Friday, March 29, 2024

Synthetic dairy no big worry

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Fonterra dipped a toe into synthetic dairy technology by investing in United States company Motif but marketing executives are not shaking in their suits yet about the technology eclipsing traditional dairying.
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Just over a year ago Fonterra invested in the Boston company that is the commercial arm of bio-tech research giant Ginkgo Bioworks. 

Fonterra’s Asia-Pacific ingredients and food services head Judith Swales likened the value of the investment to about that of a small Taranaki farm, without the cows.

It was more an effort to stay connected to the emerging synthetic technology to trace its development and effectively have good market intelligence on how it plays out in the marketplace in coming years.

But there are a number of factors Fonterra researchers see stifling the technology from developing as rapidly as was claimed a few years ago.

At its 2014 launch synthetic dairy company Perfect Day was going to have a liquid milk out within a year but it hasn’t happened. 

The main consumer product launched to date is a limited-run premium ice cream two months ago, as a publicity move.

“The technology is tending to raise more questions than answers at this stage but it is getting broader coverage with both information and misinformation out there on it,” Swales said.

She noted Perfect Day has pivoted away from its fresh liquid milk promise and, after evaluating the technology and economics, Fonterra staff are not surprised.

“It would have been uneconomic at no less than $20 a litre and is so far from consumer reality, certainly from a white milk view.”

Even the move to try to synthesise milk components has proved tougher than envisaged, with scaling up to commercially viable levels still elusive.

Fonterra is taking a long-term view being involved with Motif, which has not released any commercial food products.

Some significant hurdles remain for synthetic dairy that are often not recounted by the dairy doomsayers predicting pastoral farming’s demise.

Yield ratios or the amount of actual milk produced per kilogram of feed stock input remain poor. 

Smales said estimates of an 8:1 feedstock to product yield appear optimistic and she put it closer to 20:1. She was unable to provide the cost of the product but some estimates have put it at US$100 a kilo.

“Then there is the issue of dealing with what is left after production, the energy source that was fed to the yeast.” 

Somewhat ironically, it is possible in the United States to feed the waste to cattle but its genetically modified components make that problematic in countries where it is banned.

The technology requires a relatively high level of genetic modification, in turn raising issues about its deployment and marketability.

But Swales said there is also acknowledgment of the technology’s potential to synthesise small-quantity, high-value dairy components like lactoferrin. 

These complex proteins used in nutritional products require 10,000 litres of cows’ milk to make just one kilo. It has been worth as much as US$2500 a kilo but also as low as US$200/kg.

“There are also human milk oligosaccharides used in infant formula in small quantities. You could see how the potential is there given their high value.”

Looking over the food horizon China might be one of the first places to adopt the technology at scale, given its desire to feed its population more protein.

While synthetic milk proteins have been touted as possible ingredient replacements for traditional dairy, Swales points to manufacturers’ desire to have extensive intellectual property and experience behind formulations, something Fonterra has almost a century of.

“I would still back us to stay ahead of the game. 

“We intend to remain strongly focused on our core businesses of medical, sports and food service nutrition. This is a watching brief,” Swales said.

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