Most factories, including those owned by top firms like Fonterra and National Foods, plan to significantly reduce water usage over the next two years. A range of research projects designed to reduce the dairy industry's environmental impact, and partly funded by state governments, are also underway. The moves follow the publication of a State of the Environment Report, pulling together figures on energy, water and chemical usage from companies representing three quarters of all milk processed in Australia. It is something dairy industries in Europe may look to draw upon as firms everywhere see climate change rising up the public agenda. UK sector leaders are set to discuss the environment in June. In Australia, drought and marketing opportunities offered by tackling environmental issues are spurring the industry on. "This report is more than about the dairy industry and regulators, for us it's also about consumers. It's going to impact on their buying decisions in the future," said Dr Mike Ginnivan, managing director of Dairy Australia, the industry association which launched the report. He added environmental awareness would be the "lynchpin" in securing export markets. A 'green label' that could denote a food firm's environmental credentials on the front of packs was recently proposed in the UK, an important export market for Australia, by environment minister David Miliband. Water is one area Dairy Australia is pushing hard. The ratio of waste water to raw milk processed can reach 3:2 in some cases, but most firms have set a target of 1:1 within two or three years, Dairy Australia's Neil Van Buuren told DairyReporter.com. Van Buuren, in charge of resource management and technology, said the industry's water usage, currently 10bn litres, should also fall in 2007. Steps taken include installing cooling towers, clean-in-place systems and new membrane technology, which has improved recovery of water, chemicals and by-products. In Sydney, an 'every drop counts' scheme across the community has sought to monitor water use more closely, and helped National Foods cut use by 22 per cent in the area. One of the worst droughts on record in recent months has given Australia a bigger glimpse than most of the potential dangers climate change holds. "The drought and climate change has made the community more aware of sustainability in general," Van Buuren said. Milk production was down 10 per cent for the six months to December 2006, compared to the same period in 2005. "All the factories now have environment managers and focus on environmental compliance and practise has taken on a much greater focus than it did 10 years ago," Van Buuren said. Energy usage is another area Australian dairies will target, with eight of the nine surveyed by Dairy Australia signed up to a Greenhouse Challenge initiative. Carbon footprint was put at 94 tonnes per million litres of raw milk processed in the State of the Environment Report. A range of research projects will look to address this. The Sustainability Victoria initiative has allocated $150,000 to support Dairy Australia-backed research into eco-efficiencies in milk spray driers. On packaging, a majority of companies surveyed by Dairy Australia are also signed up to a national recycling target for packaging of 65 per cent by 2010. No increases in packaging waste entering landfills will be allowed after this date.