Dear Members, 

Because we Milkon employees are so concerned about the environment, we make every effort to preserve natural resources, constantly reduce energy consumption, and generally to minimize environmental pollution. Our certification according to ISO 14001 helps us to identify and eliminate weak spots. 

Every year, an annual Environmental Program describing our environmental projects is prepared by the Milkon Environmental Officer and approved by the CEO. Together with the plant managers, the Process Officers, and the Quality Department, they devote a great deal of attention to these projects. The most important environmental protection projects completed in 2009 were as follows: 

Optimizing the Separation of Waste Fractions 

In 2009, it was possible to further significantly reduce the proportion of commercial waste resembling household waste. The average quantity of residual waste at the Bozen/Bolzano plant was reduced by approx. 12,000 kg per month (= a 50% reduction). In 2009, the quantity of residual waste requiring disposal dropped by 141,000 kg (as compared with 2008). This corresponds to an average annual quantity of waste generated by 580 residents of South Tyrol. The following measures contributed to this result:

• Continued measures to raise consciousness and train coworkers about improved waste separation
• Since September, composite cartons (e.g., Elopak and Tetrapak) are disposed of separately. Further, plastics (e.g., Nylon PS, PP, and PET) are disposed of separately. 

The proportion of waste which was recycled was boosted, from 75% in 2008 to 82% in 2009. In this context, we always gave a higher priority to material recycling than to thermal disposal. 

Optimizing Shipping
• The loading capacity of the trucks used in outbound logistics was further optimized. Since the start of 2009, dairy products for the wholesale customers Despar, Finiper, Carrefour, GS, Coop, Land, and Mila 500g have been transported on pallets with a shipping height of 1.2 meters (i.e., in two layers). As a result, each truck can now transport one-third more goods. This yields an annual reduction of 290,000 km and thus a savings of approx. 200 tons of CO2 per year.
• The emissions from Milkon’s motor pool were further reduced vis-à-vis 2008. Thus, emissions of nitrogen oxides were reduced by 352 kg (=9%), and emissions of fine particulates were decreased by 13 kg (=20%).
• In the area of regional mobile sales, three sales trips were saved since mid-year. This results in a reduction of 30,000 km and thus an annual savings of approx. 21 tons of CO2.
• Milkon’s motor pool underwent significant modernization in the last four years. In 2006, Euro 5 vehicles still accounted for 1% of total kilometers driven. By 2009, this had already increased to 25.6%. Over the same period of time, the number of kilometers driven by Euro 2 vehicles was drastically reduced – from 18% of total kilometers driven in 2006 to only 8.4% in 2009.
• In co-operation with our suppliers of packaging materials, deliveries of empty yoghurt cups were optimized. This was achieved by increasing the number of cups per carton. In the case of 125-gram cups, for example, the number of cups was increased from 2,050 to 2,100 per carton. This resulted in a reduction of approx. 13,454 km and thus annual savings of about 9.3 tons of CO2.

Optimizing the Consumption of Cleaning Agents and Disinfectants
• Between 2007 and 2009, the consumption of cleaning agents and disinfectants at the plants in Bozen/Bolzano and Bruneck/Brunico was reduced by 29,000 kg per year (=5%). Thus, in 2009, detergents and cleaning agents equivalent to the consumption of about 1,036 inhabitants were saved.
• At, e.g., the Bruneck/Brunico plant, the consumption of leach was reduced by 1,330 kg compared with 2008.
• For every 1,000 liters of processed milk, the plant in Bruneck/Brunico was able to reduce expenditures for cleaning agents and disinfectants from EUR 2.01 to EUR 1.72 (=14%). Thus, expenditures for, e.g., floor cleaning declined 10%.
• At the plant in Bozen/Bolzano, expenditures for cleaning agents and disinfectants per 1,000 liters of processed milk were reduced from EUR 2.75 to EUR 2.60 (=5%). This was achieved by means of comprehensive testing of the CIP purification masks. Measures included, inter alia:
- In the case of the pasteurization milk tanks, the mixing phases between cleaning and rinsing were shortened.
- It was ordered that heavily diluted cleaning solutions shall no longer be re-introduced into the CIP cycle.
- In the case of fresh milk filling machine, the number of leach cleaning treatments was reduced to once or twice a week.
- The cleaning of the yogurt evaporation plant was optimized so as to avoid idling during cleaning.
- The cleaning of the AF 205 Hamba yogurt filling machine was optimized so as to avoid loss of leach.
• Nine collection tubs for the storage of cleaning agents at the plant in Bruneck/Brunico were acquired. The use of collection tubs can prevent the loss of cleaning agents. This can also prevent the contamination of surface waters, the soil, and the groundwater by liquid wastes.

Energy Conservation
Starting in 2010, the plant in Bruneck/Brunico will implement numerous energy optimization projects and thus reduce the annual gas consumption by approx. 16% (= EUR 122,400 Euro per year) while also reducing the consumption of electrical energy by approx. 4.7%. Specifically, the following individual savings were achieved:
• One of the two existent steam boilers (5.6 tons/hour) was replaced with a newer model (10.0 tons/hour). The new model features an economizer: The waste gases from the boiler are used to pre-warm the feed water. Additionally, the new boiler features improved thermal insulation, and thus emits less waste heat. Consequently, it is approx. 8% more efficient. This results in a reduction of its annual gas consumption of about 8% (=EUR 60,000 per annum.)
• In late December, the condensed fumes from the evaporation plant used to make yogurt were led to a heat exchanger used to provide hot water for office space heating. To do this, a plate-type heat exchanger was installed and some new pipes lain. This resulted in a reduction of the annual gas consumption of approx. 2% (= EUR 17,000 per annum.)
• By insulating numerous pipes, it has been possible to reduce heat losses. Insulation was installed in the following areas: In the plant heating pipes, the yogurt milk heater, in various steam and hot water pipes in production, in heat exchangers in the factory hall, and in steam supply pipes for the yogurt filling stations. This resulted in savings of approx. 4% of the annual gas consumption (= EUR 30,000 per annum.)
• In order to avoid steam losses, in late December of 2009, numerous defective condense water separators and shut-off valves were replaced (all in all, 40 condense water separators). This resulted in savings of about 2% of the annual gas consumption (= EUR 15,400 per annum.)
• In late December, the operating pressure was reduced from 5.5 bar to 4.0 bar. This was made possible also by the replacement of the existent pumps for fresh water, ice water, and luke warm water with new pump systems featuring frequency control. This resulted in annual savings of approx. 129,000 kWh (= EUR 18,000 per annum.)
• By replacing porous compressed air hoses and defective valves, by installing smaller jets, and by separating air lines, it was possible to reduce air losses. This resulted in savings of approx. 3.2% of the annual consumption of electricity (= EUR 40,000 per annum.)
• The installation of photovoltaic modules on the roof of the dairy in Bruneck/Brunico. This installation has a total rated capacity of 269.70 kWp. In the course of a year, it can thus generate approx. 305 MWh of electrical energy. This corresponds to the annual consumption of 90 households. This plant reduced the dairy’s electrical costs by about 5.3%, representing a savings of 207 tons of CO2 per year.