Ingredia expands MPC production in Australia, and US defends home market

Milk protein concentrates (MPC) are dried, processed protein powders created from the ultra-filtration of skim milk and are used in a wide range of foods from ice cream, nutrition bars, processed cheese products and baked goods. Valued at €5.52 billion in 2000, the overall European protein ingredients market has risen on demand for ready meals and the emergence of markets such as sport nutrition boosting growth by 10 - 20 per cent in the 1990s. According to Frost & Sullivan, milk proteins account for a 25 per cent slice of this market. Ingredia will carve a deeper position in the MPC market signing a deal with Australia's A$270 million Tatura Milk Industries to co-manufacture the functional ingredient under a joint A$8.5 million facility investment, due to break ground in July this year. 'The products manufactured at Tatura will be jointly marketed using the Pro Milk, Pro Diet and Tatura brands and will add in excess of A$25 million in value added dairy exports each year,' said Ingredia. Both firms believe the joint venture - slated to be ready for commercial operations in early 2005 - will support their mutual focus on specialised dairy proteins and functional components, helping to remain competitive, added Ingredia. Depending on the level of protein concentrate, added-value ingredient MPC can be used instead of skim milk powder or to create speciality food items such as dairy products high in protein and low in carbohydrates (lactose). In the wake of BSE-crises and a consumer backlash against animal proteins, food makers have reformulated certain recipes to substitute animal proteins with plant or milk proteins. In addition, food firms responding to public concerns over genetically modified organisms (GMOs) such as GM-soya are also looking for alternative proteins. These changes have resulted in increased industry competition in the MPC marketplace as participants race to provide alternative protein ingredients at reasonable prices. EU subsidies to the MPC market have also contributed to growth, helping European firms create a buoyant export market. The EU leads the world in total fluid milk production, followed by India in the number two slot and the US falling in third place. But US dairy farmers are up in arms against what they perceive as the 'trade distorting' imports of MPC that severely undercut their market for non-fat dry milk powder, entering the country under no quotas and a negligible tariff. MPC are produced by European and other countries such as Australia and New Zealand, but not by US manufacturers. Some food companies prefer using MPCs to powdered milk because of their greater flexibility and cost attraction. The US National Milk Producers Federation - lobbying hard for changes to the current rules that would impose higher tariffs - claims that MPC exporters and US manufacturers have exploited a loophole in trade rules to the detriment of domestic producers. NMPF reported that in 2003 MPC imports were up 39 per cent from year-earlier levels, totalling 26,270 metric tons. The dairy body estimates that imports have cost the dairy industry $2.25 billion in lost income since 2001. "The rapid growth in MPC imports demonstrates the vulnerability of the US dairy marketplace to products that have benefited from international trade loopholes for almost a decade," said Jerry Kozak. president and CEO of NMPE. The 'loophole' dates back to 1994 when the US negotiated its Tariff Rate Quotas (TRQs) for imported dairy products at the General Agreement on Tariffs and Trade talks. At the time the technology to both produce and use concentrated milk proteins was in its infancy and not widely used on a commercial basis. While the US established TRQs for other forms of dairy products, such as cheese, butter and nonfat dry milk, they did not create any significant tariffs or quotas for MPC. "Right now, our farmers and processors are closed off from competing in one of the fastest-growing markets in the dairy industry - protein concentrates," said Wisconsin Congressman Mark Green last month when he unveiled a new bill that would threaten market share for European MPC producers. The new rule seeks to establish the Dairy Proteins Program to help US farmers and processors turn their surplus milk into milk protein concentrate for sale in the US. Green claims that imports of MPCs have surged by more than 600 per cent over the last six years with no signs of slowing down. Face to face with dairy farmers are the manufacturers and consumers who contest any new tariffs. In a letter sent to the US Congress last year the Consumers for World Trade (CWT) said : "Maintaining unrestricted entry for imports of milk protein concentrates (MPC) and casein is a top priority. If tariffs or tariff-rate quotas are imposed, these ingredients will cost about 50 per cent more, causing enormous price hikes consumers will ultimately bear." The Coalition for Nutritional Ingredients, which includes companies such as Kraft and Nestle, is also working to head off any tariffs. "New tariffs on imported milk proteins would raise consumer prices on a wide variety of popular food and snack items," the group said in a recent statement.

Ingredia expands MPC production in Australia, and US defends home market

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