The Next Wave: The Dairy Group's food for calves (and babies) cash winner

By PHILIPPA STEVENSON

A "magic" formula best known for getting sick horses up and running is on the home stretch to being a multimillion-dollar earner for the dairy industry.

Until four years ago, colostrum, the thick secretion from a cow in the first four days after the birth of a calf, was most likely to cost farmers, who incurred a financial penalty if it contaminated their milk supply.

But this year, about 1500 Waikato and Canterbury farmers were paid up to a high $1 a litre for about nine million litres of raw colostrum, and, processed into around 100 tonnes of powder, it fetched from $50 a kilogram on a growing market.

Hamilton-based New Zealand Dairy Group has turned the home remedy for sick animals into a high-tech human health food.

Peter Hobman, general manager of the company's specialty ingredients group says the growing body of scientific evidence - backing a raft of health-giving claims for colostrum - makes him confident enough to make earnings predictions.

"The size of the market will be constrained by the volume of product we can produce ... but it is conceivable it will be a $100 million earner within five years," he says.

The story of the waste-to-wizard product began around 1996 when Dairy Group researcher Trevor Lock recognised colostrum's potential as a health food.

Colostrum imparts immunity to disease in all newborn mammals (including humans) and is particularly important to calves.

Unlike human babies, calves get no disease resistance from their mother's bloodstream in the womb.

Instead, at birth a calf's intestine is porous for the first 12 hours, allowing the especially rich load of immunogoblins or antibodies in a cow's colostrum to flow into its offspring's blood.

Colostrum also contains antimicrobial factors which control disease-causing bacteria that the calf might be exposed to in its environment, and components that encourage the growth of beneficial bacteria in the intestine.

Now, as Dairy Group can boast, studies by researchers around the world have shown that colostrum can destroy viruses, toxins, bacteria, yeasts and parasites, boost immune function, help accelerate injury healing, assist in burning fat and building lean muscle mass, increase vitality and stamina, and elevate mood.

Back on the farm, each humble cow gives between 15 and 20 litres of colostrum and farmers need to ensure all their calves get an adequate share, sometimes having one of two herds supplying colostrum to the factory while the other's is fed to calves.

The first year of the new project, sourcing supply from around 100 farms with a minimum of 250 cows, the company made less than 10 tonnes of powdered colostrum.

It then set out to find a market.

Dairy Group discovered Symbiotics, an American marketing company that has almost singlehandedly created a $15 million colostrum health food category in the US.

Symbiotics' website highlights its connection to the healthy, pasture-fed cows of Dairy Group, and carries research-based findings on colostrum as well as the personal story of the wife of one of Symbiotics' founders, who credits colostrum with saving her from diseases she could not fight with an immune system destroyed in childhood.

Mr Lock now manages the New Zealand arm of Symbiotics and this year Dairy Group's colostrum-supplying farms rose to 1500, with the company's Hautapu (Cambridge) and Clandeboye (Canterbury) factories producing around 100 tonnes of powder.

Markets have expanded into Asia, including Korea where one client uses it in infant formula, Mr Hobman says.

Dairy Group is investing in research with Otago University that has produced promising results suggesting colostrum might help in the treatment and prevention of stomach ulcers, and combat the effects of Candida albicans, the naturally occurring bacteria that causes oral and vaginal thrush and is implicated in irritable bowel syndrome.

The company is also working with Australian gastroenterologists in clinical studies on colostrum's role in treating of gastrointestinal disorders.

Meanwhile, other Australian researchers have shown that endurance sportspeople benefit from colostrum boosting their immune systems, allowing them to train continually at peak levels.

Mr Hobman, who spent 28 years at the Dairy Research Institute, says the research has shown the recovery rate after exercise is better - a factor that has implications for ageing - and the Australian scientists also claim that sportspeople have a 30 per cent increase in strength.

But colostrum is not the only multimillion-dollar good-news story for milk and "the reason I'm pleased to get out of bed every morning," says Mr Hobman.

At its Edgecumbe factory, in the Bay of Plenty, Dairy Group also manufactures complex lipids, components of milk fat found in concentrations of less than 0.001 per cent. They sell for hundreds of dollars a kilogram.

"It's becoming big business," Mr Hobman says. "Infant formula is the first target but we now have applications in cosmetics and supplements, and indications these products will be helpful in heart disease, brain function, as well as be anti-viral, anti-cancer, and anti-microbial."

The company got its first order for the complex lipids in 1997, achieved a multimillion-dollar turnover in 1998-99 and is predicting 14 per cent growth in the next financial year.

Last week, Dairy Group received a commendation from the Foundation for Research, Science and Technology for its innovative work on the commercial extraction of complex lipids.

Mr Hobman says the accolade and the growing business are "an answer to those critics who said the dairy industry was a sunset industry."

"New Zealand's competitive advantage is agriculture and there is still a lot to explore and invest in."