Production increases in Argentina

Arla Foods Ingredients is now ready for the next stage of the milk powder venture in Argentina. Approx. USD 20 million is being invested in improvements and new technology in order to further strengthen an already profitable business.

Arla Foods Ingredients' production site in Argentina.
The plant in Argentina processes added value whey protein powder, which is sold as ingredients to primarily the dairy and baking industries. However, so far only 30 pct. of the raw material - whey - can be used for this type of production. The rest - permeat - is sold as liquid animal feed.

"The investment will allow us to process 100 pct. of our raw materials instead of just 30 pct. We're expecting that the result will be a very substantial rise in revenue. Until now it has been difficult to process whey permeat powder of a high quality due to its sensitivity to humidity. However, since we built the factory new technologies have been developed which can cope with the problem," says Henrik Andersen, who is responsible for Arla Foods Ingredients' whey protein segment.

A new spray tower will be erected to dry the permeat. From the autumn 2009, the powder products produced from here will be sold as ingredients mainly to food producers in South America.

"Compared to our current whey protein powder, the whey permeat powder will be a standard product, but considerably more profitable than animal feed," Henrik Andersen says.

The Argentinean operation, a joint venture between Arla Foods and the local dairy group SanCor, is celebrating its first five years this year. The results for 2007 are expected to be well beyond the expectations, not least due to high world market prices.

"We're currently seeing a fall in protein prices but our whey protein products are of such high quality that we should be able to maintain relatively high price levels. When we're able to process the permeat, our competitiveness should be enhanced even more," says Henrik Andersen.

--- Facts ---

* The factory, which employs a workforce of around 100, processes approximately 600 million kg whey per year.
* Turnover: around DKK 330 million (approx. USD 65 million)
* The factory is located at Porteña in the pampas, approximately 600 km northwest of Buenos Aires.
* Customers are based in South America, the Middle East, the Far East and Oceania.