Fonterra has upped production of lactoferrin - a special, high-value protein known in the industry as "pink gold" - at its Hautapu plant, near Cambridge.
At an official opening of the expanded plant yesterday, Fonterra executives said the $11 million spent on doubling lactoferrin production there was an example of Fonterra's drive towards adding value.
They were secretive about the technology involved - the opening was held well away from the plant - and details were scant on how much lactoferrin the plant produces and how much it sells for.
As a guide, lactoferrin is paid for in dollars per kg, while most of Fonterra's production is priced as dollars per tonne. It takes 10,000 litres of milk and sophisticated technology to make 1kg of lactoferrin, with the rest used for casein and milk protein concentrate.
Lactoferrin is a naturally occurring protein in milk and is in high demand, particularly in Asia, for nutritional applications from infant formula to health foods and yoghurts.
The protein exists in human milk in high proportions, which is considered to be indicative of its importance in infant nutrition.
Unlike some dairy products there is no problem with oversupply and demand is growing strongly, said Fonterra's managing director of global operations, Robert Spurway.
Fonterra director Ian Farrelly said the co-operative's reputation as the world's largest dairy exporter had been built on commodities - powder, butter and cheese - but the Hautapu expansion was an example of more milk going into higher value product.
Spurway said after the ceremony that Fonterra expected milk production to be down by 4 to 6 per cent this season, despite a good amount of rain in Waikato - where 30 per cent of its milk comes from - and other parts of the country last month.
"Whilst the countryside is looking pretty green, and we have had some good rain in January, it is starting to dry off pretty quickly," he said.
Farmers had adjusted their feed and stock levels to reflect the lower farmgate milk price.
"Farms are relying more heavily on the pasture-based model, so when it does dry off, milk production drops off pretty quickly," Spurway said.
New Zealand is well past the season's peak production and has collected about 70 per cent of the season's expected total already.
• Lactoferrin is a naturally occurring protein found in milk.
• In high demand for a wide range of nutritional applications from infant formula to health foods and yoghurt.
• It takes 10,000 litres of milk and sophisticated technology to make 1kg of lactoferrin.
• Fonterra has spent $11 million on doubling lactoferrin production.