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The Best Whey To Expand Exports
By Brian Goggin
Exports of many U.S. dairy products are booming. Familiar products like ice cream and cheese have set export sales records nearly every year and have begun to acquire a flashy international reputation for quality and consistency.
U.S. whey and lactose, two less well-known products have also become stellar performers in world markets, but a bit more quietly. U.S. exports of dry whey actually surpassed cheese exports for the first time in 1996, while U.S. lactose exports are greater than U.S. fluid milk, yogurt and butteroil exports combined.
Combined exports of both
totaled over $177 million in 1997, comprising roughly 19 percent
of all U.S. dairy exports. As exports of whey and lactose
continue to spiral upward, the question most often raised about
these products is...what are they, anyway?
Whey is the liquid product that is separated from milk and cream during the cheese production process. Whey contains lactose, which is a mild tasting sugar that provides the natural sweetness in milk, and other ingredients, including highly nutritional protein, minerals and vitamins. Commercially processed whey is often called dry whey, indicating that the water was removed while the lactose (sugar) remains an integral component.
Lactose, often separated from whey in processing, has many commercial uses apart from whey. Cow's milk averages roughly 5 percent lactose.
Whey, too, has a great variety of uses, primarily as an ingredient in processed foods, particularly value-added dairy products, including frozen desserts, yogurt, cream and acidified and cultured milks. Dry whey and whey products are also used in bakery goods, soups and sauces. Infant formula also generally contains whey or whey products.
Various processing techniques for whey have led to the advent of several modified whey products, such as reduced-lactose whey, reduced-minerals whey, whey protein concentrate and whey protein isolate. All of these products have very specific applications and functions when used as food ingredients. You can spot them in processed cheese products, salad dressings, beverages and infant foods.
Whey is also manufactured for animal feed. Dry whey and whey products are often used, for example, as a milk replacer to raise and fatten calves. It is also mixed with other feed products to make cattle and hog feeds.
Lactose is separated from
whey by crystallizing the sugar to separate it from the other
whey ingredients. Lactose also has a great variety of uses in
food processing. It's used primarily as an ingredient and
sweetener in many processed foods such as frozen desserts,
prepared dry mixes, infant foods and bakery products. Lactose's
mild flavor is highly valued by food processors, both here in the
United States and overseas.
International trade in whey, whey products and lactose consists of a wide variety of products for different uses in food processing and for feed use. Dry edible whey is the most commonly exported product. It is light, stable and easily packaged or shipped in bulk. Lactose is commonly shipped in solid form, which is also easily packaged and shipped.
Make Cheese, Make Whey?
Since whey is a co-product of cheese manufacture, the amount produced is for the most part determined by cheese production. However, whey production has increased independently of cheese production, due to improved technology in dairy plants that recover a higher percentage of edible whey solids.
Not only can more whey now be recovered, improvements in processing have led to improved quality and consistency, paving the way for use in higher value processed food products. In years past, whey was often considered a waste product that was only processed to reduce effluents from dairy plants. The whey for feed use produced by many plants was sold for only a few cents per pound. But no more--dairy plants now produce whey primarily for human consumption, commanding higher prices in both domestic and export markets. And, as food technologists continue to find new uses, whey's value to processors will continue to increase.
For 1997, prices for edible dry whey in the United States generally averaged 15 to 25 cents per pound, f.o.b. plant, depending on the grade and the final use of the product. Dry whey used as a milk replacer for calves and in mixed feed rations is generally the lowest priced category, with domestic prices generally ranging from 10 to 18 cents per pound.
Leader of the Pack
U.S. exporters are currently the world market leaders in both whey and lactose, commanding more than a third of the world trade in both products.
U.S. dry whey exports totaled 109,000 tons in 1996, a 17-percent increase from 1995 and a 78-percent increase from 1994. The explosive growth of the last three years, however, seems to have leveled off in 1997; U.S. trade statistics show that dry whey exports through November 1997 were roughly equal to the total for the same period a year earlier.
Whey products, particularly such value-added products as de-mineralized and de-lactosed whey and whey protein concentrate, are playing an increasingly important role in international dairy trade. There were no recorded U.S. exports of whey protein concentrate in 1993: by 1996, annual exports were valued at more than $8 million. In 1997, the export value reached over $16 million, nearly double the value of exports in 1996.
Best Customers: Asians Top the List
Asia is the world's largest market for imported whey and lactose products; whey imports from all sources totaled nearly 60,000 tons in 1996, roughly half of all world imports. Despite stiff competition from low-cost producers in New Zealand and Australia, the United States commands a 40-percent share of all whey and lactose imports into the region.
Japan is the second-largest whey and lactose importer and the top destination for U.S. exports. In 1997, U.S. dry whey sales to Japan totaled over $18 million, accounting for 17 percent of all U.S. dry whey exports, while lactose exports reached $27 million, slightly more than 50 percent of U.S. lactose exports.
The growth of U.S. whey and lactose exports to Japan, however, is gradually slowing. Sales are expected to continue to increase in the next five years, but at a slower pace than the 13 percent annual growth during the 1990-96 period. The continuing economic crisis in the Far East is expected to play a role in the leveling of growth.
U.S. exports of whey and lactose to Korea also expanded rapidly over the same period, to reach approximately $10 million in 1997, an 83-percent increase from 1992. The economic crisis in Korea is expected to moderate these growth figures for 1998.
Another growth market for U.S. whey and lactose is in Southeast Asia, particularly ASEAN member countries. (ASEAN members include the Philippines, Singapore, Indonesia, Malaysia, Thailand, Burma, Brunei and Vietnam). Import growth by its member countries has expanded rapidly since the beginning of the decade, and the United States captured a significant share of the growth.
The United States seized an estimated 30 percent market share in exports to ASEAN countries in 1997, considerably more than the 17 percent share in 1994. Since 1995, growth has continued, but at a slightly slower pace than during the 1990-96 period. U.S. exports of dry whey and lactose to the region were expected to surpass $16 million in 1997, approximately 20 percent more than in 1996.
Although the recent currency crises that have plagued the region are likely to weaken import growth in 1998, the long-term outlook for whey and lactose sales to the ASEAN countries remains bright.
Canada and Mexico are also
growth markets for U.S. whey and lactose, and both may quickly
surpass Japan as the leading U.S. export destination. Imports by
these two countries from all sources totaled over 45,000 tons in
1996, with roughly 30,000 tons going to Canada and 15,000 tons to
Mexico. U.S. exporters control more than 90 percent of both
markets. Canada is currently the second largest market for U.S.
whey and lactose exports (on a value basis), while Mexico is the
third largest. U.S. exporters can expect to maintain their
commanding lead; and no other exporter can expect to match U.S.
prices and quality standards.
South America has quickly become a major export destination, too. The value of dry whey exports to South America increased by 137 percent from 1992 to 1996 to reach nearly $5.5 million; exports for 1997 reached nearly $6 million. U.S. exports of lactose also increased substantially during the period, reaching $1.9 million in 1997. The major importers in the region are Brazil, Colombia, Peru and Venezuela.
U. S. whey and lactose processors are clearly established as leaders in international markets. Furthermore, the outlook for export opportunities remains bright, particularly to Mexico, Canada, and South America. The phenomenal export growth to Asia is expected to slow in 1998, however.
While U.S. whey and lactose may not compete with cheese and ice cream for recognition, no other U.S. dairy product can match their payoff: a steady annual increase in export value.
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The author is a marketing specialist in FAS' Dairy, Livestock
and Poultry Division. Tel.:(202) 720-4884; Fax: (202) 720-0617; E-mail:goggin@fas.usda.gov
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