Dairy companies race to unlock milk's potential

By Hugh Stringleman, Agribusiness writer

Friday 2nd November 2001

A packed nutrition conference as part of the IDF world dairy summit in Auckland this week showed that biotechnology embodies much of the speculative hopes of dairy companies.

Fonterra Co-op Group chief executive Craig Norgate called it a race to unlock the hidden potential of milk to ensure that dairy products are positioned as healthy products for the world, not simply a staple of life.

To get to the ASB Theatre in the Aotea Centre more than 700 delegates had to file past the temptations displayed by Howard Paterson's A2 Corporation, promoting "healthier" milk protein to lower the risk of diabetes.

Fonterra subsidiary Food Solutions offered "Doctor's Choice" bovine colostrum supplement for immunodeficiency in large pills which tasted, well, like vanilla milk.

Not to mention the array of lifestyle dairy foods and drinks for which New Zealand Milk, Mainland Foods, or Tip Top has transformed a few cents worth of farmers' best production into something costing $2.70 in a popsicle, or $2.30 in a pottle.

Strangely quiet then was the ViaLactia stand, for Fonterra's "pure" biotechnology ventures, where perhaps diagrams of bovine gene sequencing techniques and possibilities didn't gel with the thronging marketers of dairy ingredients, bioactives and functional foods.

But a happy buzz resounded off the Aotea Centre's giant paua shell once the New Zealand Government's pragmatic response to the recommendations of the Royal Commission on Genetic Modification became known.

Incorporating milk-sourced bioactives into functional foods is no picnic, though, warned GalaGen president Robert Hoerr, of dairy state Minnesota, whose 1996 IPO raised $US20 million to fight Aids and is now trying to stake out territory for colostrum-based food ingredients with a slogan which runs "an ounce of Proventra".

Giant food companies wanted more bullet-proof guarantees over claims of health benefits and functionalities than the drug companies, Dr Hoerr warned.

Such is the buzzing edge of the huge world dairy industry, on show at a summit where the president of 60,000 US dairy farmers can argue for his country's billion-dollar farm aid programmes on a platform with India's representative, who explained his 70 million constituents owned one or two cows each, most of them without land of their own.

The world dairy summit opened with giant US, European and now New Zealand companies contrasted against the small, perfectly formed niche companies like Tatua Co-operative and Bega Foods, on the NSW south coast.

Just such a seeming backwater, County Kerry in Ireland, decided in 1980 to corporatise its dairy co-operative and seek fame and fortune across the Atlantic in food ingredients.

"We were very similar to New Zealand and Australian co-ops of the time," explained soon-to-be retiring chief executive Denis Brosnan.

Success followed success and now dairy products represent only 20% of the company with turnover of 3.5 billion euros. Co. Kerry's dairy production is just 1% of turnover and clearly the company can't pay 172.7 million Euros of profit in the milk cheques. But the 4000 original farmer-shareholders have seen their 1.25 million punts grow into 50% of the shares in 1.25 billion Euros of capitalisation, something approaching one thousand times larger.

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