While manufacturing of ingredients for the company’s own branded goods and external processors is not new, the group says that it hopes to specifically focus the new division on industry innovation through formulation.
Mark Korsmeyer, DFA president for foods, told DairyReporter.com that he believes the cooperative is well placed to expand its operations to meet an industry-wide shift in improving value in the supply chain.
“Extracting dairy components, which have positive health implications and a functional value for finished goods utilisation, is strategically sound for all milk processors,” he stated.
Despite the current high commodity prices affecting dairy manufacturers and other industries, the group says the move reflects a long-term strategy of supplying higher value dairy products to alleviate commodity issues.
“As in all commodity products, production and price cycles will continue to be part of business proposition," he stated. “Both DFA and the US dairy industry are focused on capitalising on the global demand for high quality, dairy-based products.”
DFA, which is supplied and owned by 18,000 farmers across 48 US states, said that the ingredients it was developing would be supplied for its brands like Borden cheese and Keller’s butter as well as for external customers.
The company did not clarify if the division would concentrate on specific types of ingredients, stating that around the world there was strong demand for products like cheese powders, condensed milk, flavours and casein.
“We will continue to focus on dairy ingredients that remain in high demand both domestically and abroad,” Korsmeyer stated.
DFA claimed that it is already producing these ingredients for use in baby formulas, ice creams and dairy beverages.
The cooperatives strategy comes as the European dairy industry also looks to maximise value in the supply chain.
Earlier this year, a chief executive for one of Ireland’s leading dairy cooperatives said that product innovation was vital for any business wishing to remain competitive in the industry.
Noel Coakley, chief executive of the Irish Dairy Board (IDB), a major national cooperative, said that the ongoing reform of the EU dairy market would ensure that volatility remained a fact of life for producers.
"In order to build a strong dairy industry for the future we will need to be more innovative and responsive to the realities of the marketplace in this new era,” he stated. “Product development will be very important with a specific focus on added value and consumer convenience."