But foundation support is not guaranteed, as it has also received five other proposals for research consortiums covering the genetics of white clover, reducing methane from belching livestock, meat-based health foods, wood quality tests and new materials using wood fibre.
The foundation's investment committees meet on Monday and final decisions are due to be announced on May 30.
The foundation has "ring-fenced" $22.5 million over the next three years to provide up to 50 per cent funding for consortiums, with industry partners required to put up at least as much.
Dr David Johns, development manager of Fonterra food ingredients subsidiary NZMP, said the total investment by the company and the foundation could be $35 million over the next seven years.
"That's the starting point - to get something on the table," he said.
"We are also trying to attract venture capital as well as Fonterra money, so they [research companies] will be separate little units to actually do their job."
Dr Tony McKenna, of the Fonterra Research Centre, formerly the Dairy Research Institute, said research would focus initially on the components of milk which feed bone growth and the immune system.
"Although they are designed for the young mammal, the mechanisms may be important at any stage of life," he said.
He said dairy researchers had been working for some time with Auckland University's bone research group led by Associate Professor Jill Cornish and Professor Ian Reid.
The group is a leading research centre on osteoporosis, a thinning of the bones that affects more than half of New Zealand women and nearly a third of men over the age of 60.
More than 3000 New Zealanders break a hip each year.
A third of them die within a year from related complications, and another third are so incapacitated that they never return home.
"There are some products that are showing some promise in terms of bone growth, but there is nothing with FDA [United States Food and Drug Administration] approval that increases bone mass in the elderly.
"So there is a gap there. The consortium is looking for opportunities to fill that gap, and milk is a good starting point," said McKenna.
Researchers have also been working on bacteria in products such as yoghurts that stimulate the body's immune system to fight dangerous microbes causing problems such as diarrhoea and gut cancer.
"At Auckland University we are looking at components that might interrupt asthma in a positive way," McKenna said.
"There is a team there that are excellent in allergic response.
"There is also a group at the Wellington Medical School, part of Otago University, with real skills in that area."
nzherald.co.nz/dairy
International Dairy Summit
