Development and application of a processing model for the Irish dairy industry

Abstract

A processing-sector model was developed that simulates (i) milk collection, (ii) standardization, and (iii) product manufacture. The model estimates the product yield, net milk value, and component values of milk based on milk quantity, composition, product portfolio, and product values. Product specifications of cheese, butter, skim and whole milk powders, liquid milk, and casein are met through milk separation followed by reconstitution in appropriate proportions. Excess cream or skim milk are used in other product manufacture. Volume-related costs, including milk collection, standardization, and processing costs, and product-related costs, including processing costs per tonne, packaging, storage, distribution, and marketing, are quantified. Operating costs, incurred irrespective of milk received and processing activities, are included in the model on a fixed-rate basis. The net milk value is estimated as sale value less total costs. The component values of fat and protein were estimated from net milk value using the marginal rate of technical substitution. Two product portfolio scenarios were examined: scenario 1 was representative of the Irish product mix in 2000, in which 27, 39, 13, and 21% of the milk pool was processed into cheese (€ 3,291.33/t), butter (€ 2,766.33/t), whole milk powder (€ 2,453.33/t), and skim milk powder (€ 2,017.00/t), respectively, and scenario 2 was representative of the 2008 product mix, in which 43, 30, 14, and 13% was processed into cheese, butter, whole milk powder, and skim milk powder, respectively, and sold at the same market prices. Within both scenarios 3 milk compositions were considered, which were representative of (i) typical Irish Holstein-Friesian, (ii) Jersey, and (iii) the New Zealand strain of Holstein-Friesian, each of which had differing milk constituents. The effect each milk composition had on product yield, processing costs, total revenue, component values of milk, and the net value of milk was examined. The value per liter of milk in scenario 1 was 24.8, 30.8, and 27.4 cents for Irish Holstein-Friesian, Jersey, and New Zealand strain of Holstein-Friesian milk, respectively. In scenario 2 the value per liter of milk was 26.1, 32.6, and 28.9 cents for Irish Holstein-Friesian, Jersey, and New Zealand strain of Holstein-Friesian milk, respectively.

Heritability and repeatability of milk coagulation properties predicted by mid-infrared spectroscopy during routine data recording, and their relationships with milk yield and quality traits

“…It has been widely demonstrated that milk with desirable clotting characteristics, namely relatively short clotting time, good firming rate and high curd firmness at cut, results in higher cheese yield than poorly coagulating milk (Johnson et al, 2001;Pretto et al, 2013) and increased profitability for the dairy industry (Bynum and Olson, 1982;Formaggioni et al, 2005). The improvement of MCP is strongly advisable to enhance dairy sector efficiency, especially in countries were milk is predominantly destined to cheese production (Geary et al, 2010).…”

How can dairies maximize their profits and properly remunerate their dairy farmers?

“…Every month, Conseleite (the Brazilian Joint Council of Producers and Milk Processors) calculates the reference price for standard raw milk depending on the mix of dairy products, yield of industrial products, production costs and raw milk quality (Canziani and Guimarães, 2003). It is more advantageous for the dairy to remunerate the raw milk supplier for a raw material that improves production efficiency and yield (Geary et al, 2010b). However, there is no Brazilian program for pricing a kg of solid milk components, as proposed in this study.…”

“…In dairies, whose production processes a wide variety of products that may generate intermediate products, such as cream and whey, which are raw materials for other products, optimization techniques have already been efficiently deployed (Banaszewska et al, 2013;Geary et al, 2010a;Geary et al, 2010b;Geary et al, 2012;Guan and Philpott, 2011;Milad and Faezeh, 2012). This optimization relies heavily on the production process, together with marketing and management of raw materials -raw milk which is considered a constraint, because of its irregular availability throughout the year given the seasonality of its production (Banaszewska et al, 2013;Brockington et al, 1992;Geary et al, 2012;Roma et al, 2009).…”

“…A model that supports strategic decisions and milk pricing strategies would be helpful in determining the mix of milk products and the characteristics of the raw milk supplied (Geary et al, 2010b). To fulfill these needs, we developed a mathematical model for smallsized dairies to price raw milk in terms of its quality and to maximize TCM through the definition of the optimal mix of products using LP.…”

Using models to establish the financially optimum strategy for Irish dairy farms

“…The base milk price was included at 29.5 euro cents (c)/L with the A + B − C multiple component pricing system used for milk payment (Geary et al, 2010). A flat-rate value added tax payment was included on milk sales at 5.2% based on current national policy.…”