Whey is the largest dairy by-product being disposed of for little or no
value by SA cheese producers. However, the recent increase in prices of whey
internationally must be prompting the managers of both large and small SA
cheese plants to consider ways in which they could gain value from it.
Whereas prices for milk powder have merely doubled in the past few years,
from about $2,800/t to around $4,500/t currently, prices of whey powder have
multiplied 3-4 times.
There is no standard publication of whey prices
(unlike powdered milk prices), but whey is currently selling at about $1,500/t;
and lactose, which can be produced in the same process, at about $2,000/t.
Jerry Van Loon, senior product technology manager of GEA Process
Engineering, Niro division, who is a world authority on whey processing,
believes the recent extraordinary increase in whey prices is partly due to
increased demand from China. He says: "When people are poor, they produce for
their own survival; when they become slightly better off, they spend on their
children; when they become affluent, they spend on pet food."
China is in
the middle-income area and spending on baby food - which contains whey powder,
whey protein concentrates (WPCs) and lactose - is rocketing.
All whey
production plants in SA produce a basic whey product, which is used, for
instance, as an ingredient in ice cream and yoghurts. All of these plants are
associated with large (in SA terms) cheese factories.
The European cheese
industry may provide an indication of future developments. About 40 years ago,
European cheese factories set up whey production units primarily in order to
get rid of whey. They were growing to such an extent that their whey production
could not be simply fed to pigs. Typically, whey is produced in almost equal
amounts to the litreage of milk processed in a cheese factory, so if one
million litres is processed per day, the massive task of disposing of nearly
one million litres of whey arises.
Says Van Loon: "There were simply not
enough pigs for the European cheese factories."
Disposal of waste was thus
their primary motivation. However, today the financial contribution from whey -
and more sophisticated derivatives of it - is the primary impeller for European
whey plants, he says.
Currently in SA, whey plants produce basic whey, but
none of the sophisticated products which are produced by some whey plants in
Europe and the US.
Says Van Loon: "We have to tell cheesemakers in SA that
they have value products. It is a matter of changing mindset."
Nonetheless large-scale production
of whey is still needed in order for a plant to be economic.
Van Loon
estimates that a cheese plant processing one million litres of milk, and
therefore producing nearly one million litres of whey per day would previously
have been needed to make a whey powder plant economic.
But with the ''new
economics'', a whey plant of a quarter of that capacity - 250,000 litres per
day - could be economic, he says (if it is assumed there is no cost currently
to disposing of liquid whey). That is still large, by SA standards.
But it
is not only economics which is impelling large or medium cheese producers to
think about extending their existing whey concentration or installing
greenfields projects. It is that, like the European plants, there is no other
way to dispose of whey, and waste disposal via municipal sewage systems is
becoming increasingly expensive.
But with the current economics, the
processing of whey can assist major dairies to make extra money to pay farmers
more for their milk - thereby encouraging higher milk production to ward off
the kind of shortage which is currently crippling the processing industry.
Small/medium cheese producers
This scenario seems to
exclude small and medium-sized cheese producers. However they could also be
considering some kind of concentration of whey in decentralised plants to make
it more transportable - if, that is, they can find a market for their
concentrated liquid whey at a larger whey powder plant of one of the major
cheese companies.
They will also be impelled by tightening waste disposal
legislation.
They could consider a reverse osmosis plant with membrane
technology rather than the larger evaporator and spraydrying plants. However, a
question they will need to answer is whether, if they deliver concentrated
liquid whey, they will receive prices which reflect the higher world prices
from the larger whey powder plants.
With the larger SA whey powder plants
probably at full capacity currently, they might not pass on the higher price to
smaller suppliers. However, they might be more inclined to do so if there was
competition with other larger plants (as there is in many cases in Europe) for
supplies from smaller producers - or if they come to have spare capacity and
need more supplies of partially-concentrated liquid whey.