Scenario Analysis Indicates Revenue Increase for German Dairy Farmers Through Supply Chain Energy Management

Abstract

Highlights The research field of supply chain energy management (SCEM) is introduced and applied to the German dairy sector. Changes in farm revenues are quantified, considering electricity sales and remuneration for energy data sharing. Results show that SCEM could become the most relevant driver for increasing energy-related revenues at dairy farms. Abstract. The dairy sector of the German food industry is vital not only for providing nutrition to people but also for promoting environmental responsibility. However, sustainability efforts in the sector must be balanced with profitability goals, and farmers face the challenge of operating profitably while also seeking new, sustainable sources of income. Energy management is one such lever that can help establish sustainable revenue streams for farms. Currently, energy management at dairy farms is mostly limited to the barn's boundaries, and there has been no comprehensive study yet around profit-oriented collaboration on energy management along German dairy supply chains. This lack of collaboration not only hinders revenue growth for dairy farms but also complicates the achievement of sustainability targets, which can negatively impact the sector's public perception. To address this issue, we have applied supply chain energy management (SCEM) as a research field that examines energy-related interdependencies along the dairy supply chain. Our scenario analysis assessing the future revenue change for German dairy farmers through the application of SCEM indicates that it has the potential to become the most relevant driver for increasing energy-related revenues at farms. For example, our studies on a sample farm with 56,950 kWh photovoltaic systems show that it can increase its energy-related revenues by 170% simply by adapting its energy (data) distribution mode in the context of SCEM. Based on these findings, we recommend conducting further studies within the research field of SCEM, which is the aim of the new initiative DairyChainEnergy. Keywords: DairyChainEnergy, Electricity sales, Energy data sharing, Food industry, Income, Profitability, SCEM, Sustainability.