Ingredients for Success

Written by Emily Battmer

When you go to the dairy section of your grocery store, you’ll see plenty of DFA products.

But branded, consumer-ready products such as Borden Cheese and Plugrá butter account for only a portion of DFA’s commercial investments. Almost half of DFA’s processing facilities are dedicated to producing dairy ingredients for sale to customers like Nestle and Mead Johnson.

“The term ‘ingredients’ means that we’re taking the raw milk and processing it into something that our customers will further process and add value to,” says Gary Wietharn, vice president of ingredients manufacturing.

DFA’s ingredients include cream, butter, anhydrous milkfat, butterfat blends, condensed milk, nonfat dry milk (NFDM), whole milk powder (WMP) and dry whey, among others. Some DFA ingredient plants also produce Italian-style cheese. These cheese products are considered ingredients because they are sold to regional and local restaurants and food service companies that are looking for local, high-quality cheeses, and are destined for further processing into pizzas, entrees and other products.

With so many ingredients on the list, roughly half of DFA’s manufacturing facilities are dedicated to producing these products. Sixteen of DFA’s 33 plants fall into the ingredients division, compared with nine that manufacture fluid milk and ice cream; five that process dairy-based foods and beverages, such as chip dip and coffee or energy drinks; and three that make products for DFA’s consumer brands, such as Keller’s Creamery and Cache Valley.

DFA markets almost 3,500 tankers of milk every day, representing about 30 percent of the market share of total U.S. milk production. Ten percent of this — about 350 tankers — is destined for one of these 16 ingredient plants.

There are several key reasons to invest in ingredients production, Wietharn says, but it all boils down to one purpose: to bring more value to DFA’s member-owners.

One of the practical reasons for ingredient manufacturing is balancing purposes. DFA balancing plants are strategically located throughout the United States to process excess milk after demand sales are met. This excess milk is converted into a form that helps DFA accomplish two objectives: balancing and producing ingredients for food manufacturers desiring a broader dairy ingredient portfolio, including products such as milk powders and cream.

“We need to be able to market and maximize value for our farmer-members’ milk,” he says. “And by converting it to ingredients like dry milk powder, that gives us more options. This is one of the best opportunities for us to process milk and maximize market channels for that product.”

Of these markets, some of the most exciting are those growing overseas. Wietharn says one of the biggest advantages of manufacturing ingredients is the potential to grow DFA’s global footprint.

“Our greatest potential, the reason we built the Fallon, Nev., plant, is that there’s a tremendous growth in demand for export. Global customers value reliable, high-quality dairy protein,” he says. 

Demand for dairy products in regions such as China, Latin America, Southeast Asia, the Middle East and Africa is increasing as the middle class grows. More people now have the money to purchase high-quality, nutrient-rich dairy products, including infant formula, a product that uses the milk powder ingredients produced at DFA’s Fallon plant.