1. Technology, Demand and Lost Data Mark Stephenson, Ph.D. Cornell Program on Dairy Markets & Policy

2. Milk Components Have Been Recognized for a Long Time! In 1905, a Mr. H.E. Cook wrote: “The experiments at the Wisconsin and New York State stations proved so conclusively that the fat content measured the cheese-making power of milk so much more accurately than the scales (cwt) alone, that we began paying on that basis in 1893.”

3. Food Scientists are Busy! We have been separating milk into cream and skim fractions for many years In the lab, membranes, ion exchange and other processes are now separating milk into many smaller fractions. –They are demonstrating technical feasibility –How much will it cost in a plant? –What is the market for the fractions?

4. Many Implications for “Milk Refineries” Simple example–Separate casein and whey proteins from skim milk fraction. –Send whey fractions to fluid plant Whey protein is more digestible –Send casein to cheese plant Much higher yield No whey to contaminate with salt and enzymes and further process.

5. Many Implications for “Milk Refineries” Simple example–Send only what a cheese plant needs to make cheese –No byproduct or waste stream –Where is optimal plant location?

6. Value Added Production Milk has been a health delivery system for many years –Vitamin A Nutriceuticals may be interesting –High CLA milk is being produced –Biotechnology can enable “harvest” of products from milk

7. Implications for Regulation Can the Federal Order system keep up? –Chasing fractions to their end use seems impractical –Unlikely to have a spot market for these fractions –Can we use a survey and product formula approach to pricing

8. Implications for Structure Where will the fractionation take place? –On farm –Butter/powder or cheese plants –New country milk stations(back to the future)

9. Conclusions… More questions than answers Plants are already testing these ideas Progressive farmers are ready for the next big opportunity Some of the ideas will require education –New product buyers –Consumers