Dairy farmers find a different way to value add

Three years ago, Ms Walker and husband Neil, who milk 180-200 cows near Korumburra in the heart of Victoria's South Gippsland, were looking for a way out of the dairy crisis.

Value-adding made sense but, with the market awash with boutique milk brands, the couple decided to take another course.

"We ruled out fresh white milk right from the start," she said.

"You need to be processing millions of litres to make money and be running seven days a week.

"That's a lot of work."

The answer presented itself when a mutual friend introduced them to dairy process engineer Campbell Evans, who raised the idea of marketing colostrum.

Colostrum is a big business, estimated at more than $US1.40 billion globally in 2018.

The big Australian processors, including Murray Goulburn, once supplied the market but Mr Evans said he knew of only one other small Australian business selling colostrum these days.

With its small volumes, high-value niche, absence of Australian competitors and longer shelf life, colostrum made sense.

"You have to recognise at the very start that we're a small family-owned business," Mr Evans said.

"How do you start in the dairy industry today without being a worldwide company and actually do something?

"The product has to fit the capabilities and the resources you have."

Their business, South Gippsland Dairy (SGD), is now on the verge of launching its product and has just recruited its first suppliers.

While the idea was to select a business that was bite-sized enough for the trio to handle, the road has been far from easy.

"It was more challenging than I'd imagined, primarily because there is no other producer for these authorities to refer to," Mr Evans said.

"They were all starting from scratch.

"We were having to go to Canberra to get classification for what colostrum actually is, it doesn't exist in some of the codes.

"We've come to some big hurdles, from the whole of veterinary medicines, through Dairy Foods Safety Victoria to the Therapeutic Goods Administration; we've had to have all of those authorities involved.

"We could have been far more successful in financial terms just importing the stuff and repacking.

"That was an option for us some two years ago but we said that's not true to our cause and what's the point of doing that?"

Mr Evans said he hoped the business will be able to repay their investment within two to three years, depending on its level of market success.

In fact, SGD will trade heavily on its status as a high-end colostrum supplier and a 30-day supply of tablets will retail for the premium price of $55.

Mr Evans said while many brands of powder contain as little as 5 per cent colostrum, SGD's was pure and proven to be more potent than others.

"We will never be the biggest producer but we would like to be the best producer in the world," he said.

"We've had CSIRO test the product and our results are good.

"They take antigens that those antibodies will attack, or attach to, put them in a dish and measure how effective the colostrum is at attacking them.

"We've been testing our product for two years.

"Now, we're confident we have consistently superior product."

Aside from purity, the key to producing high quality colostrum is fastidious handling from farm all the way through the factory.

SGD farm services manager Neil Walker said the colostrum had to be from the first milking.

Each batch is strained, decanted into 10-litre bags and frozen on farm before being processed at SGD's small facility in Leongatha, Vic.

Farmer-suppliers are paid $3 to $7 a kilogram, depending on the quality of the colostrum and must sign on to a colostrum management program to ensure adequate colostrum is retained for calves.

SGD believes its small-scale collection and processing system, which processes about 12kg of powder per hour, gives it a big advantage over large dairy processors.

"If you're a large cooperative that has a big processing facility then, by the time you get this small amount of stuff and fill your pipeline, nothing's coming out the other end because it's been flushed out by the time you get through the process," Mr Evans said.

"Large companies that take it by the tanker-load have diluted it all down with milk.

"They had to get such volumes of colostrum, they would collect it from all over the state for one processing plant.

"By the time is gets collected, consolidated, all sudden by the time it gets processed, it's days and days of deterioration."

Mr Evans said large processors also tended to put the colostrum through spray dryers operating at 160 degrees, while SGD's colostrum is freeze dried at -50 degrees.

The trio plan to expand SGD's product offering, with capsules and even skin creams on the agenda.

Convinced of its immune-boosting, gut-healing properties, they hope its results will build a loyal customer base.

"We want 75pc of customers to keep coming back and buying not one but 12 lots a year," Ms Walker said.

"If people are getting results for their own health, they'll come back to it."

This story first appeared on Stock & Land

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