Fonterra taps health market

By LIAM DANN

Dairy giant Fonterra goes into competition with tiny Waikato rival Tatua this week as it begins producing the lucrative dairy protein lactoferrin.

Fonterra yesterday opened a $15 million lactoferrin-processing plant at its Hautapu site near Hamilton.

Tatua is the world's biggest producer of lactoferrin - a whey protein that sells for $500 a kilogram in markets such as Japan and Korea.

Tatua chairman Steve Allen said he was not concerned about Fonterra getting into the market.

"There's competition everywhere," he said.

Fonterra might be able to use its size to increase the market, "and that will be good for everyone".

Fonterra's head of health and nutrition, Patrick Geals, said lactoferrin was in the milk of most mammals.

It was identified in 1939 but it was only in the past 10 years that scientists had discovered the extent of its health benefits.

He said it provided the first line of defence against micro-organisms, boosted the immune system and could be useful for treating tumours.

Fonterra-financed research by the University of Auckland's osteoporosis research group was also showing possibility in bone growth and inhibiting bone breakdown.

"Lactoferrin will be to the dairy industry what aspirin has been to the pharmaceutical industry," Geals said.

"It's the only dairy ingredient that I know of which is the subject of regular world conferences."

Japan produces consumer products such as yoghurts containing high doses of lactoferrin.

Tatua has been producing lactoferrin for about 10 years in steadily increasing volumes.

The total world market is still tiny by dairy industry standards at 90 tonnes.

Last year, Fonterra sold more than 2 million tonnes of basic dairy ingredients.

Processing lactoferrin uses large volumes of milk - about 10,000 tonnes are needed to produce one tonne of lactoferrin.

The left-over milk is reused to make more basic milk powders.

Geals said Fonterra would try to capture as much market share as possible.

That will initially put it into competition with Tatua, but rapidly growing world demand will probably give both companies room to increase their market share.

Fonterra would start slowly and not flood the market, Geals said.

But it had a big advantage over rivals because it had a milk supply that no one else could match.

Processing lactoferrin was the first step for the new plant at Hautapu.

In the next few years, it would be used to process new milk proteins that Fonterra was developing.

Lactoferrin

Lactoferrin is a milk whey protein that boosts immunity and may be useful in the treatment of tumours and osteoporosis.

It sells for $500 a kilogram in Japan and Korea.

About 10,000 tonnes of milk are used to produce one tonne of lactoferrin.

Tatua has produced lactoferrin for 10 years.

Fonterra starts production this week.