By: Karen Trebilcock

For Kiwi dairy farmers, the glass of milk is proving to be definitely half full with the latest international butter prices and, according to Dunedin geneticist Peter Amer, it’s actually overflowing by 25%.

That’s how much more fat Kiwi cows produce per litre of milk compared with North American and European Union cows.

Amer, a board member of agribusiness company AbacusBio, says decades of breeding for milksolids has given our cows the edge and more gains could be made.

“In the past few years, international food processors have moved away from adding sugar to make food taste good and they’re instead adding dairy fat.

“Because of this the dairy markets have got out of balance with the value of butter soaring and the European Union stockpiling skim milk powder because it can’t sell it.”

“Skim milk powder is half protein and half lactose which of course is sugar.”

Recent findings that animal fats, particularly butter, were not as bad for your health as previously thought, and that sugar is the real problem is causing what he believes to be a structural shift in the market.

“The rise in the international price of butter in the past year could be a temporary market situation but I think it’s actually more than that now. Because of the health findings, people are changing what they want to eat.

“There are two ways to make processed food taste good and it’s either by adding sugar or fat. Now food processors are adding fat instead of sugar so they can promote the food as low in sugar, so it sells.”

The value of milk fat on a graph has become U-shaped with butter returning to where it was when it was a dietary mainstay in Britain in the 1950s and 1960s.

“Most of my adult life I’ve been told that I can’t eat butter and now the health guidelines are saying that’s wrong. I’m really annoyed because I’ve been eating the wrong foods all this time.”

The past two to three decades of breeding cows in New Zealand to increase the protein levels in their milk, as protein was seen to have more value than fat, will not be in vain if the market for butter continues to soar.

“Genetically, protein drags fat up with it – they’re linked. So, our cows are producing more milk fat as well as more protein than they ever have which is what we want at the moment. In fact, there is more genetic variability among cows for fat production than there is variability for protein production.

“When we’re breeding cows we’re crystal ball gazing what the market will want in 10 years’ time. If you had told me 10 years ago that butter would be making a comeback I wouldn’t have believed it.

“We’re just lucky that protein and fat are linked genetically.”

New Zealand Animal Evaluation Limited (NZAEL) manager Jeremy Bryant says farmers can expect to see animals with strong fat breeding values soon rising to the top of breeding selection lists.

“When it comes to breeding, selection is based on the impact that individual traits have on farm profit,” Bryant says.

“A higher price for fat leads to a higher weighting in our national selection index, Breeding Worth, which in turn will increase the rate of genetic gain for that trait.

“The increasing value of milk fat is a huge opportunity for New Zealand dairy farmers and the genetic variation that our dairy cattle have for this trait puts us in a unique position to respond to a market shift.”

Amer says what is also good for NZ dairy farmers is the way we sell our milk.

“In North America, most of the milk produced is for drinking so there is very little fat they can take out to make into butter.

“In New Zealand we don’t want to export water, so we have traditionally broken down the components of milk into protein and fat. Cheese is about half fat and half protein and butter is mostly milk fat.”

The EU cannot milk more cows to produce more butter as that would add to their skim milk powder mountain.

“They can’t produce one without the other and they need to be paid well for both. With our high-producing milk fat cows we can.

“Of course, this could be just a market aberration, the price of butter could fall again, but I don’t think it will. I think this is a structural change in the market and it’s here to stay.”