Despite an expected increase in milk production, dairy prices will likely remain high through 2008. According to a recent “Livestock, Dairy, and Poultry Outlook” from USDA’s Economic Research Service, “robust demand, both domestically and, especially, internationally, will keep prices high.”
In addition to increased global demand for milk, nonfat dry milk, cheese and butter, the report cites an anticipated higher feed-to-price ratio and decreased use of recombinant bovine somatotropin (rBST)—a synthetic hormone injected into cows to increase milk production —as factors in the current situation.
“Strong international demand and short global supply of nonfat dry milk, dry whey and lactose have steadily driven prices up in the past six months,” says Connie Tipton, president and CEO, International Dairy Foods Association (IDFA), Washington, D.C. “The price of nonfat dry milk has gone up about 30%, and the price of dry whey is at a record high; in fact, it’s more than twice as high as it ever was before the current run-up in prices.”
According to IDFA, nonfat dry milk and dry whey prices are “component prices” used by the U.S. government to determine the minimum, government-regulated price that milk and dairy companies must pay for all farm milk within the Federal Milk Marketing Order system.
As a result, when prices rise for these dairy ingredients, all farm milk prices increase. The growing demand for corn to produce ethanol has caused feed prices to rise. These costs, which comprise the largest operational costs for farmers, are passed on to industry and consumers. The USDA report notes that feed prices aren’t going down: “The 2007/08 season-average corn price is forecast to average $2.80 to $3.40 a bushel and the soybean meal price is forecast to average $200 to $230 a ton. Alfalfa hay prices could remain high, as alfalfa producing-regions of the country are experiencing dryness.”
More farmers are discontinuing use of rBST, which is banned in Canada and Europe, mainly due to concerns that it leaves cows more prone to illness. And, although the hormone is FDA-approved for use to boost production in dairy cows, some manufacturers of dairy products declare “hormone- free” on their food labels to drive sales.
While some companies that rely on milk for their products will likely feel the pinch in their bottom line and be compelled to raise prices, others may turn to other ingredients, such as cheese and dairy flavors, cheese powders, and replacement systems for cream, milk, yogurt, buttermilk and sour cream, as solutions to the rising cost of dairy.
INDUSTRY NEWS
Tate & Lyle Wins Food Product Design Scientific Excellence Award
Promitor™ Fiber H2O with Protein satiety water from Tate & Lyle, Decatur, IL, received the first-ever Food Product Design Excellence Award, which was to be presented on Nov. 8 in the Virgo Publishing booth at SupplySide West, The Venetian & The Sands Expo, Las Vegas. The satiety water is formulated with Promitor soluble corn fiber, whey protein and calcium, sweetened with Splenda® to minimize calor ies, and is fortified with micronutr ients, including vitamins A, E and B.
“We are proud to have been awarded the first Food Product Design Excellence Award for Promitor Fiber H2O with Protein,” says Stacey Kappes, Ph.D., food scientist and formulator of the satiety water. “Tate & Lyle’s new range of Promitor dietary fibers were launched in June this year, in response to increased demand for wellness ingredients. The average adult diet in the U.S. does not meet the national recommendations for daily intake of fiber. Our range of Promitor fibers offers manufacturers a real opportunity to help consumers boost their fiber intake with innovative products that deliver the right texture and all the taste people expect from their favorite brands.”
Isomaltulose Health Claim
FDA authorized a noncariogenic health claim for the carbohydrate sweetener isomaltulose. “Cariogenic” describes a substance that stimulates tooth decay (dental caries) and is a common description for sugars that can easily be digested by oral bacteria, such as sucrose, fructose and lactose. Cargill, Inc., Minneapolis, submitted a health claim petition last year. The company produces Xtend™ isomaltulose.
Polydextrose Approval Extended
FDA extended its approval of polydextrose for use as a bulking agent, formulation aid, humectant and texturizer in all foods, with the exception of meat, poultry, baby foods and infant formulas. Danisco USA, New Century, KS, supplier of Litesse® polydextrose, spearheaded the effort and has attained this Food Additive Petition (FAP) approval.
SUPPLIER NEWS
Price Increases
Orafti Active Food Ingredients, Malvern, PA, announced a price increase for its range of Beneo™ prebiotic ingredients. The price of syrups will increase by 6% and powdered products by 8%. The increases went into effect Oct. 1, 2007. DSM Nutritional Products, Kaiseraugst, Switzerland, announced a worldwide 10% price increase for vitamin E. This adjustment is effective immediately.
New Flavor and Fragrance Company Launched
Flavor and Fragrance Group (FFG) Industries, Inc., Upper Saddle River, NJ, launched Agilex Flavors & Fragrances Inc., a new flavor and fragrance company formed through the integration of FFG and six of its operating companies: AromaTech, Somerville, NJ; International Fragrance & Technology, Canton, GA; Technology Flavors & Fragrances, Amityville, NY; Key Essentials, Rancho Santa Margarita, CA; Flavor- Source, Anaheim, CA; and Western Flavors & Fragrances, Livermore, CA.
Ocean Spray Recognizes Robertet
Robertet Flavors, Piscataway, NJ, received the Supplier of the Year Award from Ocean Spray Cranberries, Inc., Lakeville-Middleboro, MA, for its role as an outstanding supplier in the Ingredient/Commodity category. The award marks the third from Ocean Spray over the past six years.
Glanbia Acquires Pizzey’s Milling
Glanbia plc, Monroe, WI, an international dairy foods and nutritional ingredients group, acquired Pizzey’s Milling, Angusville, Manitoba, a supplier of milled flaxseed ingredients. The existing management team, headed by Linda and Glenn Pizzey, will remain with the business.
Frutarom Earns Certification
Frutarom USA Inc., North Bergen, NJ, received ISO 9000:2000 certification from the Bureau Veritas Certification, London. The company processes botanical extracts, hydrocolloid gums, flavors and other functional ingredients for the food, flavor, nutraceutical, dietary-supplement and cosmetic industries.
