Fonterra faces non-dairy future
Fonterra has taken its first step into non-dairy products, investing in a start-up company developing non-dairy proteins using precision fermentation.
In a process similar to beer brewing, precision fermentation uses microbial cells to grow proteins, fats, enzymes or vitamins.
To make nature-identical food ingredients the process only needed energy, water, microbes, a feedstock, such as sugar, and a controlled environment.
Precision fermentation technology had been around for decades. Products like insulin, vanilla essence and rennet (for cheesemaking) are made using the process.
Fonterra has worked with DSM, a global nutrition and bioscience company, since 2019 to speed up making the proteins. The partnership had already created intellectual property and filed patents, the statement said.
Jonathan Boswell, programme leader for complementary nutrition at Fonterra said the patents were confidential because they were not in the public domain yet.
Dairy nutrition would remain Fonterra’s core strength but the food preferences of some consumers were changing to nonanimal products. New technologies had a place alongside dairy, the company said.
There would be a role for dairy and other sources of nutrition to feed the world’s growing population, the company said.
Food scientist Anna Benny, who researched how precision fermentation would disrupt the dairy market, said most milk produced in New Zealand was dried to make whole milk powder. This was sold as a commodity, and was an ingredient in everything from yoghurt drinks to medicine.
Benny said the million-dollar question was what would happen to the milk price and to farmers when whole milk powder could be replaced by products made by precision fermentation.
‘‘People are still investing in farms and [farm-related businesses] that will not pay back in the next seven to 10 years. All the signals we are getting from industry players and the Government is that milk is selling well and that dairy farmers are propping up the economy. It will be catastrophic for the economy if milk powder fails,’’ Benny said.
New Zealand’s reliance on whole milk powder meant it was overexposed to such risks.
A tipping point would come when companies were able to copy whole milk powder through precision fermentation, could make it on a large scale, and its price was similar or lower than whole milk powder from dairy, Benny said.
She said Fonterra’s partnership was similar to companies overseas.
In the United States, Perfect Day, which manufactured animal-free dairy alternatives, was working with food processing company ADM, she said.
Waikato dairy farmer Pete Morgan said at its core Fonterra was a food company. If it looked decades into the future, it would see precision fermentation was part of the answer to feeding a growing world population.
‘‘The answer isn’t an us [dairy] and them [other technologies], the answer will come from everybody,’’ Morgan said. ‘‘A company with a long-term focus would look at such technologies.’’
It was widely known that if the world was to have enough food to meet its nutritional requirements by 2050, the amount of food being produced would have to double, Morgan said.
Milk was important as a raw product, but Fonterra was not just about milk. It had expertise in food manufacturing, intellectual property, supply chains and customers, Morgan said.
Some farmers would struggle to understand why Fonterra made this move, but Morgan believed Fonterra had a longterm view. It was better to head into any market disruption with knowledge than to wake up one day and have fallen behind, Morgan said.