Waste product becomes cream of the crop in milk wars

Maris Beck and Mark Hawthorne
April 17, 2012
The Age

IN THE milk industry it’s called ”permeate” – a watery, greenish waste product from the production of cheese – and documents obtained by The Age reveal that it forms up to 16 per cent of the fresh milk we drink.

As the milk wars between supermarkets have crunched margins for major milk producers, industry sources say permeate is increasingly used to reduce the cost per litre.

Just how much permeate – which is cheaper than fresh milk and can be used to moderate fat levels – is used has been a closely held secret in the industry.

Internal documents from Australia’s biggest supplier, National Foods – which makes Pura, Big M, Dairy Farmers and supplies both Woolworths and Coles brand milk – reveal that its milk now contains up to 16.43 per cent permeate, shaving almost 16 per cent off the cost of production. And it does not have to be disclosed on the label.

In Australia the Food Standards Code allows producers to dilute milk with ”milk components”, such as permeate, as long as the total fat level remains at least 3.2 per cent (for full-cream milk) and the protein at 3 per cent (for any milk). Natural cow’s milk has a fat level of 4 per cent.

There are no known health risks associated with adding permeate to milk but its use is purely a cost-saving measure.

Not only does it cut costs, it eliminates the need to dispose of the permeate. According to industry consultant Dairymark, ”increasingly stringent environmental regulations mean discarding the [permeate] material in waterways is no longer an option for most companies”.

A Dairymark report recommends the industry’s view of permeate should be changed to ”a rich source of dairy carbohydrate”, rather than a ”waste stream that is proving problematic in disposal terms”.

The chief executive of A2 Milk, Peter Nathan, who said none of his milk contained permeate, described it as a ”lemony-green liquid substance, it’s certainly not attractive”.

He said consumers were ”being led to believe that milk they are drinking is pure milk. It’s not.” He said supermarket ”milk wars” put pressure on producers to boost the permeate levels.

”There is no doubt that milk processors are under more cost pressure than ever before. It would certainly be tempting to add the maximum amount of permeate. Why wouldn’t you? You don’t have to declare it.”

The leaked documents, which cover 2007 and 2008, also show the percentage of permeate added varies each month.

A spokeswoman for milk producer Lion refused to say how much permeate was in its milk. ”We have not increased the use of permeate in milk, and certainly not due to the price wars, beyond the standard variations according to seasonality and fluctuations in protein levels.

”Permeate use varies according to seasonality. It is used to standardise protein levels in milk across the entire year. We manage this in line with the FSANZ food code.”

Parmalat, the second-largest supplier of supermarket-brand milk, also uses permeate in its milk. When asked how much, Parmalat Australia declined to comment. But it has a fact sheet on its website explaining that ”permeate is used to help ensure cow’s milk is consistent in taste, texture and nutrients”.

A Woolworths spokeswoman said: ”This is regulated by FSANZ. We contract our own brand milk to numerous suppliers around the country and we are confident that they are delivering a product that matches the nutritional panel.”

A Coles spokesman said: ”Coles brand milk is made to the same high standards as branded milk lines, and in no way has the quality of our milk been altered as a result of our milk price cuts in January 2011.”

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