An international climate initiative targeting dairy production would impose significant costs on American farmers, speed up consolidation in the industry, and raise food prices while making the United States more reliant on foreign agricultural producers, according to a new report from Heartland Impact and Consumers Defense. The report, titled "The War on Dairy: Foreign Influence Subverting America's Dairy Sector," examines Pathways to Dairy Net Zero (P2DNZ), an international coalition launched in 2021 that seeks to push the global dairy industry toward net-zero greenhouse gas emissions.
The initiative operates through what's known as "Scope 3" emissions accounting, which requires companies to track emissions throughout their entire value chain, including those generated by suppliers. When large processors, food companies, or retailers adopt net-zero targets, the emissions cuts needed to hit those targets get passed down to the farms supplying them. P2DNZ is part of a broader environmental, social, and governance (ESG) framework that can turn "voluntary" climate commitments into de facto requirements through lending standards, procurement policies, supply-chain contracts, and corporate emissions targets. Small- and medium-sized dairy farms are particularly vulnerable because they're less able to absorb costs tied to emissions monitoring, reporting, third-party verification, consultants, and capital investments—expenses that large operations can spread across much greater production volumes.
The report concludes that "P2DNZ is not a benign, isolated effort to 'modernize' dairy production in the United States." Instead, it's "the agricultural face of a much larger transformation, one that replaces real-world results with abstract accounting, and democratic oversight with decisions made by unelected bureaucrats behind closed doors, often in foreign lands, and ultimately with little overall consideration for American economic interests." The authors write that what's marketed as "science-based" and "voluntary" increasingly is neither. For dairy farmers, the report notes, a climate commitment made in a corporate boardroom can eventually become a condition for selling milk or obtaining financing, and farmers who refuse to participate could lose access to purchasers or other critical parts of the agricultural marketplace.
The mechanism works because what starts as voluntary guidance can eventually function as an obligation. As margins shrink under the weight of new compliance costs, smaller producers are more likely to exit the industry, the report warns, leading to further consolidation and less-resilient agricultural supply chains. Policies like P2DNZ raise the cost of producing food domestically while delivering negligible environmental benefits, the authors argue, threatening small farmers, increasing costs for American families, encouraging further consolidation of agriculture, and potentially making the nation's food supply more dependent on foreign competitors. The report emphasizes that American farmers already have powerful incentives to be responsible stewards because their livelihoods depend on it, and that environmental improvements should be driven by innovation, competition, sound science, and voluntary adoption—not through opaque ESG standards imposed by multinational corporations, financial institutions, or international organizations.
While the USDA is already beginning to push back against P2DNZ, the report offers state-level recommendations to counter the initiative. State attorneys general should investigate whether P2DNZ members' activities violate antitrust, consumer-protection, or fiduciary-duty laws, the authors suggest, and should probe asset managers and financial institutions to see if prioritizing ESG standards violates fiduciary obligations to investors while harming the agriculture sector. Most importantly, state lawmakers should pass Farmer Protection Acts that would prohibit financial institutions from discriminating against agricultural producers based on their greenhouse gas emissions, use of fossil-fuel-derived fertilizers, or use of fossil-fuel-powered machinery. Under such laws, a financial institution with an ESG commitment would have to prove that any denial or restriction of financial services was based on ordinary business considerations rather than a farmer's failure to meet ESG requirements. Policymakers should ensure farmers remain free to make production decisions based on what's best for their farms, the report concludes, rather than forcing them to comply with costly net-zero accounting schemes just to obtain credit or access markets.