Dave Kuehnel – A Look Into Markets: Milk & Milk Commodities

When it comes to milk replacers, Dave Kuehnel, president of Milk Products LLC, knows the “in’s and out’s” of an ingredient label. During his presentation at Vita Plus Calf Summit, Kuehnel focused on an ingredient of milk replacer that may be more valuable in human food and medicine products: whey.

This is remarkable, said Kuehnel, considering the fact that even as recent as 30 years ago, whey was considered a waste product and dumped into ditches and streams and onto fields.

Today, whey protein is a global market all on its own, consisting of 1 million tons and worth $4 to $4.5 billion.

On a domestic level, three main dairy areas are producing whey: (1) New York and Pennsylvania, (2) Upper Midwest states such as Wisconsin, Minnesota and Michigan, and (3) California and Idaho. The most dominant of those areas, with a heavy past and bright future in whey, is the Midwest.

On a global level, U.S. dairy producers should be keeping an eye on the Oceania area of Australia and New Zealand, with investors from China and Europe, where freight costs tend to be much less expensive than in the U.S.

All of this attention on whey is a good thing for dairy producers, Kuehnel said.

“At 60 cents per pound, the whey component of USDA Class III milk contributed $2.35 per hundredweight this spring,” he said.

Still, this could mean consistent rising costs of milk replacer. He advises growers to look into substitutes, such as soy protein, wheat protein and plasma.

“Ask yourself, can I live with a three percent difference in performance for a 15 percent cost savings?” he said.

While that performance-versus-cost discussion varies depending on the operation and the type of ingredient replacing the whey, Kuehnel said it’s one to have even when milk replacer costs aren’t on the rise.

And as for dairy producers, the whey market is only going to continue to grow, potentially bringing with it new opportunities for profitability in the dairy business.

“Whether you sit on a board of directors for your cheesemaker, or simply sell your milk to someone who makes some kind of cheese, what they do with their whey should be something you keep an eye on,” he said.