The growth of milk powder exports has help fuel the exponential expansion of dairy trade globally in recent years. New Zealand as a key exporter, and China as a key importer have played pivotal roles in this development.
In 2005, milk powder accounted for €2.4 billion or 59% of New Zealand’s €4.5 billion dairy export value. By 2013, milk powder exports from New Zealand had jumped to €5.3 billion in value, or 65% of New Zealand’s €8.2 billion dairy exports.
China has facilitated this growth, importing over 750,000t of milk powder in 2013. The growth rate of Chinese milk powder imports has been astronomical.
In 2008, 46% of China’s dairy imports or €272.8 million in value was credited to milk powders. By 2013, this value had seen a 10-fold increase, jumping to €2,715 million. Milk powder accounted for 69% of Chinese dairy imports in 2013.
How is Milk Powder made?
Milk is 87% water, which makes is widespread transport and export uneconomical. To get around this dairy companies convert milk into a powdered form that contains just over 3% water.
To put this in perspective, close on 7.5t of milk coming from a dairy farm will be converted into 1t of whole milk powder.
The production of milk powder is an energy intensive process in which milk is first passed through an evaporator to reduce the water content to 50%. This evaporator concentrate is then passed through a spray dryer to produce a finished product containing just over 3% water.
Whenever you drive past a dairy processing plant the tall buildings you see from the outside usually house the drying installations. Spray dryers in Ireland typically dry between 4-8t of milk powder per hour, while the world’s biggest spray dryers are capable of drying 30t per hour.
Milk powder products can largely be summarised into three key products:
Whole milk powder or WMP – This is the most basic of milk powders. It is basically dried milk, it contains all the proteins, carbohydrates, lactose and minerals in dried form that you would expect to see in cow’s milk.
Skim milk powder or SMP – skim milk powder is whole milk from which the fat or cream has been 'skimmed' off. In other words it is a fat free powder.
Fat filled powder – The cream removed or 'skimmed' from whole milk is substituted in the skim milk with an economical replacement, e.g. vegetable oils such as palm or coconut oil. Beo from the Irish Dairy Board is a popular brand of fat filled milk powder sold extensively across the African continent.
How much milk powder is exported from Ireland?
Ireland accounted for 12% of EU28 milk powder export volumes in 2013.
Ireland exported 80,092t of milk powders worth €242.6m last year. Some 50% of this product volume was exported to Great Britain, Netherlands, Nigeria and China.
To put this production volume in perspective, New Zealand exported over 20 times this volume, or 1.7 million tonnes of milk powder in 2013.
New Zealand enjoys favourable tariff rates when exporting to China, almost two and a half times lower that the EU tariff rate imposed on Chinese milk powder imports from Ireland.
The US has also become a big international player in the export marked. It has seen the value of its milk powder exports increase almost 10-fold, from €240m in 2003 to €2.3 billion in 2013. Combined, New Zealand and the US accounted for 38% of global milk powder exports in 2014.