Jerry Dryer

No! This is not a story about one of my favorite consignment shops along Florida's Route A1A. Instead, it is a story about dairy proteins and milk sugars, i.e., whey proteins and lactose. Most folks in the dairy business can recite that history in their sleep, so I won't spend much time there; but the fun part is what's happening right now.

First, a quick glance over the shoulder. Straight from the cheese vat, whey is what's left over; it is mostly water. It contains, however, enough protein, lactose and other solids to make it a problem when dumped in the creek or fed into the local sewage treatment plant. Hence, whey was viewed as trash.

Back in the 1960s, Uncle Sam began seriously objecting to the dump-it-in-the-creek-solution and towns and villages charged an arm and a leg to deal with whey in the waste stream. In some respects, necessity became the mother of invention. Today, cheesemakers have a treasure.

Literally hundreds of products are now produced from the whey/lactose stream. They range from the most basic (dried whey) to the extremely sophisticated (isolates and albumins and a host of other fractions).

Derivatives of whey-various proteins and lactose-can be found in thousands of items in the neighborhood grocery store. Just take a stroll down the aisle and read some labels; you'll be amazed. Don't forget the pet food aisle and, if you need more convincing, check out the local feed store. Whey is everywhere.

Current situation

Dry whey production totaled just slightly more than 1 billion lbs during 2004. This is actually 13% less than during 2000, but for good reason. Greater volumes of higher value (higher protein content) whey-based products are using a larger share of the liquid whey supply. Basic whey powder has a protein content of about 12-13%.

Whey protein concentrates (WPCs), as reported by the USDA, have a protein content ranging from 25% to 89.9%. Last year, U.S. manufacturers churned out 348 million lbs of WPCs. Annual output has had its ups and downs, as more manufacturers add more capacity to produce whey protein isolates (WPIs), the 800-lb gorillas of the protein world. WPIs contain 90% or more protein.

USDA doesn't keep tabs on WPI production, but that is clearly where-the-action-is. Exports do get counted and WPI shipments overseas have grown more than ten-fold in the past five years. Shipments jumped from 1.7 million lbs during 1999 to 18 million lbs during 2003. Through October-the latest data available-2004 exports were running ahead of the pace set in 2003.

The protein content of finished products is boosted by stripping away an ever greater percentage of the lactose found in the liquid whey. Not surprisingly, lactose production has surged as higher-protein whey products have commanded a greater share of the market.

Last year, lactose production totaled 669 million lbs, 36% more than 2000. Fortunately, appetites here and abroad keep growing. Lactose exports totaled 315 million lbs during 2003, more than half of total domestic output. Overseas shipments have grown steadily and are on track to use up at least half of the 2004 production.

Interestingly, the whey protein concentrates and lactose moving overseas have a higher value than the product used in the United States. During 2004, the average U.S. price for WPCs was about 59 cents; exports garnered an average price of 67 cents. For lactose: The U.S. price, just shy of 23 cents, but the average price overseas, 31 cents.

Whey has moved from an item on the expense side of the ledger to hundreds of items on the income side of the ledger-one of the dairy foods business' "trash to treasure" stories.