Guest Columns

Which whey to go?

by Dean Sommer

Dean Sommer is a cheese technologist for the Wisconsin Center for Dairy Research. He is a guest columnist for this week’s issue of Cheese Market News®.

Many cheesemakers in small- to medium-sized operations are at a crossroads decision point on what to do about their whey processing or, more correctly, their lack of whey processing capabilities. While most larger operations and companies for years have had on-site or within organization whey processing operations to capture more value from their whey stream, in many cases small- to medium-sized companies have been much more limited in their abilities to further process and market their whey solids. Consequently, these organizations have not been able to capture nearly as much value from their whey streams as have companies that further process their whey into some sort of final powder form.

Historically this has not been an economically insurmountable issue for small- to medium-sized cheese plants. However, two things have recently occurred which have changed this scenario. The first significant change happened in April 2000 when USDA changed the formula to calculate the Class III milk price. One of the significant ramifications of this change is that virtually the entire value of dry whey (minus a make allowance) that could potentially be generated from the liquid whey produced from cheese production is captured in the Class III milk price. In effect this means that a cheesemaker is paying his producers for the value of the whey that could potentially be generated from their milk whether or not the cheesemaker extracted that value from the whey. This was not overly debilitating for cheesemakers that only captured a relatively minimum value for their whey as long as the dry whey prices were in their historic ranges of $0.16 - $0.20 per pound.

However, recently we have experienced a dramatic escalation of dry whey prices to values never dreamed possible. The weekly average dry whey price peaked in April of this year at $0.7925 per pound. The Wisconsin Cheese Makers Association recently reported that in June of this year whey added $3.32 to the Class III price. That represented approximately 21 percent of the value of the Class III price. This compares to a historical average of the dried whey contribution of 2-5 percent of the Class III price. While this was certainly good news to producers who reaped the economic benefits of the skyrocketing dry whey markets and its effect on the Class III milk price, it spelled potential economic disaster to small- and medium-sized cheese plants that weren’t capturing nearly that much value from their whey streams. Recently dry whey prices have retreated to values just under $0.40 per pound. The question now is, what does the future hold for dry whey prices? And how do cheesemakers that don’t gain the full value of their whey solids react and prepare for the future?

It is well known that in cheesemaking if one starts with approximately 100 pounds of milk you will get more or less 10 pounds of cheese and 90 pounds of whey (with a solids content of 6.5 percent before whey cream separation). Of the solids in the original milk (approximately 12.4 percent), roughly 54 percent of the solids end up in the cheese and 46 percent end up in the whey, with lactose (at about 75 percent of total whey solids) being the dominant whey solid, followed by whey proteins and minerals. Of course approximately 94 percent of the water in the original milk ends up in the whey as well, which proves to be problematic, and expensive, to remove in order to capture the maximum value from the whey solids, which normally requires a dried product of some sort; more on that later.

There is no shortage of possible commercial products that can be made from whey. This includes dry sweet whey powder at about a 6.5 percent yield, demineralized whey (6.1 percent yield), reduced lactose whey (3.4 percent yield), whey protein concentrate (WPC)-34 (2.3 percent yield), WPC-80 (1 percent yield) and, finally, whey protein isolate (0.9 percent yield). In addition there are individual whey proteins such as lactoferrin, glycomacropeptide, alpha lactalbumin and beta lactoglobulin. Of course we can’t forget about the permeate stream (dairy product solids, primarily lactose and minerals) which increases in volume as you further concentrate the protein fraction of the whey.

Small- to medium-sized cheese manufacturers have employed a number of practices to deal with their raw liquid whey. Until recently many were satisfied to virtually give it away to someone for further processing to avoid disposal costs and environmental quagmires. Now, many cheese plants have installed ultrafiltration systems. This allows them to capture the whey proteins and whey permeate stream. The whey proteins are sold for further concentration and drying; the whey permeate, now a valuable component, is either concentrated and sold or, in many cases, land spread. The ability for small- to medium-sized cheese plants to at least go this far with their whey processing depends upon a number of factors: the ability to find a willing customer for their liquid whey streams; the distance to plants that could further process their whey, WPC or permeate streams; the quality of their whey streams; USDA and kosher status of their whey streams; and the economic, technological and site space to install proper whey storage tanks, cooling, membrane systems and other processing equipment.

To capture the maximum value of a whey stream it is important to have the ability to take it all the way to a dry state. Unfortunately the installation of whey evaporators and dryers is an extremely capital-intensive operation and subject to large economies of scale. Ted Jacoby III reported at the Wisconsin Cheese Industry Conference in LaCrosse, Wis., this spring that the equipment to dry whey for a 1-million-pound-per-day liquid whey processing operation would cost $9.3 million, but for an additional 24 percent more money (total $11.5 million equipment cost), you could double the plant size to 2 million pounds of liquid whey per day. For an additional 12 percent more money (total $12.9 million equipment cost), you could buy equipment for a plant to process 3.0 million pounds of liquid whey per day. (Jacoby also stated that the facility to house the equipment will cost about as much as the equipment in it). Daily operating costs were almost 9 cents per pound of dry whey for the 1-million-pound-per-day plant, but leveled off to about 5 1/2 cents per pound for the 2- and 3-million-pound-per-day plants. The conclusion was that “size matters when it comes to drying dairy products,” and it appears that it is necessary to have a plant of at least 2 million pounds of liquid whey per day capacity to economically justify.

Given all of this, small- to medium-sized dairy plants are faced with a dilemma. To do nothing to extract maximum value from their whey streams risks another economic crisis if and when the whey price — and with it the Class III milk price — climb again to recently seen heights. Given that extra whey evaporation and drying capacity within a reasonable distance is at a premium, bargaining power for higher prices for liquid whey streams may be limited. Trucking and fuel costs can easily eat up large portions of margins if liquid whey streams have to be shipped over a considerable distance. Construction of whey evaporators and dryers is extremely capital intensive. Finding experienced people to run this complicated equipment is no small task. Whey evaporation and drying is governed by huge economies of scale, and small- and medium-sized plants don’t individually have enough whey volume to justify the expenditures. Sales and marketing expertise is critical to economic success and most small and medium cheese plants don’t currently have this expertise in house.

The risk for small- and medium-sized cheese plants not gaining adequate revenue from their whey stream seems clear. It is only a matter of time before whey prices rise again to levels that put their businesses at economic risk if they don’t capture more value from their whey. The options for gaining more value from their whey stream seem limited but also clear: Develop equitable economic relationships with current whey processing partners for the value of their whey especially in high whey markets; pool resources to take advantage of economies of scale through the formation of whey cooperatives or joint ventures with other small- and medium-sized cheese plants; and find other strategies or technologies to gain value from whey and whey components that aren’t subject to the large economies of scale that currently exist. Or, do nothing and hope for the best, which is probably taking the biggest risk of all.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

© 2025 Cheese Market News • Quarne Publishing, LLC • Legal Information • Online Privacy Policy • Terms and Conditions
Cheese Market News • Business/Advertising Office: P.O. Box 628254 • Middleton, WI 53562 • 608/831-6002
Cheese Market News • Editorial Office: 5315 Wall Street, Suite 100 • Madison, WI 53718 • 608/288-9090