Precision fermentation uses directly modified microorganisms to produce proteins like cow-free milk. Photo / Whakatane Beacon
Precision fermentation uses directly modified microorganisms to produce proteins like cow-free milk. Photo / Whakatane Beacon
Fonterra has formed a new partnership to explore dairy-like ingredient production through fermentation, a move its milk suppliers are keen for the big dairy company to explain.
It has linked up with US biomass fermentation company Superbrewed Food, which is reported to have produced a fermentation-derived protein ingredientapproved for use in the food industry by the US Food and Drug Administration. It’s been reported the partnership includes Australian precision fermentation firm Nourish Ingredients.
New Zealand’s AgResearch says precision fermentation is a strong technological platform to help transform food production systems. It defines it as a process which uses microbes as cell factories to produce proteins and other nutrients that are functionally equivalent to traditional animal sources. Precision fermentation uses directly modified microorganisms such as yeast and bacteria to convert simple carbohydrates into specific target molecules of proteins or lipids. Examples of products include cow-free dairy milk, ice cream and yoghurt, egg proteins made without chickens, and lactoferrin for use in infant formula.
“Without jumping to conclusions, I think the key thing to understand is that Fonterra is a dairy company owned by farmers,” said council chairman John Stevenson.
“We need to understand if this action complements our dairy products and if it delivers a strong return on capital. My understanding is that Fonterra’s engagement in this space is an effort to enhance dairy products rather than create something that competes with us.”
Fonterra in a written response to Herald questions said there was no equity investment by either party in the collaboration, and no commitment to produce products as a result of the work together.
New Zealand’s biggest business said it was working with Superbrewed “to explore the potential to create more value from milk by converting lactose into high-quality, sustainable protein using Superbrewed’s technology”.
Lactose permeate was a byproduct from the dairy manufacturing process and Fonterra was interested in the potential to create a new value stream for the co-operative, it said.
“The focus of this work is on dairy, the conversion of lactose from milk. The project combines Superbrewed’s patented biomass protein with Fonterra’s dairy processing, ingredients and applications expertise. Fonterra and Superbrewed have agreed to work together to explore the potential of their shared expertise.”
It’s not the company’s first look at precision fermentation. In 2022 it said it was working with Netherlands-based nutrition and bioscience company Royal DSM to develop and commercialise fermentation-derived proteins.
Stevenson said the council, which last year called on Fonterra to be more transparent about partnerships and investment ventures, would be seeking more information.
Fonterra Co-operative Council chairman John Stevenson.
“Farmers would like to understand the strategic rationale behind it ... alongside any other updates on strategy and strategic direction, including the proposed consumer business divestment.”
Fonterra took the business world by surprise in May with an announcement it was exploring the option of selling its consumer brands businesses - including supermarket mainstays such as Anchor, Fresh’n Fruity and Mainland.
It has brought in Jarden, JP Morgan and Craigs Investment Partners as transactional advisers.
Stevenson said farmers wanted progress information “as soon as we can get it”.
“We’ll be asking further questions when Fonterra releases its annual results in September. We would be anticipating some of those questions to be answered.
“We need to understand exactly what’s in front of us. In farming language, we’re potentially looking at sell off a few of the big back paddocks.
“We need to understand how the farm operates without them.”
Alongside more information, the council would expect a commitment to some medium-term targets “much like the long-term aspirations they have released in the past”.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the $26 billion dairy industry, agribusiness, exporting and the logistics sector and supply chains.
