Dairy Week.doc by handongqp



The Weekly News Bulletin on the Australian & New Zealand Dairy Industry

                   Week Ending 15 September 2006
Dairy Companies
Fonterra Shareholder Council Annual Report Says ‘Targets Not Good Enough’
Fonterra Shareholder Council Release 11 Sep 2006; Fonterra Shareholder Council Report
11 Sep 2006; National News TVNZ.co.nz 11 Sep 2006; Fonterra Media Release 11 Sep 2006
In the Council’s Annual Report to Shareholders released this week, Chairman John
Monaghan said: “The Shareholders’ Council did not endorse the Board of Directors’
Statement of Intentions (SOI) for the 2005/06 season because the targets fell short of
expectations and did not represent a significant lift in business performance. “The Board
presented the Council with a SOI targeting a payout of $3.85 per kg of milksolids including
value add returns of only 17 cents. The Council expected Fonterra to seek Total Shareholder
Returns (TSR) in the top quartile of benchmark companies but the Board targeted
performance within the top half. Fonterra’s actual TSR for 2005/06 ranked in the bottom half
of benchmark companies. Value add returns again contributed less to payout than they did in
Fonterra’s first year of operation. The final payout of $4.10 per kg also exceeded target but is
the second lowest in the co-operative’s history. After five years in operation, we expect a
business in Fonterra’s position to have differentiated itself through superior performance.
While annualised merger benefits of more than $300m were delivered ahead of schedule,
Fonterra has too often appeared slow and reactive and growth opportunities have been lost.
Fonterra’s business planning and budgeting process for the new season has been more
rigorous. We are watching closely to see how Fonterra’s results measure up against farmers’
Executive Summary: “After five years in operation, meaningful value add returns have
continued to elude the co-operative. Merger and acquisition activity and increased working
capital requirements saw the co-operative take on more debt and as a result the capitalisation
ratio finished outside the Board’s target upper limit. Solid progress has been made in
consolidating Fonterra’s diverse Australian interests but the return from these operations must
improve. The Council is encouraged by the commercial disciplines applied to the business
this season but we are still awaiting results that are consistent with farmers’ expectations and
level of investment in the co-operative. Fonterra’s business planning and budgeting process
for the forthcoming season has been more rigorous and this is reflected in the 2006/07
Statement of Intentions’ targets.”

             Dairy Week is published on a Private and Confidential basis to Subscribers.
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In this issue:
Agri Quality ........... 7      DFB ....................... 4     Gulf States ............. 8    Organic Milk ....... 15
Argentina ............. 11      Drought.................. 6       Infant Formula .....16         Recycling ............. 14
Bacteria ............... 13     Fiji ....................... 12   Innovation ............15      Scottish Dairies ..... 3
China ................ 5,10     Fonterra ......... 1,8,13         Insulin ..................16   South Africa...... 5,10
Cream Cheese ...... 14          Friesland ................ 3      Lactose .................16    Trans Fats ........... 17
Dairy Waste ......... 13        Glanbia ................. 4       MPC’s ................... 9    UK ................. 5,8,15
DEL ....................... 7   Groupe Danone ..... 5             NZ Dairies............. 2      Vietnam ............... 12

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                                                                                  Dairy Week

Investment Strategy: “San Lu: Fonterra has paid $174m for a non controlling interest in San
Lu. Little information is available about this investment and Fonterra’s shareholders will
expect returns that reflect both the risk and the potential of this market. Kapiti Fine Foods: At
$169m, this transaction is on a par with Fonterra’s investment in San Lu. As well as further
strengthening Fonterra’s position in the domestic market, the indications are that this
acquisition will be payout positive immediately.”
Board Performance: “The Council has been disappointed at the speed at which the Fonterra
strategy has been implemented. While the financial benefits of the merger were achieved
ahead of schedule, it is taking more time to get the business operating optimally. Fonterra has
appeared slow and reactive in its acquisitions activity and a number of investment
opportunities have been lost. Fonterra’s growth aspirations have been given impetus this
season through an active acquisition program. It will be some time before the wisdom of the
Board’s decisions can be fully assessed.”
TVNZ quoted Chairman John Monaghan: “The impact of poor payouts will extend well past
farm profitability and may challenge the very existence of the co-operative. A lean payout
could encourage suppliers to look for alternatives and may not encourage farmers to increase
production.” But Fonterra’s Chairman, Mr Henry van der Heyden has responded: “The
Shareholders’ Council’s annual report recorded many of the issues confronting Fonterra
during the past year but the Board is confident that management has appropriate strategies to
counter these issues. A significant step up in the returns from Fonterra’s value-add businesses
is currently being implemented. Farmers are making it very clear that they expect Fonterra to
pick up the pace on performance and lift its returns to farmers year on year.”

New Zealand Dairies New Dairy Company for Canterbury
NZ Farmers Weekly/Annette Scott 4 Sep 2006; NZ Herald 8 Sep 2006
Annette Scott reports on plans to convert a Waimate vegetable processing plant. (Brief
excerpts): “Food Processors Ltd General Manager, Peter Stewart, confirmed the vegetable
factory at Studholme near Waimate, would be converted for the ‘on-processing’ of dairy
products and work was expected to begin in the next 12-18 months. A Companies Office
search revealed a new company, Food Processors (2006) Ltd, was registered on 24 August. It
is owned by New Zealand Dairies Ltd, a Te Aroha-based company. The Chairman of Food
Processors (2006) Ltd, is Keith Diprose of Te Aroha, and the company has applied to
Environment Canterbury for three consents. This indicated the proposed dairy factory would
be capable of processing a significant volume of milk.
Mr Diprose told NZFW four new companies were all related to the establishment and
development of the Studholme dairy factory. He confirmed Food Processors (2006) Ltd was
the company that was developing the dairy plant. This company was owned by New Zealand
Dairies Ltd, a privately owned company of which specific details of ownership were presently
“commercially sensitive.” Dairy Exports New Zealand Ltd would be involved with the export
of product from the new dairy plant. Mr Diprose added: “We plan over a period of time to
establish a processing plant capable of processing large quantities of milk to process both bulk
and value-added products producing a combination of products that would include cheese and
milk powder products for export.” Meanwhile, DFNZ Chairman, Frank Brenmuhl observed
there could be more new dairy companies than was the case, but the high cost of plant and
securing milk supply may be deterring investors. He said private companies were not
required to take all their suppliers’ milk, a major shift in an industry traditionally run by co-
operatives, which are required to do so.

Singapore’s QAF – Latest Snapshot
Weekly Times/Megan McNaught 6 Sep 2006
Singapore-based QAF earned $250m revenue in Australia last year and $886m worldwide.
The company has bought two dairy farms near Cobram. QAF General Manager, Paul
Peterson said: “The company has said it would like to have 20% of the dairy industry.” QAF
already owns 51% of Challenge Dairy in Western Australia.

                                                                                  Dairy Week

Six Scottish Dairies Alleged to have Colluded on Price
Ian Potter Associates 8 Sep 2006; BBC 12 Sep 2006; Food Business Review Online/Jamie
Crogan 7 Sep 2006; Dairy Markets/Agra Informa 7 Sep 2006
Six Scottish dairies have provisionally been found by the OFT to be in breach of competition
law, over a four year period from 2000 to 2003 having entered into an agreement and/or
concerted practice in the supply of fresh processed milk to ‘middle ground’ customers. The
OFT has issued a statement of objections setting out its provisional findings to the milk
processing dairies concerned (Wiseman, Ballantyne, Grahams, Quothquan, Renfrew and
Scottish Milk Dairies). Jamie Gregan reported: The OFT said: “The main provisional
finding is that the dairies engaged in price-fixing by sharing pricing information and
coordinating a series of price increases between them and colluded over arrangements not to
compete for each other’s customers, a form of market sharing.” However the OFT added:
“No assumption should be made at this stage that there has been an infringement of
competition law.” If the firms are found guilty, potential penalties could total as much as
10% of their worldwide turnover (estimated at ₤60m).
Meanwhile, according to the BBC, Robert Wiseman sold 500,000 shares in Wiseman Dairies
a day before regulators concluded it and five firms had colluded to agree milk prices. The
Financial Services Authority has now written to Mr Wiseman to ask him to explain the
background to the sale. Wiseman Dairies said it had not been informed of the regulator's
findings, which it is contesting, before they were published and the proximity of the share sale
was a pure coincidence. “We are satisfied that Robert Wiseman followed all of the
appropriate procedures and protocols in relation to the sale of shares,” a company spokesman
said. In a further press release Wiseman Dairies stated they will strongly contest the
allegations of being in breach of competition law and will address the Statement of Objection
within the timeframe given. And a spokesperson for Grahams Dairies said: “We strenuously
deny that we have breached competition law and we fully intend to make representations to
the OFT to refute the allegations.”

Royal Friesland Produce Strong First Half – International Performing Well
Friesland Foods 8 Sep 2006
Royal Friesland Foods performed well in the first half of 2006. Net profit climbed by 29% to
€58m. Revenue increased - the first time since 2003 - by 7%, to reach €2.3b. Consumer-
related activities in Southeast Asia and West Africa were the main contributors to the
improvement in revenue and net profit. Europe: Friesland Foods produced more cheese and
milk powder in the Netherlands. Regarding the increase in milk powder production, this was a
consequence of the greater volume of milk supplied by member dairy farmers in the first half
of 2006. Cheese and butter, however, felt the impact of declining selling prices. The margin
on milk powder shrank because of higher energy costs. The operating profit for Europe was
down by 5% to €79m. Asia: In Asia, revenue climbed by 28% to €430m. The increase is
attributable to higher sales volumes as well as higher selling prices. Most of the market
improvements were in Vietnam, Thailand, Hong Kong and Malaysia. The results in Indonesia
improved, mainly thanks to cost savings and the charging on more effectively of energy-cost
increases in the selling prices. Of the growth in Asia's revenue, €21m is attributable to
favourable movements in exchange rates. At constant exchange rates, revenue in Asia
increased by 20%. Operating profit in Asia soared by 75% from €24m to €42m. Other
regions: Revenue in the other regions (principally, West Africa and the Middle East) also
rose, climbing by 21% from €128m to €155m. Operating profit shot up by 125% from €8m to
Luc Dahlhaus, President of the Board of Management said: “I am pleased with the revenue
and results in Southeast Asia and West Africa. They were not affected by exceptional
currency fluctuations. On the other hand, part of our Dutch dairy activities had to contend
with difficult market conditions. When considering the 29% rise in net profit, this should be
seen in the light of a weak first-half 2005 in terms of revenue as well as results. In the second
half of 2005, revenue and results were both substantially better. This trend continued in the
first half of 2006.”
                                                                                Dairy Week

Glanbia plc Reports Half Year Results and $US105m Acquisition of Seltzer
Glanbia News Announcements 6 Sep 2006
Results: In the first half of 2006, revenue decreased €3.3m to €922.8m (H1 2005: €926.1m).
The downturn in performance in the Food Ingredients division, particularly the Irish
operations, led to a decrease in overall operating profit and margins. Operating profit pre
exceptional declined €1.9m to €36.4m (H1 2005: €38.3m). Profit before tax pre exceptional
at €30.2m was similar to the same period last year (H1 2005: €30.6m). Profit after tax for the
period pre exceptional at €26.9m was also comparable to the first half of 2005 (H1 2005:
€26.7m). Group net debt increased seasonally by €85.5m in the first half to €301.2m. Net
cash generated from operating activities, pre movements in working capital, was €34.2m (H1
2005: €29.0m).
International Joint Ventures: Glanbia’s strategy is to build international relevance in cheese,
nutritional ingredients and selected consumer foods and this incorporates a number of
strategically significant joint ventures producing cheese, whey and milk products.
UK: Glanbia Cheese, a joint venture with Leprino Foods, produces mozzarella cheese for the
European market. This business continues to steadily improve profitability and margins and is
expected to perform well for the full year. Nigeria: Nutricima is a joint venture with PZ
Cussons plc which manufactures and markets branded dairy based consumer products for the
Nigerian market. This business is performing to expectations with strong revenue growth and
further expansion is planned. USA: The commissioning of Southwest Cheese (SWC), the
Group’s joint venture with our main partners Dairy Farmers of America and Select Milk
Producers Inc., is substantially complete and the ongoing scale up of production is
progressing to plan.
Outlook: Operating costs remain a key ongoing focus for management, although previous
rationalisation initiatives support an improved performance from Irish operations in the
second half. In the USA, better cheese markets and continuing volume growth underpins the
delivery of a good result for the year overall. As trading currently stands, we expect to meet
market expectations for the full year and we remain on track to achieve double digit growth in
Acquisition: Glanbia plc today announced the acquisition of a California based nutritional
business, Seltzer Companies, Inc., (Seltzer). The total consideration is $US105m. Seltzer is a
leading US nutritional solutions company with strong expertise in the development of
customised formulations and the distribution of speciality ingredients for the nutritional
supplement, food and pharmaceutical markets. This is a significant acquisition for Glanbia.
Seltzer’s growth prospects broaden the potential for the Group’s US and international
nutritional solutions business where Glanbia is a key supplier of nutritional premixes and
functional customised formulations.
John Moloney, Group Managing Director of Glanbia, commented today: “The acquisition of
Seltzer Companies, Inc., combined with our existing Nutritionals business, extends Glanbia's
platform to develop a global Nutritionals business and will be earnings enhancing in 2007. It
also advances the international development of the Group into key global growth markets.”

Dairy Farmers of Britain Improves Year on Year
First4Farming/FWI 8 Sep 2006
Turnover for the year ending 31 March 2006 rose from ₤594m to ₤609m. Total group
operating profit grew almost ₤4m to ₤25.4m while pre-tax profits were up 1% to ₤16.86m. A
spokesman said the profits included the 1p/litre capital contribution paid by members on the
1.8b litres of milk supplied by them to DFB. About 53% of the milk produced by DFB’s
membership is now processed by the co-op but the full value of its recently launched Dairy
Farmers of Britain and Farmers’ Best brands had yet to have a major impact on turnover.
Chairman, Robert Knight, said: “We have invested significantly in the past year, we expect
our branded sales to make good progress.

                                                                                 Dairy Week

Call for Further Rationalisation of UK Dairy Co-op Sector
Farming UK Online 12 Sep 2006
Further consolidation within the dairy sector is being called for by the All Party Parliamentary
Group for Dairy Farmers. Farmers for Action spokesperson, David Handley, said: “Co-op
merger has been part of our campaign over the last six years. During that period we have
witnessed dramatic rationalisation among producers, however we have not seen the same
trend within the processing sector. We need to take costs out of production, and here we have
in effect three major PLCs competing against each other. However, I have been told on three
occasions by the Office of Fair Trading that they have no objection to the three co-ops
merging into two co-ops.”

China’s Mengniu Boosts First Half Profits
AP-Food Technology/Dominique Patton 7 Sep 2006
Mengniu, China’s biggest producer of liquid milk, said yesterday first-half profit jumped 39%
to CNY343.4m. Sales surged by 59% to CNY7.55b during the six months, more than
compensating for the significantly higher selling expenses to promote new products during
the period, as well as higher raw milk and sugar prices. In a statement to the Hong Kong
stock exchange, Mengniu explained: “Although competition for traditional products remained
intense, the group saw consumers become more aware of the nutritional value and specialities
of dairy products and thus demand for them is rising. The group believes that products such as
functional milk beverages, yoghurt and premium milk products will be the growth drivers for
the industry.” Liquid UHT milk nevertheless remained the primary revenue for the group,
accounting for more than 85% of its sales.

Groupe Danone Acquires Ukranian Rival
Dairyreporter.com/Neil Merrett 7 Sep 2006
Groupe Danone is planning to increase its presence in the growing Ukrainian dairy market by
purchasing local rivals Molochnyi Zavod Rodich. Danone is already a dominant force in
Eastern European dairy production with large market shares in Poland, Hungary, The Czech
Republic and Bulgaria. Out of the €13b profit Danone made last year, around €1.2b came
from its Eastern European operations. With its presence in the region increasing, the company
says it can add to these sales by investing in markets like the Ukraine.

Parmalat South Africa Invests in Volvo Milk Tankers
Cape Business News 11 Sep 2006
South Africa’s second largest producer of dairy products, has over the last year taken delivery
of 25 Volvo trucks to operate in its fleet of more than 75 truck and tanker combinations.
Their complicated logistics operation moves approximately 1.1 million litres of milk each
day. Following an exhaustive process of investigations and analysis of the various
manufacturers’ trucks on offer, Parmalat bought its first 15 FH12 380s with geartronic
gearboxes in September 2005. The latest 10 units ordered are the new generation 13 litre FH
400hp. These vehicles will run with full maintenance contracts that cover 800 000km over an
estimated 60-month operating life.

Davisco Foods International Wins Exporter of Year Award
Stagnito/Dairyfield 12 Sep 2006
Davisco Foods International has been selected as the first recipient of the Exporter of the Year
Award, introduced by Dairy Field magazine and the US Dairy Export Council to honour dairy
manufacturers. Davisco produces 185m pounds of cheese annually, as well as 10m pounds of
whey protein isolate (WPI). Davisco produces a full-range of whey products. Davisco
continues to differentiate itself by branding its whey products - BioPro, BioZate and BioPure
to enhance its position in the global marketplace.

                                                                              Dairy Week

Farmgate Issues
Drought Concern in Australia and New Zealand Continues
Dairy Australia Release 12 Sep 2006; Country News 11 Sep 2006; Dairy Markets/Agra
Informa 7 Sep 2006;
More than 2000 dairy farmers in South East Australia are entering spring with very low or
virtually no allocations of irrigation water, and with low levels of subsoil moisture. Dairy
Australia is working with State departments and Regional Development Programs on a
number of initiatives to provide information in the worst affected areas. The dry conditions
include South East Queensland, the majority of NSW and significant areas in Western
Australia. Northern Victoria dairy farmers Graham and Helen Hann have just recovered
financially and emotionally from the last drought and now they don't know what to do as they
look towards a new one. The Hanns are milking 100 cows. Mr Hann said: “We don’t reckon
we have the resources, and our age is not on our side to milk through and recoup the losses
out the other side.” He said in 2002, the Victorian Government Farm Business Support
Package had helped. “But it doesn’t help confidence when every time you turn around
they’re taking water off farmers.” Meanwhile in New Zealand, farmers and economists were
placed on alert this week when weather forecasters said there was a 50% chance New Zealand
could have an El Nino summer and autumn, bringing drought conditions to parts of the
country and reducing milk flows. The National Institute of Water & Atmospheric Research
(NIWA) put the chances of a weak El Nino pattern at 50%, double the usual probability

While Cow “Parking” Starts in Northern Victoria
Country News/ Nonie Stava 11 Sep 2006
Fonterra Milk Supply Manager for Northern Victoria, Durham Prewett, said six Fonterra
customers had taken up cow parking opportunities in the Western District and Murray Valley.
“No-one’s tried to park the whole herd, they’ve just lightened the load.” Murray Goulburn
Cobram Field Services Manager, John Furphy, said a few of their Goulburn suppliers were
considering cow parking, but some were hesitant because of nasty experiences in the previous
dry. “The grain price is lower and the milk price is higher, so I think people will be more
inclined to leave them at home. But we are still helping farmers find willing helpers in
Southern Victoria.” Tatura Milk Supply Manager, Stuart Brown, said some of the company’s
suppliers had parked cows. “I know some are having their cows parked. People who used it
as a strategy last time would be considering doing it again. Options will gradually disappear
throughout the season, but new ones might become available.”

The Cockerells Cling to Their Colostrum
Country News/Nonie Stava 7 Aug 2006
On John and Margaret Cockerell’s Waaia dairy farm, they do not sell their colostrum to dairy
manufacturers, but rather store it in vats and cherry barrels to feed to their calves. Mrs
Cockerell said they stored as much as 3000 litres of the sour milk that needed to be stirred
once a day. “We refuse to sell it, it’s just too valuable for our calves.”

Average Farms Better off With Rotary Milking System Than Automatic
NZ Dairy Exporter/John Waugh Sep 2006
Analysis by Dexcel has shown that automatic milking systems are not economically viable for
the average New Zealand farm compared with a traditional rotary dairy. It shows that the cost
of producing a kg of milksolids through an automatic system milking 450 cows would be
27% higher than a rotary system. Significant changes in the cost of technology and
implementation as well as improved cow throughput would be required. However, practical
findings had shown that automated systems could become a viable financial and practical
option for low-input pastoral dairy farming.
                                                                                Dairy Week

Industry Stakeholders
AgriQuality CEO Moves On – Successor Sought
AgriQuality Release 12 Sep 2006
AgriQuality’s long-serving CEO John Morgan is to move on from New Zealand’s largest
food safety and biosecurity business to pursue private business interests. He has been CEO of
AgriQuality for seven years. AgriQuality Chairman Rakihia Tau said: “Under his leadership,
AgriQuality has become a world-leader in food safety and biosecurity services - growing
annual revenues from $38m to over $80m. AgriQuality is a global leader in the science of
bringing together leading edge technology and the most technically proficient experts to
deliver excellence in food safety, quality assurance and biosecurity work. The Board has
begun a search for a successor to Mr Morgan, who will stay with AgriQuality until

Industry Levy Vote for Australian Dairy Farmers
ABC Rural 11 Sep 2006
Dairy Australia is calling for farmers to increase their support for research and development
when an industry levy is put to the vote early next year. Many farmers have voiced
disappointment with the performance of the peak industry body at recent meetings to discuss
the levy. Dairy Australia’s John McKew says the vital investment must continue. “It’s really
building an understanding amongst dairy farmers about what it is that their national service
organisation actually does for them.”

Dairy Equity Limited Relaxed About Shareholder Council Pressure
Dairy Equity Release 12 Sep 2006; The Dominion Post/Terry Hall 11 Sep 2006
Dairy Equity Limited says it is likely that today’s Shareholder Council criticism of Fonterra’s
payout performance will increase farmer demand for equity SWAPS. Dairy Equity Chairman
Peter Jensen said: “We expect that scrutiny of Fonterra’s performance and debate over its
capital and payout structures will be ongoing. We are very comfortable with this and see it as
positive. Obviously we will adjust the price we pay for SWAP agreements if Fonterra does
make structural changes, but our agreement is flexible and for now we are still offering to
enter SWAP agreements at the current Fair Value share price of $6.56/share.” According to
Terry Hall, it was thought Dairy Equity had exceeded the $80m being sought. Demand was
sufficiently strong for broker ABN Amro not to bother with a roadshow, and few shares were
allocated to rival broking firms. Now its shareholders will be waiting to see whether investors
in Dairy Equity appear to feel it offers a chance to gain an exposure to the country’s most
important industry.

United Dairy Farmers of Victoria Receive Federal Grant
The Land 7 Sep 2006
A $40,000 Federal Government grant for young leaders has been given to the UDV who will
use the grant to develop an integral industry supported training program for young people.

Robot ‘Bruce’ Making Milk A Lot More Valuable
The New Zealand Herald/Stephen Ward 11 Sep 2006
A robot named ‘Bruce’ is at the centre of attempts to spark a value-added revolution in the
dairy sector. ‘Bruce’ is an on-farm fractionation device designed to separate out high-value
proteins and fats from raw whole milk for use in the neutraceutical industry. His developers,
Dexcel and Sensortec believe robots have the long-term potential to add tens of millions of
dollars a year to dairy sector export earnings. Sensortec CEO Rod Claycomb estimates that
equipment for a 600-plus cowherd would cost in the range of $100,000-$200,000.

                                                                                Dairy Week

New Zealand & Gulf States Start Free Trade Agreement Negotiations
National Business Review 7 Sep 2006; Dairy Markets/Agra Informa 7 Sep 2006
The Foreign Ministers from the six Gulf Co-operation Council (GCC) member states have
agreed to begin negotiations for a free trade agreement with New Zealand. The GCC States
imported a total of $720m in exports from New Zealand over the last year. According to
Trade Minister Phil Goff, New Zealand’s traditional big exports like dairy and meat should
stand to benefit, along with forestry, horticulture and manufacturing. Meanwhile, the United
Arab Emirates (UAE) may lift quota levels and duties on a number of basic food items. The
aim would be to increase competition among importers and reduce food prices. The goods
would include condensed and powdered milk and cheese.

Fonterra Chairman Reflects on Milk Supply
NZ Farmers Weekly/Glenys Christian Sep 2006
Glenys Christian, Editor, interviews Chairman, Mr Henry van der Heyman: “Fonterra had
refreshed its growth targets. We don’t see supply getting in front of demand. Asia, the
Middle East and Africa were all showing growth in milk demand of 3% a year while milk
supply around the world was growing by 2%. Fonterra was expecting its milk production to
lift by 2% a year with milk flows out of Australia being relatively flat over the next two to
three years. Eastern European would become a net exporter not an importer in ten years time.
More than 90 new suppliers had come on board this season. Milk production is tightly linked
to water and the debate hasn’t started yet. It will be one of the key drivers of whether we get
milk growth in New Zealand.”

Dominican Republic Dairy Farmers Threatened by DR-CAFTA
Dairy Profit Weekly/David Natzke 11 Sep 2006
A Dominican Republic Deputy Minister said about 58,000 small and medium sized dairy
farmers would be put out of business when the Dominican Republic – Central American Free
Trade Agreement (DR-CAFTA) is in place, according to the Dominican Republic News.
DR-CAFTA is expected to be implemented this Fall.

UK Farmgate Prices Need to Rise Says NFU While Production Drops
First4Farming 4/11 Sep 2006
Milk prices should rise now if farmers are to retain any faith in the market and invest in the
future, says the NFU’s Gwyn Jones: “There is clear evidence from independent sources that
commodity prices have gone up. I would appeal to processors to show us that the market
works.” Ken Boyns, the MDC’s chief economist, admitted it was difficult to say for how
long this upward trend would continue. But even if values rose for just two months those
making dairy products would be benefiting from higher prices, he said. Mr Jones added:
“Unless the market decides this money is rightfully owed to farmers we could ask all our
members to invoice their milk buyer for the money owed.”
Meanwhile, milk production in the UK has fallen to its lowest level since deregulation,
according to estimates from the Rural Payments Agency. Provisional wholesale milk
deliveries in August were 1.103bn litres, a drop of 33m litres compared with the same period
last year. Milk production from April to August was 5.9bn litres, 69m litres lower than the
previous year and the lowest figure since the break up of the Milk Marketing boards 13 years

                                                                                 Dairy Week

India’s Mother Dairy Lifts Prices
The Hindu/Staff Reporter 7 Sep 2006
New Delhi-based Mother Dairy has announced that its revised prices are aimed at enabling
dairy cooperatives to pay a higher price to rural milk producers and to offset the increase in
the cost of processing and distribution. “Customers may need to pay more for their tea and
coffee to make up for the increase in prices,” says Vikas Gupta who runs a tea stall. “We have
the option of using milk and milk products from other companies, but these companies too
may now hike their prices.”

United States Imports of Milk Protein Concentrates - Latest
USDA-Economic Research Service/’Dairy Backgrounder’/James J Miller/Don P Blayney
26 Jul 2006; Dairy Line/Lee Mielke 12 Sep 2006
Imports into the US of concentrated milk protein products (casein, total milk protein and milk
protein concentrates) have been a contentious issue for some time. Much of the concern over
today’s imports of concentrated protein products can be traced to the handling of casein
imports in the past. Casein was not considered a primary agricultural product and therefore
was not included in the support-program waivers that allowed such things as non-tariff
barriers and export subsidies. Milk protein concentrates (MPC) are the current manifestation
of a situation similar to the casein situation of the past. Countries (particularly New Zealand)
devoted considerable efforts to produce dry MPC suitable for international trade, MPC are
often produced to custom specifications with protein content ranging from 40 to 90%. There
were some allegations that some of the MPC imported was actually a simple mixture of
casein and nonfat dry milk. Processors favour MPC where the capability to tailor the product
composition is important or where the lactose found in skim milk solids is not needed or
wanted. However, most analysts have concluded that imports of MPC aggravated the surplus
of nonfat dry milk in the late 1990s and early 2000s. Subsidisation of domestic MPC
production may not be very effective and might be subject to WTO challenge. Imports of
MPC may be an important issue for the domestic industry if international protein prices are
viewed as badly distorted.
DairyLine’s Lee Mielke posed a question to NMPF’s Vice President, Rob Byrne, on whether
the US would be vulnerable to a challenge in the World Trade Organisation if the Food &
Drug Administration began allowing the use of liquid milk protein concentrate in cheese
manufacturing while banning the dried form. “We really would not be subject to a WTO
challenge,” Byrne said, “Because we’re not doing anything to stop the imports of these
products.” As to its use in cheese making, Byrne said, “As long as we’re treating the domestic
product and the imported product the same, then we’re not subject to a WTO challenge. These
products would use liquid UF milk as opposed to the dry MPC.”

Latest European Dairy CAP Recipients
Dairy Markets/Agra Informa 7 Sep 2006
CAP recipients in 2004/05: non-farm payments
                                  (₤)                                                   (₤)
Fayrefield Foods Ireland         18,361,816.61       Nestlé UK                        5,116,853.67
Philpot Dairy Products           13,229,777.84       Meadow Foods                     4,909,609.00
Meadow Foods                     12,471,426.15       TMC Dairies                      3,100,963.74
Milk Supplies                     9,775,832.61       Lakeland Dairies                 2,938,066.39
Dale Farm                         8,616,911.24       Express Dairies Milk             2,270,698.41
It is likely that aid receipts to dairy traders in future years will be somewhat lower as the EU
dairy reform program takes effect.

                                                                                 Dairy Week

China – Latest Snapshot – Companies and Infant Formula
USDEC Press Centre 8 Sep 2006; Dairy Markets/Agra Informa 7 Sep 2006; AP Food
Technology/Dominique Patton 7 Sep 2006
“With 29% growth to $11.1b in 2005, dairy is the fastest growing of China’s food segments.
Mengniu’s 58.7% first-half sales growth to $945m was driven by new value-added products,
rising market share and increased fluid milk sales. Net profit jumped 39% to $43.2m. It plans
to invest $176.4m to boost production capacity in 2006. Yili increased sales 30% in the first
six months of 2006 to $712.5m. Net profits were up by 11.5% to $21.4m. A new $47m yogurt
and ice cream plant is under construction in Sichuan province, and a $26m milk powder
facility in the northwestern Xinjiang region. Six-month sales for Bright Dairy dropped 2.5%
to $312.5m while profits plunged 40.2% to $11.3m.” (USDEC China office; AgraEurope’s Dairy
Markets Weekly, 9/6/06; XFN-Asia, 9/6/06; The Standard, 9/6/06) Meanwhile Dairy Markets
reports China’s Yili dairy group is to spend 207.9m yuan (€20.5m) on building a new milk
powder production facility. The plant in Shihezi in Xinjiang region, is expected to be
completed in 15 months’ time.
Dominique Patton reviews the formula market: “Concern has been expressed by Chinese
authorities on the high levels of protein currently found in milk powder for infants. Recent
research suggests that excess protein, causing rapid growth during infant years, can increase
the risk of heart diseases and diabetes later in life. The percentage is around 1.8%, much
higher than needed, says Wang Dingmian, Deputy Chairman of the Guangdong Dairy
Industry Association. “Though there is not an international standard for this issue, most of the
developed countries are restricting protein content to about 1.1-1.3%.” There are also rising
concerns about obesity among children. China is paying increasing attention to quality and
nutritional issues. It has seen several safety scares, some resulting in infant fatalities. This
week YaShiLi, based in Guangdong province, said it would recall certain batches of
powdered milk destined for middle-aged and elderly people because of sanitary concerns.
Currently China produces about 1.1 million tons of powdered milk each year. Since tariffs
dropped last year to meet WTO requirements, imports have surged to more than 130,000 tons,
an 80% increase.”

New York Dairy Farmers Call for Federal Aid
The Business Review Albany 8 Sep 2006
New York’s dairy farmers are being hit with a ‘double whammy’ of low milk prices and high
fuel costs, according to New York Farm Bureau President John Lincoln. Two years ago
farmers were being paid $1.35 for a gallon of milk while fuel cost $1.91 per gallon. Currently
farmers are getting $1.05 for a gallon of milk, and fuel prices have gone to $2.81 per gallon.
The Farm Bureau and Agri-Mark, a farmers co-operative which represents over 500 New
York farmers are calling for Federal action to provide New York farmers with emergency
funds and price supports. Agri-Mark is urging New York state to spend $60m to cover
farmers losses for the period from April through September.

Cheap Milk Imports Blamed for South African Dairy Farm Exodus
Dairy Markets/Agra Informa 24 Aug 2006
Nearly 200 milk producers left the South African milk industry over the April 2005-April
2006 period, according to the Chief Executive of the Milk Producers Organisation of South
Africa. The main reason say experts are cheap imports which have prompted authorities to
impose tighter controls. Chief Executive, Bertus de Jongh says farmers left as a result of
lower profitability, mainly driven by lower producer prices and higher input costs. The strong
Rand has resulted in an increase in imports and expectations for a rise in producer prices has
not materialised. Analysts say calls by local dairy producers for a cut in dairy product imports
by retailers were unlikely to stem the rising tide of imports.

                                                                                 Dairy Week

Further Report on Dairy in Argentina & Chile Released by CARD
Centre for Agricultural & Rural Development/Iowa State University/FH Fuller/JC Beghin/ BB
Babcock/W Foster Aug 2006. Brief excerpts over three weeks. This week: Argentina (Part 1)
Argentina’s dairy processing sector is dominated by 10 large companies that process more
than half of the milk produced in the country. The three largest dairy companies are SanCor,
Mastellone Hermanos and Saputo. There are also about 1,000 mid-sized plants that specialise
primarily in cheese production. According to one industry analyst, the processing capacity in
the country was at roughly 90% utilisation in December 2005. Argentina’s dairy processing
sector is divided into two distinct components: an export oriented segment and an “informal”
or domestic segment. The export-oriented firms account for 50%-55% of Argentina’s dairy
production, and the remaining 45%-50% stays on the domestic market.
SanCor Co-operative controls about 18% of Argentina’s milk production, and it receives milk
from about 2,100 farmers. The bulk of SanCor’s products are destined for the domestic
market. SanCor uses independent marketing agents to distribute its products to smaller stores
and shops, but it deals directly with supermarkets. SanCor also has a marketing agreement
with Nestlé to distribute Nestlé’s products domestically in Argentina. In 2004, SanCor
established a co-operative marketing agreement with Arla Foods, which is owned by Fonterra.
Mastellone Hermanos. SanCor’s primary domestic competitor is Mastellone Hermanos,
which also processes about 18% of total milk production. Mastellone focuses primarily on
fresh products for the domestic market, particularly in the Buenos Aires region. Mastellone
also exported $52m in dairy products in 2005. Saputo is Canada’s largest dairy processor and
Argentina’s third-largest processor. Saputo branched into the South American market by
purchasing Molfino Hermanos S.A., and it currently operates two large processing facilities in
Argentina. Saputo’s processing capacity is estimated at 1.6m litres, roughly 10% of total milk
Argentina is the third-largest exporter of WMP, shipping 185 thousand metric tons (tmt) in
2005. Since the start of the recovery from the economic crisis in 2003, Argentina’s cheese
exports have nearly doubled, reaching 45 tmt in 2005. However, the Argentine government
put a damper on export growth by increasing the export taxes on dairy products. In addition,
the government no longer provides partial refund on the value added tax (VAT) for exported
dairy products. The Argentine processors use plants in Uruguay when they face processing
capacity constraints. This allows them to bypass the export tax. The export tax level appears
to be driven primarily by the desire to keep sufficient products in country to satisfy domestic
demand at lower prices. (Next week: Part 2)

US DEIP Scheme Unlikely to be Resumed
Dairy Markets/Agra Informa 7 Sep 2006
US Secretary of Agriculture Mike Johanns, gave dairy farmers little hope on the resumption
of the use of Dairy Export Incentive Program (DEIP) subsidies. “I can take a look and see if
it makes any sense, but at least at this stage, it has not been brought to me that we should be
headed toward DEIP.” The US has not subsidised dairy exports since January 2004. He saw
a great deal of potential in the international market for dairy products and said USDA has
forecast this year’s US dairy production exports at $US1.6b.

New Zealand Butter Finds Support All the Way from Norfolk!
NZ Dairy Exporter/Letter Sep 2006 (Excerpts)
Dear Editor “I am writing to you from Norfolk, having recently read of EU Trade
Commissioner Peter Mandelson’s actions suspending imports of New Zealand butter. Many
of us over here dislike the EU intensely since it has no legitimacy at all yet its Commissioners
churn out directives which stifle everyday life around Europe. In the meantime, I intend to do
everything I can to protest including buying more New Zealand dairy produce.” Jon Dellar,
Old Hall Farm, Wymondham, England.
                                                                                    Dairy Week

Solutions Sought To Help Barbados Dairy Industry
The Barbados Advocate/Nicholas Cox 11 Sep 2006
Experts say a Dairy Board is required to help the Barbados maintain their dairy sector.
Farmers say they would welcome any incentives that could be granted, such as proposals to
help access loans at preferential rates to upgrade milking parlours and a reduction in
bureaucracy. The Chairman of the Rural Development Commission said farmers needed some
regulation and supported the decision to pay the top price for milk across the board and to
suspend quotas.

Vietnam’s High Milk Retail Prices No Help for Farmers
Vietnam New 11 Sep 2006
Despite record retail prices for milk, dairy farmers in Vietnam aren’t seeing the benefit,
pushing many to the verge of bankruptcy. Vietnamese farmers currently sell milk for some of
the lowest prices in the world, at US$0.20 per kg, compared to $0.30 in China and $0.60 in
Switzerland. Meanwhile, milk retailers can command $0.82 per kg. Farmers are getting rid of
dairy cows and lowering production due to the sorry state of milk prices says Livestock
Production Department director Nguyen Dang Vang. The department figures reported the
number of dairy cattle nationwide had fallen by 1.2% in the first half of the year.

Uncertain Times For Fijian Dairy Farmers As Leases Expire
Fiji Times/ Verenaisi Raicola 7 Sep 2006; Fiji Times 9 Sep 2006
Since the coup of 2000, production of milk among Fiji farmers has continued to decline.
Expiration of land leases and the low price of milk has forced farmers to abandon the dairy
industry. The Rewa Dairy Co-operative has created a land committee to deal with the issue of
land lease expiry, which has the support of the Native Land Trust Board. Tailevu North dairy
farmers fear they could lose their land and years of hard work if landowners decided not to
renew their leases. Raiyawa settlement dairy farmer, Ashik Hussein, said dairy farming is the
only trade they know, adding that there were at least 10 farmers in the area who refused to
invest funds or extend their farms because of lease renewal problems.

International Market Review
NZ Farmers Weekly/Agri-fax.co.nz 4 Sep 2006; Dairy Markets/Agra Informa 7 Sep 2006;
ASB Bank/Prof W Bailey/Western Illinois University 5 Sep 2006
   NZFW/Agri-fax.co.nz       ($US/tonne fob)
                       Past week      4 weeks ago     3 months ago     1 year ago     2 years ago
      Butter             1520            1575            1650             1975           1850
      SMP                2120            2120            2050             2225           2050
      WMP                2110            2090            2070             2250           2075
      Cheddar            2600            2625            2625             2900           2750
      Casein             6300            6350            6400             7150           5825
   Dairy Markets:                 ($US/tonne fob) Oceania
      Butter    $1600-1750   WMP       $2100-2200      SMP      $2150-2250
   ASB Bank/Bailey: “European SMP prices are remaining strong, moving up last week to
    yet another historical high. Strong internal demand, when combined with expectations
    that European fluid production will be down from last year’s level, point toward
    continuing near term high prices. But according to one price series, Oceania SMP is
    trading at nearly a 30% discount to European origins. European butter prices were
    unchanged from the previous week. Oceania butter prices finally stopped their decline.
    Expectations continue that New Zealand butter will soon be cleared for a resumption of
    sales in the EU. With Oceania butter prices at their lowest level since early 2004, and
    European prices stuck at current levels, downside price risk appears limited.”
Note: Prices are a guide only and historical, they should not be used to make commercial decisions.

                                                                                 Dairy Week

Closing the Final Loop on Dairy Waste Research
How Now Gippy Cow/Graeme Allinson/Danielle Auldist Sep 2006
The Closing the Loop (CTL) research project is now entering its final year. Some major
highlights of the research: • The first ever detailed survey of resource usage and waste issues
across 28 major dairy processors. The survey found the dairy industry currently spends
around $37m per year on waste management. • The treatment of fat solid can be improved by
up to 30% using ultrasonic technology, although this option is as yet not economic. • An
assessment of the constitution of dairy processing waste streams to evaluate recycling and
reuse opportunities. • A preliminary study of selected Victorian dairy factories currently
applying dairy processing sludge to land showed no noticeable detriment to soil structural
properties and fertility. • That CIP products are a major contributor to the elevated levels of
salt/sodium in some dairy factory waste streams, limiting the possibility of reuse due to the
potential for soil damage. Over 60 cleaning products were identified that could fill the role of
a standard alkaline cleaner while reducing sodium output by at least 20% The three top-
performing chemicals are now being trialled in factories for their cleaning ability. • The
design and construction of a membrane-based pilot plant to meet the dairy industry’s needs,
which will be trialled shortly in a factory. Removing salt from waste water allows greater
reuse of water to take place, and of the technologies assessed – the most effective was found
to be membrane-based. • CTL researchers have been able to design an electrolysis cell that
can produce cleaning solutions from what was otherwise waste product. For more
information about the CTL project contact melanie.carew@dpi.vic.gov.au

Company Receives Award for Bacteria Disinfection Product
Foodproductiondairy.com/ Ahmed ElAmin 5 Sep 2006
Netherlands-based company EBI Food Safety has won a Frost & Sullivan award for
innovation in food safety for its efforts in developing pioneering bacteriophage technology for
use in disinfecting cheese and meats. To food pathogens like Listeria, bacteriophages are the
viral hit squads of the microscopic world. In May, EBI Food Safety began commercial
production of its first product, Listex P100, a phage preparation that can eliminate pathogens
from cheese and meat products. It is a natural product free from genetic modification. The
company expects to launch several other phage products, including those that target
salmonella and campylobacter.

Fonterra Improves Energy Management but Effluent Discharge Queried
Fonterra Release 7 Sep 2006; Manawatu Standard/Michael Cummings 11 Sep 2006
According to an Energy Efficiency Conservation Authority (EECA) report, Fonterra’s Energy
Reduction Project achieved energy efficiency savings of 1.8 petajoules last year. Energy is
Fonterra’s third-highest cost after wages and depreciation. Many of Fonterra’s New Zealand
manufacturing sites have now exceeded the 10% Reduction Target, with its Lichfield site
reaching 17%. Savings are the result of identifying more efficient ways of working and
investing in new, energy-saving plant equipment. Fonterra is planning to invest $20m of
capital in energy efficiency initiatives over the next two years.
Meanwhile, Fonterra’s plan to discharge effluent in the Manawatu River for the next 15 years
could be derailed by Horizons regional councillors. Horizons Chief Executive Michael
McCartney says councillors will be asked to consider its company’s reply to an appeal to
Fonterra’s resource consent, which could see the conditions of the plan changed. The July
decision to allow Fonterra to discharge waste into the river for 15 years was appealed in the
Environment Court by the Waitarere Care Association last month. It is up to the councillors
to decide whether they choose to endorse or challenge the resource consent in the reply to the
                                                                                  Dairy Week

Australian Japanese Cream Cheese ‘Saved’ by Codex Ruling
Bulletin Food News/Australian Government Sep 2006
A recent win for Australian cream cheese exporters demonstrates the importance of food
industry involvement in Codex. A customs dispute between Japan and Australia erupted over
the definition of medium fat cream cheese (MFCC) with Japan wanting to define it as ‘dairy
spread’ rather than ‘cheese’ because it contains protein levels between 0.5% and 2%.
Australian exporters of MFCC to Japan successfully pushed for an amendment to the
definition of cheese at the 7th meeting of the Codex Committee on Milk and Milk Products.
As a result, exports of MFCC, worth about $100m a year, can continue to Japan. The Codex
general cheese standard and individual cheese standards did not contain a minimum protein
requirement and Australia supported by the USA, argued that there was no technical or
processing reason to include a minimum value for protein. It was also argued that the
introduction of a minimum value for protein could be used as a disguised trade barrier.

While Kraft to Invest $US10m in US Cream Cheese Manufacture
www.newswatch/AP 12 Sep 2006
Kraft Foods will invest more than $10m and retain 331 jobs at its cream cheese
manufacturing plant in upstate New York. The Lowville plant is Kraft’s largest cream cheese
manufacturing plant, processing more than 300m pounds of milk annually, supplied entirely
by a co-operative of more than 200 local dairy farms. Company officials say they plan to
reconfigure a packaging line at the facility, install advanced waste treatment technologies, and
upgrade electrical service.

UK Factory to Recycle Plastic Milk Bottles but Sticky Labels a Problem
Dairy Reporter/Chris Mercer 5 Sep 2006
The UK’s first factory able to recycle HDPE resin from plastic milk bottles could start within
a year. The agency, the Waste and Resources Action Programme (WRAP), is hopeful that
successful trials of its plan to recycle HDPE resin will bring commercial backing to build the
Britain’s first plant for that purpose. It has almost completed a large-scale trial to examine the
feasibility of a scheme that would pick up used milk bottles from consumers’ homes and then
recycle them to get food grade HDPE resin. The trial has found that using 30% cent recycled
HDPE in milk bottles did not alter the colour or appearance of the milk inside, indicating the
practice would be acceptable to consumers. However, one problem found was that the sticky,
polypropylene labels used on the milk bottles were difficult to wash off.

Alto Dairy Wins 2006 World Dairy Expo With Colby Jack
FDL Reporter.com 12 Sep 2006
Alto Dairy Co-operative’s Colby-Jack Cheese was named Grand Champion of the 2006
World Dairy Expo Championship Dairy Product Contest. Judging took place 6 and 7
September in Wisconsin.

New York Dairy Plant Producing Hormone and Bacteria-Free Milk with Extra Shelf Life
The Daily Star/ Patricia Breakey 11 Sep 2006
Mountainside Farmers New York State milk-processing plant is using technology to produce
ultra pure milk that has an extended shelf-life. Demand has grown for organic milk but
consumers don’t want to have to pay the premium price, so Mountainside is using technology
developed in Canada to produce milk that is free of hormones and antibiotics and tests all of
its milk for the presence of the six antibiotics most commonly used on dairy cows, surpassing
the mandatory testing required by state and federal regulations. To produce the milk, an
advanced bacterial centrifuge and filtration system is used to purify the product, removing 90
to 95% of bacteria normally present. The milk has a shelf life of 16 to 17 days.

                                                                                   Dairy Week

Innovation the Key to Dairy Products
Dairy Australia Release 7 Sep 2006
The only way for dairy companies to escape the spiral of death was to innovate, according to
food innovation expert and the head of Netherlands-based NIZO Food Research who was the
keynote speaker at a dairy forum in Melbourne. Dr Ad Juriaanse addressed senior executives
from Australia’s dairy, biotechnology and research companies and other rural industries at a
forum hosted by Dairy Australia and the Victorian Department of Innovation, Industry and
Regional Development. Dr Juriaanse said: “The first question companies need to ask is what
knowledge is really competitive and what can be outsourced? Then to ensure that the best use
of ‘all available knowledge’ is made, companies need to find professional partners that can
translate the science into technology and apply it. Those with specific criteria can help
industry with new ideas and new technologies for desired benefits, speed, low cost and –
through patenting – a sustainable competitive advantage.” Also speaking at the forum were
the heads of Glanbia Nutritionals from Ireland, Nutricia Australia, DuPont Australia, and
Tarac Technologies from Australia who gave presentations about the latest trends in
innovation, their approaches, and how they identified new horizons and opportunities. Dairy
Australia Managing Director Mike Ginnivan said that the forum was the first of its kind for
the Australian dairy industry and that it could ultimately transform the conventional ways the
participants thought about innovation, giving them new ideas and enthusiasm.

UK Study Shows Organic Milk Has Healthy Additives
Just-food.com/Joe Ayling 11 Sep 2006
New research by the UK Organic Milk Producers’ Association reveals that organic milk
contains higher levels of fatty acids than traditional milk. While organic milk has always been
promoted for what it didn’t contain, it now could now be marketed on the active health
benefits, namely fatty acids and omega-3. The Association has asked the Food Standards
Agency to “revise its position and recognise for the first time that there is a nutritional
difference between organic and non-organic milk.” Association Marketing Manager, Rosie
Palmer says their findings are a further boost to a product that is already growing rapidly –
47% in the full-year period to August 2006. “I would be surprised if it doesn’t have a positive
effect on the success of organic milk,” said Palmer. “Consumer perception is that organic is
better, but it can be difficult to prove it scientifically.”

300-year-old Stilton Makes Comeback
Dairyreporer.com/Chris Mercer 22 Aug 2006
There are only seven dairies in the world licensed to make Stilton blue cheese and with the
surge in consumer demand this year, their work will be cut out for them. Sales of Stilton have
risen 15%. Stilton was granted Protected Designation of Origin status across the EU in 1996.
It subsequently has trademark rights in some non-EU countries, but this privilege only
continues in theory if Stilton is made strictly to its traditional recipe.

New Research Report on UK Dairy Companies
Business Wire 11 Sep 2006
Research and Markets has announced the addition of Dairy Products in the United Kingdom
to their offering. A comprehensive guide to the size and shape of the market at a national
level, it provides the latest retail sales data (2000-2005), allowing identification of the sectors
driving growth. It identifies the leading companies, the leading brands and offers strategic
analysis of key factors influencing the market including forecasts to 2010. For further
information: press@researchandmarkets.com
                                                                                  Dairy Week

Dairy Not Implicated in Insulin Sensitivity
Virgo Publishing 11 Sep 2006
According to a team of researchers at the Arnold School of Public Health, University of South
Carolina, dietary magnesium and calcium specifically, but not dairy intake generally, impact
insulin sensitivity in people who do not have diabetes. In their study, 1,036 US adults without
diabetes were evaluated from 1992 to 1999 as part of the Insulin Resistance Atherosclerosis
Study. Each participant’s diet and supplement intake was monitored at baseline and after five
years of follow-up; food frequency reviews were conducted to record dairy intake, and
individuals' dosages of magnesium and calcium were taken and recorded from bottle labels.

Infant Formulas – An Emotive Market – While Charges Laid in Israel
Dairyreporter.com/Jess Halliday 11 Sep 2006; Dairy Markets/Agra Informa 11 Sep 2006
The infant formula market, a highly emotive area, offers many opportunities for follow-on
products aimed at mothers, but watchdogs are keeping a close eye on marketing tactics as
they drift dangerously close to claiming that their products are as preferable to breast feeding.
Research and development on the ingredient side has centred on replicating the healthy
profile of breast milk as far as possible. Swedish company BioGaia’s probiotic bacteria are
isolated from human milk and is used in certain baby food products marketed in Europe.
Canadian fish-derived omega-3 supplier, Ocean Nutrition Canada, has taken a slightly
different tack, targeting mothers with an omega-3 profile that replicates that found in natural
breast milk.
Meanwhile, three former company officials of Remedia and five food inspectors are about to
be charged with grave negligence in connection with infant formula defects, which led to the
deaths of at least two babies in 2003. The non-dairy products were pulled from the shelves
when it was discovered that they lacked adequate Vitamin B1 content. As well as the deaths,
20 more babies were hospitalised.

Lactose Intolerant Children Missing Out on Dairy
Dairy Reporter/Stephen Daniells 6 Sep 2006
Children with lactose intolerance are missing out on essential nutrients by avoiding dairy, and
could benefit from probiotics and aged cheeses, say a review from the American Academy of
Pediatrics (AAP). Since milk can cause problems, the reviewers recommended partially
digested products, such as yoghurts and cheeses that contain live bacterial cultures, as well as
pretreated milks, viz: “Evidence that avoidance of dairy products may lead to inadequate
calcium intake and consequent suboptimal bone mineralization makes these important as
alternatives to milk.” Research has shown that yoghurts containing live cultures are well
tolerated by people with lactose intolerance because the bacteria partially digest the lactose
into glucose and galactose before the yoghurt is consumed.
Aged cheeses also get a boost from the AAP based on the observation that they have lower
lactose contents than other cheeses. Lisa Miles, a nutrition scientist from The British
Nutrition Foundation told Nutraingredients.com: “In the UK it is estimated that only 2% of
the population suffer from lactose intolerance. Milk and dairy products are important sources
of protein, calcium and riboflavin, so avoidance of dairy products is not advised without good
reason. Complete avoidance of dairy products is not usually necessary in lactose intolerant
children. Small amounts of milk spaced throughout the day, other dairy products such as
yoghurt and cheese, and milk consumed with other foods are usually better tolerated.”

                                                                                            Dairy Week

  FSANZ – Slow Progress on Trans Fats?
  NZ Herald/Martin Johnson 9 Sep 2006
  Green MP, Sue Kedgley, comments: “Food Standards Australia New Zealand have failed to
  warn New Zealanders about this risk or to reduce their presence in the food supply.” But the
  regulatory agency’s spokeswoman said yesterday it had begun investigating trans fats.
  Labelling changes were possible if any problems were identified. An Institute of
  Environmental Science & Research survey showed a decline of trans fat in the past decade.
  The highest level in the margarines and spreads checked was 6.8% compared with 18.2% in a
  1998 study. A Goodman Fielder spokesperson said they had since removed trans fats from
  further spreads and planned to remove them from the rest in the near future.

  BST Milk No Longer Welcome in New England
  Times Argus 10 Sep 2006
  Introduced 12 years ago as a way to boost milk production, synthetic hormone, BST is being
  dropped in New England by the region’s largest milk processors and dairy cooperatives. The
  reasons include demand by consumers for synthetic-free milk, the success of dairies that have
  marketed synthetic-free milk and the jump in sales of organic dairy products. Helping drive
  the effort is Dean Foods, which notified its suppliers last month that as of 1 September it
  would accept only BST-free milk for its plants.

  Farmer Hopes for Prosthesis for Three-legged Cow!
  ABC Rural 8 Sep 2006
  Tasmanian dairy farmer Geoff Heazlewood was devastated when he recently found one of his
  best cows had broken her leg after falling in a river. It turned out amputation was the only
  option and he says while the is cow recovering well, she could do with some extra help
  getting around. “I would dearly love to hear from somebody that was used to making
  prostheses and we could perhaps put a prosthesis on her,” he said. “If you can make them for
  humans I suppose you can make them for animals.”

                                          *     *     *      *    *

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