Lactoferrin is an iron-binding milk protein distinguished by its pink crystalline form, produced in small quantities and sold for high prices – perhaps $500/kg or more.
NZMP’s display said it takes 10,000 litres of milk and smart freeze-dry technology to make one kilogram of lactoferrin, which has anti-microbial, anti-inflammatory and immune-enhancement qualities.
Chief operating officer Kelvin Wickham said Fonterra doesn’t disclose its total production or its lactoferrin prices and revenue but most was made to order for long-standing customers.
Now there is a resurgence in demand as Chinese infant formula makers add it to their tins in very small quantities.
Health claims about the formulas are made in China that are not allowed in most other countries, he said.
Lactoferrin extraction from skim milk and whey is a complex procedure and the resulting majority co-products, skim milk powder and whey protein, are still readily saleable but in categories different from their regular forms.
It is not feasible to put all Fonterra’s milk collection through lactoferrin extraction before moving on to standard ingredients processing and there is only a limited market for the pink gold.
All lactoferrin plants around the world have outputs measured in kilograms rather than tonnes a day or week, Wickham said.
Earlier that day Synlait said it had a committed buyer and a multi-year agreement to underpin the doubling of its lactoferrin capacity, which would take $18 million of capital expenditure.
Managing director John Penno said the move was prompted by the growing world market, internal demand for infant formula manufacture and a secure portfolio of reputable lactoferrin users.
Synlait is one of the few producers in the world offering reliable access to significant quantities of infant nutrition-grade lactoferrin.
In NZ, Fonterra is the largest source from its Hautapu plant and Tatua Co-operative at nearby Tatuanui also produces a significant but undisclosed quantity.
NZMP’s open day was to highlight its advanced ingredients, a reporting category only recently publicised by Fonterra, as distinct from standard dairy commodities.
Advanced ingredients are the higher-value end of NZMP’s three million tonnes annual production, accounting for 19% of total milk intake in the first half of FY2018 versus 33% of base ingredients and 22% of Global Dairy Trade commodity volumes.
Advanced ingredients make higher, more sustainable returns for farmer-shareholders, Wickham said.
They have added benefits, either through better product performance or claims backed by science.
To add value NZMP worked on the needs of customers and their customers and came up with solutions.
It aspired to be the preferred supplier of dairy ingredient solutions and the number one brand for dairy expertise that led the world, he said.
Leadership might come through technical services rather than products, like the Global Dairy Trade auction platform and the related futures market for risk mitigation.
A more recent ability to source whey protein products, for example, from Europe as well as NZ mitigated the single-source risk for long-term buyers.
NZMP makes about $12b of sales annually – 60% of Fonterra’s revenue.
It is the leading player in the globally traded dairy market, with 22% of that market.
NZMP has more than 1100 customers in more than 130 countries on its database.
Some 500,000 tonnes,or 25% of its sales goes through resellers who have long-standing relationships and share Fonterra’s values and very high standards.
Among the advanced ingredients are consumer milk powders reconstituted to liquid and cultured dairy products by customers and consumers, such as Gold, Low Lactose, Fortified and Instant powders.
Fonterra has trademarked SureStart for paediatric ingredients and SureProtein for sports, active and medical nutrition applications.
Thet are quality assurance trademarks to appear beside customers’ brands, Wickham eaid.
The medical and aging nutrition markets worldwide are estimated to be worth $17.5b.
Wickham summarised the new approach as building on the relationships, performance and NZ origin by working with each customer on its needs, applying the big Fonterra research and development resources and coming up with added-value solutions.
