Dr Lesley MacLeod, DIAL CEO, presents "Post-farmgate Dairy Research in Australia" at the DIAA Victoria Conference on May 7th 2014.

1. Post Farm-gate Dairy Research in Australia
Strengthening and Growing Dairy Manufacturing
Dr Lesley MacLeod CEO

2. Why do we need post farm-gate dairy R&D?
Milk is a perishable product it requires processing for commercial sale
Dairy industry relies on an integrated supply chain where post farm gate processing
adds value
Export
Retail
Out of home eating
DistributionMarketingImport
Processing/
ManufacturingMilk Production
Feed
Production
Supplements
Irrigation
$4B
$12B
$3B

3. Dairy Processing
Major Milk Uses
Cheese
Drinking Milk
Milk Powders
Butter
Consumer Products
Specialised Ingredients

4. What are the challenges for post farm-gate
dairy R&D?
Australia exports 40% of it’s milk production
Australia is well regarded for product quality and integrity
Global demand in developing markets is growing faster than
capacity of exporters to supply
Markets for dairy products will continue to be volatile
Competitive intensity will continue to grow with domestic
supermarket dominance and export competition
Regulatory and sustainability agendas will increase
Value add will compete with commodity
Agility, responsiveness and sustainable cost competitive
manufacturing will drive growth

5. Requirements for Export growth
Production efficiency -to complete on
international market
Shelf life extension – to meet export
supply chain requirements
Product performance –robust high
quality product formulation for
traditional products
New product functionality – based on
understanding market and consumer
preferences quality and performance
requirements

6. Where is post farm-gate dairy R&D happening?
65% carrying out
dairy R&D
84% carrying out
‘near dairy’ R&D
5% not carrying
out dairy R&D
but capable
23% with pilot
facilities
85% with
Laboratory
Facilities
60
Research
Centres

7. Who is doing post farm-gate dairy R&D?
Universities
ANU, Ballarat; Curtin; Deakin; Edith Cowan;
Flinders; SAUni, UQ; UTas; RMIT, Monash;
Swinburne; Adelaide; Melbourne; UNSW;
UWestSyd; Wollongong; VU
Government departments
State and Federal
Agriculture, Industry, Innovation,
Research
Dairy companies
MG; Fonterra; Bega;
Parmalat; Warrnambool; Lion;
Mondelez; Burra; Norco;
SME’s
Private supply companies
Tetrapak; GEA; Healthlinx; TGR;
Syntek; Ballantyne;
Research organisations
DA;TIAR; CSIRO; DIAL; Baker
IDI; Dairy Futures CRC

8. Key post farm-gate R&D technologies?

9. Have we lost our way - funding and resources?
Over last decade
Constrained milk supply has caused rationalisation in
processing capacity and reduced investment in new
processing technology
Proportion of foreign ownership in dairy processing has
increased creating potential to lock up R&D as companies
look to overseas support
Market pressures have increased competitiveness forced
companies to require more rapid returns on R&D
investment
While there is a significant investment in dairy R&D it has
decreased significantly over the last 10 years and dairy
company investment in Australia has been less than 0.5% of
sales revenue

10. Australian Industry and R&D working together?
Australia last out of 33 countries compared for business collaboration with higher education or
public research agencies
4% of Australian large firms collaborated compared to 40% in Japan or 30% in UK

11. Australian Dairy industry is innovative…
Australian dairy has
Collectively invested in commercially focussed post
farm-gate R&D as a collective endeavour in Dairy
Innovation Australia
Embraced a government focus on food and
national coordination of food R&D with centres of
excellence such as the Dairy Futures CRC and the
Dairy Innovation ARC Transformational Research
Hub, FIAL, Mondelez Open Innovation centre
Individually invested in processing upgrades and
new greenfield sites eg.MG; Burra; Fonterra; Norco
Used M&A to deliver new technology delivering
innovations faster WCB + Friesland; MG+Danone;
Burra+ Itochu; Tatura +Tatua/ Mead Johnson

12. What is going on in post farm-gate dairy R&D
in Australia?
Process Efficiency /Productivity
Waste Stream Valorisation
Waste stream treatment
Energy Reduction
Water – Reduction, Recycling & Energy Nexus
Yield Increase
Supply Chain Cost
New processing technology
Technology for Product/ Market Growth
Product structure and performance
Milk compositional analysis and performance
Health and nutritional performance
Packaging development and performance
Product design technology
Sensory and consumer science
Shelf life extension
Product
Profitable
Sustainable
Growth

13. Realising Current potential – adding value
Powder Technologies Platform
Developed (DIAL, Monash, NIZO, INRA, UQ, NCDEA)
• Preheat, evaporation and drying simulation
• Viscosity measurement
• Energy use and optimisation
• High solids drying (skim)
• Stickiness assessment
• Drying Process simulator
Under Development (Monash, UQ, Syd, NIZO)
• Crystallisation in Fluid Beds
• Drying profile selection
• Powder characterisation library
• Atomisation selection
• Nano-structured Dairy Powders

14. Producing powders more efficiently and more
sustainably
Powders Performance
• Process optimisation: Evaporation & Spray Drying (Monash; Sydney)
• Product characterisation to support functional advantages (e.g. solubility) (UQ)
• Technology transfer of optimisation knowledge to all processors (DIAL)
Combining lower temperature
spray drying and more efficient
evaporation generating high
quality commodity powders from
high solids liquids.
Demonstrated to deliver:
• >5% dryer capacity increases
• Reduced energy use
• Project NPV Risk adjusted $21M
• Project IRR 23%
• Minimal Capital outlay

15. Producing higher value powders
What are the powder characteristics required for:
A reconstituted liquid that matches the functionality of the starting material ?
Long shelf life as a dry powder ?
High water-solubility with minimal heat & shear ?

16. Troubleshooting powder performance
Microstructural changes during rehydration of “Aged” MPC

17. Case study: Infant Formula
Process optimisation
A critical mass of expertise in drying and evaporation
including the manufacturing optimisation of complex
nutritional powders.
Modelling & International Networks
Sophisticated software models developed with
international collaborators to predict the outcomes of
process changes during evaporation and drying.
Powder Library
DIAL’s large reference collection of dairy powders can
assist in relating processing conditions to product
functionality.
Product characterisation
Powder flow properties, particle size and solubility. DIAL
can help with stickiness of lactose rich powders
Pilot Plant
Pilot scale evaporator and drying equipment can be
accessed at Monash University

18. Dairy Science vs. Dairy Industry

19. Protecting existing potential - quality & safety
Factors that contribute to milk quality
• Natural milk composition: protein, fat, lactose, minerals,
whey proteins
• Seasonal variation, feed
• Microbial hygiene: Microbial growth can reduce shelf
life and accelerate spoilage
• Farm, Transport, Processing
• Environmental origin or biofilms
• Health of the dairy cow: Mastitis, leading to high Bulk
Milk Cell Count (BMCC) and other compositional changes
in milk
• Enzymes, pathogens, milk spoilage
• Minor chemical contaminants: antibiotics, cleaning
chemicals

20. Protecting existing potential - quality & safety
Spores(DIAL, CSIRO, UQ, UniTas)
Developing rapid analytical methods to detect identify and track spore species to
aid control of spore levels in Australian dairy products. Estimated direct losses in
market opportunities of $6.7M in cheese and powders.
• Novel and rapid identification methods
• Tests to enable strategic and specific spore control in dairy products
Microbial milk quality(CSIRO, DIAL)
Fundamental factors that influence dairy product quality
include numbers and types of microorganisms in raw milk, survivors
of processing (conditions applied), post processing contamination
• Science based information for effective strategies for the management of
the microbial quality of raw milk
Platform for reducing quality risk by management of spore formers)
Platform for accelerated ripening; quality control and NPD

21. Case Study -Spores
New insights and resources for
spore analysis
• Many bacteria can form heat resistant
spores that survive pasteurisation,
spray drying or UHT treatment
• 700 dairy product samples analysed
• New method of 16S rDNA analysis
capable of distinguishing sub-types
within Bacillus licheniformis and
subtypes of the Geobacillus genus
• Miniaturised spore test
• Modelling studies: when and where do
biofilms form and when do they release
new spores?

22. Developing new potential -innovative
technologies
New Processing Technologies Platform
Developed (DIAL, CSIRO, U Melb, Monash ,UQ, U SA,)
• High value UHT products
• Cheese yield optimisation
• Ultrasound for lactose crystallisation
• Novel separation technologies (electro dialysis)
• Ultrasonic separation for milk and whey
components
• Modelling membrane separation processes
• CO2 shelf life extension
• Anti fouling coatings for membranes
• Anti fouling coatings for heat exchangers

23. Anti-fouling technologies
Fouling of heat exchangers & equipment
surfaces during thermal processing
(Uni Melb ARC Hub)
Fouling is a Critical Concern for
Membranes (Uni SA)
Fouling results in a
large flux decrease +
increased operating
costs (CIP, membrane
replacement)
Time
(s)
Normalizedheattransfer
coefficient:U*
Food safe coatings
reduce fouling in thermal processing

24. Non thermal shelf life extension
Short shelf life of liquid
dairy products: Milk, whey,
concentrates
• Carbon dioxide can extend the
shelf life of dairy products
1.E+00
1.E+01
1.E+02
1.E+03
1.E+04
1.E+05
1.E+06
1.E+07
1.E+08
0 10 20 30 40 50CFU/ml Time (Days)

25. Case Study: Shelf life and transport
Issue:
 Long transport distances within Australia and
to export destinations
 Preference for long life commodity products
for export: Powders and cheese
New trends - new product formats
 Liquid milk and liquid nutritional drinks – UHT
formats
 Fresh dairy and fresh liquid milk – longer shelf
 “Natural” flavour
R&D platforms for shelf life extension
 UHT &ESL expertise and pilot plant
 Formulation and NPD
 Modified atmosphere storage;
 Concentration
 Sensory Science

26. Developing new potential -innovative science
Curd Microstructure (Uni Melb ARC Hub)
Identifying the physical properties of curd microstructure that
determine sensory, textural and macroscopic features of
cheese during manufacture.
• Tools to analyse the functional properties of cheese
• Capability to predict and control quality, consistency and
functional properties of cheese
Adjunct Starter Cultures (UQ ARC Hub)
Using adjunct cultures to control and manipulate cheese
structure and sensory properties.
• Tools to identify, select and characterise adjunct cultures
Platform for new products (flavour; texture; reduced salt/ fat; functional food transfer)
Platform for accelerated ripening; quality control and NPD
Fat = red; Protein = green

27. Developing new potential -innovative science
Tribology (UQ, ARC Hub)
Use of advanced rheological techniques in conjunction
with sensory analysis to characterise the physical
properties of dairy products during production, over shelf
life and during consumption.
• Provide objective, cost effective, rapid assessment
tools
Health and Nutrition (DHNC)
To enhance the commercial value proposition of dairy
products by demonstrating related consumer health and
nutritional benefits.
Platform for new products to meet consumer demand (flavour; texture;)
Platform for information for product messaging,
NPD, regulatory submissions

28. Demonstrating consumer health and nutritional
benefits.
Child diet study reveals a
need for more dairy
Australian children older than
4 years did not reach
recommendations for dairy
intake, consuming ≤ 2 servings
per day which has important
implications for intakes of key
nutrients such as calcium
(Baird et al., 2012).
Dairy foods increase
muscle synthesis
Developing evidence to show
that dairy foods and fractions
may be helpful in maintaining
healthy muscles and
preventing age related muscle
loss which leads to reduced
mobility and increased risk of
falls.
Dairy linked to reduced
diabetes in Australian
men
The study revealed that men
with the highest level of dairy
had a 47% reduced risk of
diabetes compared to the
lowest consumers of dairy
(Grantham et al., 2012).

29. Developing new potential - capability
CSIRO
Milk compositional understanding Microstructure
impact on digestive functionality
Microencapsulation
Segregation of milk fat globules, casein micelles
Ultrasound technology
Powder Drying &UHT capability
High Pressure Processing
Health & Nutrition
Food Safety
Victoria University
Engineering packaging solutions
Membrane technologies, design and manufacture
Dairy Food component analysis
Swinburne University
Ultrasonics for milk component separation
Monash
Spray drying modelling
Powder technology
University of Sydney
Spray drying technologies
Evaporation
Queensland University
Sensory science & Flavour chemistry
Microbiology, genomics
Powders structure and performance
Melbourne University
Cheese structure and production
Dairy protein chemistry
Ultrasound technology
Membrane processing
Anti fouling technology
Sensory & consumer science
RMIT
Health & Nutrition
Formulation
Biosensors
UTasmania
Microbial predictive models
Curtin
Sonocrystallisation
Whey utilisation
Lactose chemistry
DIAL
NCDEA
Dairy Training

30. International dairy R&D networks
Australian dairy does not have to invent everything
• Technology scanning
• Fast following
• Smarter investment
BUT we do need
credibility
to play in the international R&D market
and
capability
to develop and adopt R&D and technologies
from global sources
Reading University
Massey University
Auckland University
Wisconsin University
Cornell University
NIZO (Netherlands)
INRA (France)
Moorepark (Ireland)

31. People and Capability -
delivering the opportunity science creates
Last year,
7 Masters level and 23PhD level students participated in
DIAL co-funded projects and will contribute to a growing highly
skilled work force for the Australian food industry.
17post-doctoral researchers across DIAL’s university
partner organisations contribute to advances in dairy science
and technology and are training to be the food scientists of
tomorrow.
DIAL alone strategically collaborates with 15Australian research organisations
Effective adoption of science and innovation to improve industry
sustainability and global competitiveness

32. Innovation = Research & Development +
Exploitation
Successful Innovation is commercially led responsive and adaptable
Technology Transfer Represents A Major Hurdle In Exploitation
RESEARCH is the creative driver for innovation
Grows knowledge capability and resources
DEVELOPMENT is the commercial lens applied
to creativity
Identifying opportunity and adapting research for adoption
EXPLOITATION is commercially led response
to market, consumer and customer demand
Adopting creativity to catalyse opportunity

33. Dairy research and innovation – the final
frontier
Support R&D
Collaborate with a supply chain view
Celebrate and embrace our successes
Build and nurture our capability
.
.
Dairy industry actions should be directed to long term profitability
The most important collective step is to develop and pursue a strategy for
innovation, investment and growth

34. Thank You
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