In the earlier blog, we looked at a number of different milk price payment terminology from around the world. I think I put forward a fairly good case that the New Zealand $/kg milk solids is the best, but not perfect, unit of milk price. There is however one more twist to the tale when quoting global milk prices in units of $ / kg MS - that is the issue of differing protein test methods.
In Australia milk protein is measured as 'true protein' while NZ milk protein is measured as 'crude protein - and what is the difference I hear you ask?
By simplest definition Crude Protein is the amount of nitrogen present in milk multiplied by 6.38. Crude Protein provides a measure of all nitrogenous compounds whether they are protein or compounds such as ammonia, urea, creatine, creatinine, uric acid, orotic acid, peptides, hippuric acid, amino acids, and others. True protein measures the actual protein content of the milk, excluding these smaller 'non-protein' nitrogen components. In numerical terms the typical crude protein test result will be 0.15 - 0.25% higher than true protein.
So why the difference? This story starts way back in the dim past of the dairy industry when milk protein was measured by the Kjeldahl nitrogen test. True protein measurement was an extremely tedious process but some intrepid scientists did the analysis and the world adopted the convention of 6.38 grams of protein for each gram of nitrogen in milk. That has stayed with us ever since.
The development of high speed infrared testing machines allowed for specific testing of milk protein content. This in turn allowed authorities to set a test and reporting standard for 'true protein' - well at least the authorities in Australia did.
Our research tells us that the US and France also routinely measure and report 'true protein' but most of Europe and New Zealand have stayed with the Nx6.38 'crude protein' convention.
Incidentally, the New Zealanders and Europeans don't spend hours in the lab generating lots of noxious fumes from the Kjeldahl test to measure crude protein. The same infrared machines do the job but are calibrated to measure crude protein rather than true protein.
The best explanation as to why there is a difference in global protein test measurement lies in the application of the milk. The Nx6.38 standard is still used for dairy commodities such as milk powder. Since most of New Zealand's milk goes into powder products, it makes sense to have an alignment between the farmgate testing method and the finished product.
The Australia and US dairy industries have their foundation in the liquid milk, fresh dairy, and cheese markets. In these applications the true protein measurement is considered a better measure of value. Protein is the more valuable nutritional component of drinking milk. It also holds the primary functional and nutritional value in yoghurt and ice-cream. Similarly, non-protein nitrogen adds relatively little value to cheese and whey powder production.
The milk price effect of protein test is relatively small but is none-the-less significant in this low margin industry. Fonterra's 2010 / 11 milk price forecast is currently $6.90 / kg MS. The average milk solids level in New Zealand is about 8.60% (4.9% fat, 3.7% crude protein). In an Australian context this equates to roughly 8.4% MS when expressed as fat + true protein. On this basis the adjusted milk price is $NZ 7.06 / kg MS. I guess it all pales into insignificance when we consider the currency difference. Over the past 9-12 months $1 AUD ~ $1.28 Pacific Peso - sorry NZD. $NZ 7.06 / kg MS equates to approximately $5.50/ kg MS AUD (true protein basis).
This discussion also poses the question of whether or not the New Zealand production and feeding systems boost the level of non-protein nitrogen in the milk that is produced.
Those of you who have an understanding of ruminant nutrition will be familiar with the term milk urea nitrogen or MUN. Milk urea nitrogen is used as an indicator of whether the diet is balanced for protein and fermentable energy. Typically all grass diets tend to be balanced in favour of too much rumen degradable protein. As we know, New Zealand does not have access to cheap grain and so they tend not to feed too much starch. I wonder if this means that the typical New Zealand production system is actually boosting the crude protein level of their milk rather than the true protein content of the milk.
In Australia, where grain feeding is more commonplace, I would hazard to guess that our diets are a better balance for protein and fermentable energy and therefore our MUN levels will probably be lower. We also know that when feeding higher levels of starch to cows we tend to drive microbial synthesis in the rumen which results in a higher true protein test. That will be my home work for the next couple of weeks - trying to scour the Internet and find out whether research is being done to look at feeding systems and how they influence the crude protein versus the true protein of milk.
(Editors note: Before we get howls of protest from across the Tasman, there is little evidence to suggest that non-protein nitrogen (NPN) increases as milk protein increases (for cows fed roughly the same diet). That means that New Zealand milk will potentially have a lower ratio of NPN : crude protein than elsewhere in the world where the protein content is lower (0.2 / 3.7 = 5.4% ; 0.2 / 3.2 = 6.2%).
As Neil suggests, the relationship between diet and NPN is not widely known and neither is the typical NPN level of the various global milk producing regions.
If you want to find out more about true protein and NPN, Google is your friend. We would also welcome any further information on the current standards and the history of global milk testing procedures.
btw rotw - if you want to share the joke in the title here it is)