CREAMED OFF BY MILK COMPANIES

Watery by-product used as a top-up , By Maxine Frith published in the Sun-Herald April 13, 2008

Dairy farmers have accused the big mild companies of misleading consumers by adding a “watery by-product” to supplies to help maximise profits.

A substance called permeate, a waste product of dairy production created by removing all the fat and then concentrating the material that is left, can make up 12 per cent of some mild brands in supermarkets.

NSW farmers say permeate costs less for processors to buy than milk, so the two can be mixed to produce a cheaper product.

The farmers claim they are suffering a drop in earnings because processors do not have to buy as much milk from them.  Processors including National Foods, use permeate to top up milk in the cheaper generic and home brands and the popular Pura range of milk products.

Dairy Australia the peak industry body and National Foods, one of the main processors, admitted permeate was added but denied it was done to increase profits.  National Foods distributes Pura milk.

Both organisations said permeate was used to standardise levels of fat and protein to meet strict regulations of the make up of dairy products.

The accusations were contained in a submission by the Kiama Mild Supplier Collective to the grocery price inquiry being held by the Australian Competition and consumer Commission.  The allegations were first reported in industry publication Retail World’s electronic newsletter.

Geoffrey Quinn, a consultant to the Kiama collective, said consumers were being misled.  “They have a right to know their milk may contain permeate.  It reduces the cost for the processor but the farmer still get the same low price for this milk …. Farmers are being squeezed but the processors are making bigger profits.”

A NSW dairy farmer, who did not wish to be named, said:  “I know it is going on because people in the processing industry have told me it is.”

Dairy Farmers Group, one of the two main processors in NSW, declined to comment and referred queries to the industry body Dairy Australia.

A Dairy Australia spokeswoman said:  “Fat and protein levels are very strictly regulated for milk but they can vary from farm to farm and at different times of the year.  Permeate is only added to standardise milk, so that it meets those regulations.”