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Fonterra and United Kingdom-based dairy co-operative First Milk have announced a joint venture to produce whey proteins for Fonterra’s growing food ingredients business in Europe.

The two co-operatives will combine their intellectual property and industry knowledge to add value to the dairy protein streams at First Milk’s Lake District creamery in Cumbria, England.

The venture signals Fonterra’s first step in realising its goal of local European sourcing to meet the nutrition ingredient demand of European customers. For First Milk, the deal adds value to the whey side stream of the cheese-making process.

Koert Liekelema, Fonterra Europe’s managing director, said: “We are delighted to announce this joint venture. First Milk shares the co-operative heritage and spirit with us and we look forward to using our combined consumer insights and innovative mind-sets to produce products which help European consumers live healthier lives.

“This deal underpins Fonterra’s strategic focus on premium dairy ingredients. Furthermore, we are very pleased to be working with First Milk, enabling Fonterra to offer customised, premium whey protein ingredients to the major food and beverages companies in Europe.”

Kate Allum, chief executive of First Milk commented: “While this is our first step into added value whey markets, it builds on the work we have done recently with a range of partners across the supply chain to deliver pioneering solutions.

“Obviously the UK market remains the bedrock of our business. However, it is also important that we explore opportunities, such as this one with Fonterra, that have the potential to deliver enhanced returns for our dairy farmers.

“With its leadership in dairy innovation and technical expertise, Fonterra are a great partner for First Milk and we look forward to working with them on this joint venture.”

The premium whey proteins from First Milk Lake District creamery will be applied in Fonterra’s functional and cultured nutrition ingredients like PowerProtein™ and ElevateProtein™, based on Whey Protein 80% ingredients (WPC80).

Fonterra recently reaffirmed its forecast payout to dairy farmers for the 2012 season – in the range of $7.15-$7.25 per kg of milk solids.

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