Which brings us to a bit of a myth. That our customers love our natural, grass-fed dairy. Sure some absolutely do. But most of NZ’s dairy products are food ingredient powders bought by large overseas companies. Who… do not care if these are NZ dairy products made by happy cows eating grass in an idyllic landscape. When it comes to food ingredients, provided they are safe and create the right taste or texture. These ingredients companies ONLY want reliable supply at the right price.

With dairy ingredient powders, this is something that New Zealand is set up to do very, very well. As a whole country, we have actually specialised in making enormous amounts of ingredient powders — right from the farm to the milk tankers, to highly efficient factory, to the shipping company, and ingredient auction house owned by Fonterra. All of it has been developed to make the export of ingredient powders more efficient. But with the technology coming, that will be radically different and so much more efficient. Our strategy will no longer be enough.

Dairy without cows — will the technology live up to it’s potential?

At the moment cows eat-grass, make-milk and in NZ, that is turned mostly into food ingredient powders. There are two main technologies that are going to compete with our dairy exports.

First, Plant proteins. These are made by extracting protein from plants to create ingredient powders. Soy protein has been around for years, and honestly, it tastes rubbish. But the new pea and rice proteins are starting to work as well as dairy. It won’t be long before the international ingredient companies can get reliable supply at a better price than dairy proteins. As these new plant proteins get more sophisticated and the price comes down, expect to see these products starting to replace dairy proteins in those day-to-day food products you’re already eating — and we won’t even notice.

The second new technology is synthetic proteins. Scientists have convinced yeast and other microbes to create dairy proteins. These yeast create dairy proteins that are identical to those produced by a cow. Actual dairy, but without the cow. So how this works is a lot like brewing beer. You take this special yeast, sugar, water — mix it up — the yeast grow, ferment and turn the sugar into dairy proteins. Which can then be turned into ingredient powders.

And although creating dairy products, without the cow is an emerging technology, with lots of challenges. Over the next decade, it has the potential to become much cheaper than normal dairy ingredient powders. The previous Chief Science Adviser to the Prime Minister has said that…

…”[synthetic dairy] may pose an existential threat to New Zealand’s pastoral-based economy” — Sir Peter Gluckman

The race is on, to remove cows from the dairy industry

Perfect Day a startup in the States have been working on this synthetic dairy for 5 years, so far they have raised NZ $90M. And earlier this year they partnered with Archer-Daniels-Midland (ADM), who is 4th largest food ingredient company in the world. Five times larger than Fonterra. They are huge in corn and wheat ingredients and plan on adding dairy ingredients to their portfolio using synthetic biology. Cows need not apply. There are some in NZ seeing this opportunity too. Fonterra has taken a small stake in another US startup Motif Ingredients. Motif is also focused on synthetic proteins and has raised NZ $90M so far.

Another company New Culture, launched by some kiwi’s, is currently in Silicon Valley making mozzarella without the cow, and they’re not the only ones. Huge amounts of money and talent, from around the world, is being poured into developing these new alternative-dairy technologies. You can see some of these companies in the diagram below.