the deforestation risk management of the upstream value chain, actively promotes the traceability of the raw materials purchased and supplied by the company, cooperates with the company’s key front-line suppliers, implements deforestation-free procurement pilots, improves agricultural planting capabilities, and promotes local sustainable agricultural development. We are committed to acting beyond our own supply chain to address environmental issues, resolving complaints and conflicts through open and transparent consultation processes, and committing to remediation, restoration and/or compensation for past damage.

6. Raw material procurement

Modern Dairy practices raw material environmental protection procurement, and on the basis of requiring raw material suppliers to abide by the “Modern Dairy Supplier Code of Conduct”, conducts special management of the procurement behavior of feed raw and auxiliary materials such as dairy cows and other breeding animals and soybean meal that have forest destruction risks, and strives to create a “zero forest destruction” supply chain, and try to achieve that the raw material production areas of Modern Dairy and its suppliers do not cause forest cutting and other harms due to the expansion of agricultural land or planting land.

6.1 Modern Dairy Raw Material Procurement Department

In terms of procurement management, priority is given to soybean suppliers with zero deforestation risk. When formulating the “Supplier Comprehensive Evaluation Form”, the company considers the site selection, land use, natural resource use (forest) and waste management, supplier ecological protection measures, and ecological restoration into the evaluation process, ensuring that the company’s operation on the ecosystem is minimized by diversified measures.
Clarify the industry chain “zero forest destruction” requirements and standards, require suppliers to abide by the applicable forest protection laws and regulations of the countries and regions where they operate, and require that the purchase of products produced by destroying High Carbon Stock Forests, High Conservation Value Forests, and ecosystems such as peatlands, wetlands and tropical rainforests be prohibited.
Sort out the raw material supply map, gradually trace and clarify the raw material suppliers of each link and assess whether they have forest destruction risks.
Formulate relevant control procedures, manage, and supervise raw material suppliers with forest destruction risks.
Conduct relevant training to suppliers to help them gradually comply with this Policy and related management regulations.
Encourage suppliers to obtain internationally credible third-party certification, such as FSC/PEFC/CFCC sustainable forest certification, RTRS responsible soybean certification, etc.
Explore and advocate the substitution of raw materials with forest destruction risks.

6.2 Modern Dairy Raw Material Supplier

Comply with this Policy and corresponding control procedures.
Gradually trace the raw material origin to the feed processing plant and planting area.
Gradually carry out raw material forest destruction risk identification, confirm that the forest area and ecosystem that produce raw materials are properly managed and protected, and do not cause deforestation due to the expansion of agricultural land or planting land.
Explore and carry out the substitution of raw materials with forest destruction risks.
Carry out tree planting and afforestation actions as appropriate.

7. Goal Setting and Review

Modern Dairy sets the forest protection target of striving to achieve “zero forest destruction” by 2030 based on the analysis of the current business situation and future business measurement, and regularly reviews the target progress.

8. Stakeholder Communication

Enhance the transparency of Modern Dairy’s forest protection information, and regularly disclose the implementation progress of Modern Dairy’s forest protection commitment.
Participate in external stakeholder communication, gradually increase the understanding of forest protection issues, and review and update the Policy.

9. Policy Supervision and Reporting

The contents of this Policy are supervised by the Modern Dairy Sustainable Development Committee, and the main impacts and target achievement progress are reported to the Sustainable Development Committee.
This Policy will be updated and reviewed in a timely manner.

COFCO Group and Modern Dairy partnered to achieve the first shipment of “zero deforestation and zero vegetation destruction” soybeans from Brazil. The 50,000-ton shipment arrived at the dedicated Tianjin Jiayue Grain and Oil terminal at the end of May 2024, was processed by COFCO Oils’ COFCO Jiayue (Tianjin) Co., Ltd., and then delivered to Modern Dairy.

Modern Dairy collaborated with Cargill to achieve China’s first delivery of “zero deforestation” soybeans, earning China’s first Triple-S no-deforestation certification. Modern Dairy purchased 1,000 tons of certified zero-deforestation soybean meal. Cargill China successfully delivered the zero-deforestation soybean meal to Modern Dairy farms in Chabei and Zhangjiakou in April 2024.

Canola meal contains a high proportion of oleic acid, a monounsaturated fatty acid that has an inhibitory effect on enteric methane production. Fats primarily reduce enteric methane through three mechanisms:

Direct effect: Fats can directly act on methanogens and protozoa, serving as a hydrogen ion reservoir and providing high concentrations of energy, thereby reducing methane generation;
Cell membrane adhesion: Unsaturated fatty acids can adhere to the cell membranes of protozoa, inhibiting the transfer of hydrogen ions from protozoa to methanogens, thus reducing methane production;
Biohydrogenation: During the process of biohydrogenation, unsaturated fatty acids may consume some hydrogen ions, thereby reducing the number of hydrogen ions available to combine with carbon to form methane.

In 2023, the company replaced 157,000 tons of soybean meal with canola meal, while using 282,000 tons of soybean meal. This resulted in a 35.8% reduction in soybean meal usage, achieving zero deforestation through soybean meal reduction and substitution.