Precision Fermentation Milk Poses Challenge to New Zealand's Dairy Export Market
Israeli precision-fermented milk, known as CowFree, has entered commercial availability, mimicking traditional cow's milk in taste while being more cost-effective than plant-based alternatives. This development poses a significant threat to New Zealand's dairy export economy, valued at $18 billion. Dr. Eric Crampton's analysis highlights that the product does not involve cows, thereby eliminating methane emissions and irrigation needs.
Precision fermentation technology uses engineered microbes to produce the same proteins found in milk, a method proven since 1982 in applications like bacterial insulin production. This technique allows high-value proteins such as lactoferrin, traditionally expensive to extract fr om milk, to be produced more affordably. Auckland's Daisy Lab is among the startups exploring these possibilities.
The market is experiencing a flywheel effect, wh ere competitive pricing of precision-fermented milk increases consumer demand, leading to expanded production and further cost reductions. The CowFree product is now cost-competitive with soy and oat milk, and experts suggest it could match conventional milk prices within the next decade.
For New Zealand, the stakes are high, as dairy products constitute 30% of its merchandise exports, with agricultural methane emissions accounting for about half of the country's total greenhouse gas emissions. The shift to precision fermentation could reduce these emissions significantly.
New Zealand is not without resources to counter this disruption. Callaghan Innovation is supporting the development of precision fermentation capabilities, and Fonterra has invested in related ventures. However, the country's advantage of fertile pastures and abundant rainfall may diminish as fermentation technology achieves cost parity.
Furthermore, the potential for precision fermentation to meet New Zealand's 2050 methane reduction targets is becoming more plausible, as the technology could displace traditional dairy production without policy intervention.
