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New Zealand Engineering 1999 July Food & Bioprocess 
Engineering in the New Zealand Dairy Industry Background to the technological strategy The original market and technology New technology for new pr0ducts from traditional waste streams Client servicing and product functionality The New Zealand Dairy industry is a 7.7 billion dollars a year business and the second foreign currency earner of the country, accounting for more than 20 percent of export earnings. The production of primary produce in New Zealand is dominated by the need to export. Because of our small population base we export 95 percent of our dairy products. New Zealand is not a large producer of milk. We account only for 1.5% of world production. Only 5% of world consumption is available for international trade, of which 2% is already covered by bilateral agreements. Thus only 3% is open to free trade. New Zealand currently holds 25% of that accessible market, which is all the more remarkable since many countries subsidise their dairy produce and we do not. The growth of the industry has been marked by wise marketing strategies and the willingness to use new technological developments as they became available, to organise state-of-the-art manufacturing facilities that can supply the kind of products required by an ever evolving market. Background to the technological strategy Milk is an emulsion of fat in an aqueous solution of colloidal proteins and lactose. The solids make up only 12 percent of the total weight. New Zealand is situated far away from almost all its export markets. The bulk of the dairy products must be reduced to minimise transport costs. Even then, these still represent the more important cost component in the price of our products. Dairy products are also very perishable and increased storage stability has been high in the dairy technology agenda. The water activity must be reduced to control microbial damage. The processing strategy of the dairy industry consists in removing the water. This is an example of why I like being an engineer. The simple elegance of this strategy is its strength and even old fossils like me can understand it. The process of dehydration often destabilises the original colloidal solution: the solids become less soluble and it is more difficult to reconstitute the dried product to exactly the same properties as the original milk. Thus the constraints to the engineering design come from specific sensory and functional requirements of the products made. Two factors have shaped the evolution of the New Zealand dairy industry: the nature of the export market and the availability of processing technology. The original market and technology In the 19th century, New Zealand took pride in being the breadbasket of the mother country, Great Britain, which took all of our dairy products. At that time, the only way to separate the water from milk was by precipitation of protein and fat to manufacture cheese through the action of rennet, a natural enzyme extracted from the cow’s stomach. Butter obtained through separation of the fat fraction by salting out and churning made up the rest of dairy industrial production. First exports started in 1847 from small enterprises in Banks Peninsula but large quantities were shipped only from the late 1880s with the availability of refrigeration. Evaporation was introduced in 1915 to manufacture condensed milk products, which never compared with the importance of cheese and butter. Britain’s entry into the EEC in the 1960s introduced traumatic changes to the New Zealand export mentality. Protected entry to the British market was lost. For the dairy industry, the answer was not found in developed counties of Europe and America, which had their own dairy surplus, but in the third world. However, people of developing countries did not have a taste for butter and cheese. They wanted milk because dairy farming is quite inefficient in hot and crowded countries. Milk powders were produced in earnest that could be recombined on site. Besides an impressive ability to identify alternative market opportunities and their product requirements, the New Zealand dairy industry showed a remarkable ability to restructure its plants to manufacture products of which it had little previous experience. Dried milk manufacture was attempted in the late 1940s by evaporation and drum drying, but the products proved very hard to dissolve in water and never caught on. None of my colleagues can tell me what it tasted like. By the time we decided to make milk powders, spray drying technology was starting to be applied in food and beverage production, notably instant coffee. Spray drying essentially increases the surface area of contact between the liquid milk and the hot air and thus dramatically reduces the drying time. This in turn ensures that thermal damage to the proteins is minimised and makes powders of much better quality than the old drum drying process. The first plant built in Taranaki in 1967 was by today’s standards quite small: two tons of product per hour. From these small beginnings, milk powder production has rocketed to 600,000 tons a year in 1999, representing almost half of the dairy processing in New Zealand. This successful development of a new product answering the need of a new market was all the more interesting because butter was considered until then the valuable product from milk, and farmers used to be paid according to the fat content of their milk supplies. Indeed, in the old days, skim milk was fed to pigs. New technology for new products from traditional waste streams The lessons learned in the development of this new product were quickly applied to further strengthen the industry. The growth of the industry has accelerated dramatically over the last twenty-five years. The ability to integrate technological innovation and development with marketing strategies has been at the core of this success. Four main tactical areas of engineering and technology are clearly identifiable:
Over the last 15 years, waste streams have been processed to develop a raft of new products. Whey proteins are found in relatively small concentrations from waste streams in the manufacture of cheese and casein. They too were fed to pigs. This ingenuous use of waste streams dates back centuries. Have you never wondered, for example, why Parma is well known for both cheese and ham production? We went much further in New Zealand. Whey proteins can make very good gels and can compete with other food ingredients like egg white. They also have high nutritional value. In addition, whey streams are very strong pollutants when discharged directly into the environment. The problems in whey protein manufacture are twofold. Whey solutions are very dilute. Thus direct spray drying and evaporation is too expensive. These proteins are also very small. Conventional separation techniques do not work. Membrane separation had been known for some time but the process was only applied to recover very expensive products. The development of new membranes dedicated to whey products, a joint effort between Massey and the New Zealand Dairy Research Institute, and its associated technology for recovery of whey proteins, is one of the achievements of the New Zealand industry. The whey industry has been spearheaded in many ways by New Zealand and is much less important in the States, for example. Whey products are now regarded by many in the industry as the icing on the cake. Increasingly, milk is not seen simply as a food but also as a source of raw materials. Production at the Tatua Dairy Cooperative of lactoferrin, a very small component of milk, is another example of this trend. The traditional dairy industry was based very much on batch processes. The transformation of the industry into flow and semi-continuous processes allowed the introduction of automatic control and computerisation, which are now the norm. This in turn made possible economies of scale. We now own some of the biggest spray dryers in the world, up to 20 tons of powders produced an hour requiring a feed of 160,000 litres of milk an hour. The Hawera site of Kiwi Cooperative Dairy Company processes 1.4 million litres of milk an hour in the peak season! Successful automation and control has been accompanied by large reductions in labour and it takes only two people plus a team of packaging staff to run a modern milk powder plant. Computerisation has also allowed the recording of large amounts of production data so that every single batch of products can be traced at any time. The consistency of the product and the after sales service has thus improved significantly. The other big drive in production efficiency has centred on energy savings. A survey in the eighties showed that evaporators in the dairy industry accounted for one percent of the energy consumption in the entire country. The design of evaporator and preheating systems has undergone continuous improvement, with a gradual shift from multiple direct steam evaporation to thermal then mechanical vapour recompression. The industry is also one of the few in New Zealand that has successfully applied the principle of co-generation. High pressure steam is first passed through steam turbines to generate electric power, then the latent heat of the steam is used for evaporation and heating. Using the steam twice almost halves the cost of energy. The New Zealand Dairy Group (NZDG) own their own coalmines allowing further cost savings. I have often wondered how much this efficient management of energy costs has contributed to the pre-eminent position of the NZDG in the dairy industry. Client servicing and product functionality Much of technological research and development has gone recently towards the development of functional foods, a high return niche market. A substantial part of milk powders is sold as ingredients used in recombination plants around the world. Our ability to help clients resolve their production problems, such as excessive fouling during recombination, has proved crucial and the industry supports an active research programme on fouling by milk. Another example of targeted technology development is gas packing. Fat in milk powders tends to develop objectionable rancid flavours because of oxidation during storage. Because our markets are so far away, often in tropical countries like Saudi Arabia, our products are stored at elevated temperatures and for quite some time, and flavour stability becomes a major issue. New Zealand spearheaded the development of new packaging technology by flushing our packages with an inert gas to minimise the presence of oxygen. I am told that there were close to a hundred small companies in the early days of the New Zealand dairy industry. The drive towards production efficiency and economies of scale has resulted in a gradual consolidation of the industry to the point that three companies, NZDG, Kiwi and Northland dairy cooperatives, now account for more than ninety percent of production. The highly successful integration of technological and marketing policies has been made possible by the presence of the New Zealand Dairy Board which up to now has not only provided the single selling desk with strong bargaining powers, but also channelled research and development. Many people in the industry and in the dairy farming community seem to cherish this unity of purpose. The proposal to abolish the statutory powers of the producer boards has spurred the drive towards a mega merger of the two largest players in the industry, which in effect would preserve this unity of purpose. I am not a dairy farmer and cannot speak for anyone. In my contacts with friends in that community I detect one fear. As long as the farmers own the dairy companies, they have a direct say into how the income generated by the industry is used and how much is returned to them. If the companies are owned by forces external to the New Zealand dairy farming community some believe they may well be reduced to the status of mere suppliers of raw material without much bargaining power. There is no doubt that further gains in efficiency and productivity can be achieved. Whether this requires dissolution of the single selling desk is still hotly debated. Whatever happens, it would be unfortunate if the integration of technological and market developments were lost. Trinh, Khanh Tuoc is a senior lecturer in food engineering, Institute of Food, Nutrition and Human Health, Massey University |
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