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The global capacity for precision fermentation is currently around 16 million litres a day - similar to the throughput of Fonterra Edendale during peak production. Much of this capacity is housed within research organisations and labs and not optimised for producing large volumes of commodity products. Building new precision fermentation capacity is CAPEX intensive at a time where investment in food technology is not forthcoming. This is where kiwi company Daisy Lab are doing some very interesting work, leveraging existing dairy infrastructure to drastically cut the cost of producing precision fermentation dairy proteins. Downstream processing (everything that happens after the bioreactor to separate the protein from the fermentation liquid) accounts for 70% of the capital expenditure of a PF plant. The equipment required for this already exists in dairy factories for making dairy protein powders such as casein. For much of the year, these plants are empty due to the seasonal nature of cow dairy. Daisy Lab are designing strains and fermentation protocols to fit directly into existing dairy infrastructure, meaning that dairy companies would simply need to add one piece of equipment (a bioreactor) to their production to enable them to access this lucrative market. There is so much that makes sense about this strategy for an ambitious biotech company situated in a major dairy-producing region with a large geographical distance to market. By pursuing global IP partnerships for this technology, Daisy Lab leverage New Zealand's dairy strengths while building scale in precision fermentation around the world. 🌱 Irina Miller Emily McIsaac Nicole (Nikki) Freed, PhD https://lnkd.in/g22KrWJK

Human lactoferrin. Available commercially by the end of 2024... What will this mean for bovine lactoferrin?

Price parity, scale and feedstock availability are three of the major question marks that will affect whether precision fermentation will disrupt the traditional dairy industry. Progress continues on all three fronts. Some interesting updates from Cellular Agriculture Australia’s recent report called Producing Food Through Precision Fermentation - The Opportunity for Australia: 💰 Price parity: Cauldron Ferm have indicated that a business to business ingredient price of AUD$30/kg will be price competitive. Their fed batch process is currently at around $68/kg in a 500,000L bioreactor. Once their hyper-fermentation plant, currently under construction, is up and running, they estimate a cost per kg of AUD $33.50. With further microbial strain development and optimisation, they predict this cost to fall to around $15/kg - half of the cost parity target. 🏭 Scale: Of the 6 precision fermentation dairy companies operating in Australia and New Zealand, 4 are working on lactoferrin, Eclipse Foods are in the early stages of developing human lactoferrin. Currently, global production of this bioactive protein is limited to around 500 tonnes due to its scarcity (10,000L of milk yields just 1kg of lactoferrin). At AUD$1,500 per kg, it’s around 65 times more expensive than standard whey protein. Infant formula uses 61% of the current production volume. It’s likely that lactoferrin production from precision fermentation will soon match the scale of dairy lactoferrin production. It will be interesting to see if global demand increases as availability grows, and how much this will impact the high price. Will consumers eventually choose human lactoferrin over bovine if that becomes an option? With Westland Milk Products currently building a $75 million lactoferrin plant, the New Zealand dairy sector should be watching this closely. 🍬 Feedstock: While it’s possible for a wide range of feedstocks to be utilised for precision fermentation, sugar is the simplest to use and is likely to be the main feedstock during initial development of the industry. Australia is the world’s second largest exporter of sugar, with 80% of production exported as raw sugar. The industry is currently worth $2 billion, but hypothetically could be worth $50-$80 billion if all the sugar was utilised as feedstock to produce dairy proteins and fats.

The team at Thriving Southland commissioned this report for Southland dairy farmers to 'encourage thinking and debate, grow awareness of the varying opinions and inform readers own thinking' about potential disruption from alternative proteins.   In Southland, 1 in 5 jobs are in the dairy sector, and 12% of New Zealand's dairy output is produced here. As a region, dairy is absolutely key to our economy.   The report includes input from: Jeremy Hill, Fonterra’s Chief Science and Technology Officer: Fonterra has been active in following and understanding precision fermentation for decades, and have invested in partnerships in the space e.g. Vivici. He still has doubts around scale, cost parity with dairy, nutritional equivalency and environmental claims which ‘still need to be validated’. Believes it will be completely to cow dairy. Paul Melville, Federated Farmers: "Today, dairy is our biggest export earner. In 1990 it was meat, and in 1960 it was wool. We should provide the mechanisms needed for farmers to adapt to change as it occurs." Anna Benny, Navigate: New Zealand’s dairy ingredient focus leaves us uniquely exposed. Unlike other dairy-producing nations which only convert their excess milk production into dairy commodities after producing fresh dairy products for their population, NZ puts about 80% of milk solids into ingredients. These are a lot easier to replace than liquid milk, and key customers are already working on this. The nutritional element is far less critical in these use cases, and the environmental footprint more contentious. Nicole (Nikki) Freed, PhD, Daisy Lab: New Zealand is particularly exposed to this disruption, as the New Zealand economy is heavily reliant on products that have the most potential to be impacted by precision fermentation – milk powder and dairy protein powder are bulk commodity ingredients with the potential to be most impacted by precision fermentation. I'm looking forward to seeing how this work can help inform future discussions about the future for Southland and NZ in general. Dairy farmers are making investments in producing milk which will have long payback periods. While disruption is not on the cards in the next few years, if and when it happens it will have huge impacts for these individual family businesses. I hope as an industry we continue to keep a close eye on the progress of these technologies, and use them to inform our strategies for the future rather than simply dismissing them as hype.

Mars have linked 20% of overall executive remuneration to their sustainability targets, one of which is a 50% reduction in emissions by 2030. - Would you part company with a supplier if they weren’t coming up to scratch or weren’t aligning with your net zero goals?  Absolutely. I have the title of Chief Sustainability Officer and Chief Procurement Officer for a reason. We have to transform our supply chains and that means we have to change what we buy, or where we buy it, or how we buy it, or who we buy it from. If we don’t change any of those things, we’re not going to transform our supply chain and our greenhouse gas footprint. So suppliers have to be on board and we need to see them have the same serious ambition, set the same goals, but also get on with it. - Are you confident that Mars will meet its 2050 net zero goal?  We don’t need any massive breakthroughs to halve our footprint by 2030. And we know it’s affordable. We’ve costed it. Post 2030, it will get harder and we do need some breakthroughs in terms of transport and technology. We’re going to need breakthroughs in some packaging materials and in raw materials. 

When is a KitKat not a KitKat? Today I discovered that KitKat 4 finger ingredients vary widely around the world. 🇦🇺 Here in NZ and Aus, whole milk powder is the sole dairy ingredient. 🇫🇷 In France they use skimmed milk powder rather than whole milk, but also add whey powder and anhydrous milk fat. 🇨🇦 In Canada, lactose is also an ingredient alongside ‘milk ingredients’ and whey powder. 🇬🇧 In the UK, the ingredients include whole and skimmed milk powder, lactose, proteins from whey, whey powder and butterfat. As Fonterra’s largest customer, Nestle products are a key destination for NZ dairy ingredients. Nestle have lofty net zero ambitions, and their latest climate reporting highlights ambitions to move some animal-sourced ingredients to plant-based ones to reduce their emissions profile. Technologies like precision fermentation may be a tool to help achieve this successfully in future. However, it is clear looking at the current range of product formulations for KitKats around the world that dairy ingredients are used flexibly depending on the location. NZ is doubling down on producing dairy ingredients while key customers are looking at where they can be removed/replaced. Looking at these ingredient lists, it’s clear that Nestle have the formulation expertise to produce their iconic products with varying levels of dairy ingredients. Alternative protein risk for NZ dairy is not about whether consumers will choose oat milk. It’s about understanding where our dairy is used (ingredients), and the drivers impacting our key customers to look to alternatives.

A single manufacturer producing a functional ingredient that is in half of the world’s cheese and half of the world’s yoghurt 🤯 Novonesis use precision fermentation to produce rennet for cheesemaking and the bacterial strains to make yoghurt.

The Sustainable Nutrition Initiative®have launched a tool to assess the feasibility of precision fermentation protein, along with a research paper. Really good to see in-depth analysis coming out around this subject. I've used the tool to assess what this would look like to produce one of NZ's key dairy exports using precision fermentation. I've chosen the isolated proteins (casein and whey) as these are included in the tool, and are simple for PF to produce. In 2024, NZ exported 192,500 tonnes of casein and whey protein products, which represented 12% of our dairy export revenue. - Feedstock: If sugar cane was used, 9.06Mt per year would be required, an additional 0.5% more than current global production. - Greenhouse gas footprint: 6.7 tonnes of CO2 equivalent per tonne of protein. Using the NZMP footprint calculation tool, 1 tonne of dairy whey protein isolate produces 10 tonnes of CO2e/tonne. - Price: $4,980 per tonne. To buy a tonne of NZ whey protein isolate at retail in 1kg bags would cost $5,800, maybe someone in the know could please help with a rough NZD price for whey protein isolate as a better comparison?! (Stuart Davison) https://lnkd.in/gFkxMNhk

BIG NEWS: Nourish Ingredients X Fonterra We are pleased to announce a strategic collaboration with global dairy co-operative Fonterra.   We’re combining our expertise in precision fermentation-based animalic fats with Fonterra’s rich #dairy heritage to accelerate the development of innovative dairy products.   Our collaboration will focus on: 🧀 Exploring dairy applications across cheese, cream, butter, and more 🥛 Leveraging our Creamilux™ ingredient to unlock the functionality and taste of delicious traditional dairy 🔑 Unlocking new possibilities in adjacent product segments   We’re excited to work together to meet growing global dairy demand while fostering new market opportunities. This partnership allows us to bring our vision of innovative ingredients to commercial reality faster than ever.   Stay tuned for the delicious developments to come! Read more: https://lnkd.in/eTMBQhpM

"We've talked about other dairy companies, but our real competition is alternatives like plant based proteins." "Customers are talking to us about that - they want dairy as part of their products and value chains but they have to be mindful that to reach their ambitious targets they will have to look at other alternatives to proteins and fats from ruminants because there's a much smaller footprint when it comes from plants or eventually lab grown protein so we have to be mindful of that." This is a fantastic interview with Charlotte Rutherford of Fonterra that covers some of the realities of being a dairy ingredients supplier. Great in-depth coverage of what emissions intesnsity means from a commercial perspective too.