1.2.

4 Waste Generated

The impact of dairy processing on the environment has been summarized in the schematic in Figure
2. This diagram shows the inputs and outputs for a typical dairy manufacturing plant producing market
milk, butter, milk powder and cheese. Inputs include the raw milk, other ingredients, water, energy,
detergents, refrigerants and packaging. Outputs include: dairy products; a range of dairy liquid effluents
such as cleaning-in-place (CIP) cleaning waste, cheese whey and spills; air emissions such as combustion
gases and milk powder dust; and solid wastes such as damaged stock or out-of-date product. Input-output
comparisons form the basis of the life cycle assessment of dairy processing conducted by a number of
researchers (Cederberg & Mattsson 2000; Berlin 2002; Hogaas-Eide 2002; Nicol 2004). These studies have
identified the key issues that the dairy industry needs to address to ensure the environmental sustainability
of the industry based on water and energy usage, and waste disposal.13 In this paper, the wastes that will be
considered are the ones generated by liquid and powdered milk production since the design is limited to the
said products only.

Figure 2. Dairy processing impact on the environment - inputs and outputs. Source: UNEP (2000)

1.2.4.1 Solid Waste

Hardly any solid waste is produced by the dairy industry. The main solid waste produced by the
milk processing plant is the sludge resulting from wastewater purification. There are figures available about
the amount of sludge production: in aerobic systems the sludge production is about 0.5 kg per kg of removed
COD and in anaerobic systems about 0.1 kg per kg of removed COD.14
1.2.4.2 Wastewater

Waste generating processes of major significance include: Washing, cleaning and sanitizing of
pipelines (metals), pumps, processing equipment, tanks, tank, trucks and filling machines (high N load);
Start-up, product change over and shut down of HTST and UHT pasteurizers; Breaking down of
equipment and breaking of packages resulting in spilling during filling operations; and Lubrication of
cases, stackers and conveyors;

Wastewater from milk processing plant may also originate from the following sources:

Milk receiving

Wastewater results from tank, truck and storage tank washing, pipe line washing and sanitizing.
It contains milk solids, detergents, sanitizers and milk wastes.

Milk powder

Environmental problems are caused by high energy consumption (= emission of CO2, CO etc.),
by cleaning and by emission of fine dust during the drying process.14

1.2.4.3 Air Pollution

In dairy plants, air pollution is mainly caused because of the need for energy. In the process gasses
may be discharged such as CO2, CO, NOx and SO2. Emissions of CFCs and NH3 into the air may come
about as a result of leakage and stripping of chilling machines when out of use.

Table 7. Emissions into the air as a result of gas- and oil-combustion 14

Table 8. Overview of the waste production data for the dairy industry.15
(1): Taiganides (1987), refering to EPA (1971).

(2): Barnes et al (1984), refering to EPA (1971) and Kearney (1973). Values between brackets are
recalculated, assuming 2400 kg waste water/ton milk processed, thereby overestimating the range to some
extent.

1.3 Market

1.2.1 Global Market

Approximately 150 million households around the globe are engaged in milk production. In
most developing countries, milk is produced by smallholders, and milk production contributes to household
livelihoods, food security and nutrition. Milk provides relatively quick returns for small-scale producers
and is an important source of cash income.15

In recent decades, developing countries have increased their share in global dairy production.
This growth is mostly the result of an increase in numbers of producing animals rather than a rise in
productivity per head. In many developing countries, dairy productivity is constrained by poor-quality feed
resources, diseases, limited access to markets and services (e.g., health, credit and training) and dairy
animals low genetic potential for milk production. Unlike developed countries, many developing countries
have hot and/or humid climates that are unfavourable for dairying.16

In the last three decades, world milk production has increased by more than 50 percent, from
500 million tonnes in 1983 to 769 million tonnes in 2013. United States is the worlds largest milk producer,
with 18 percent of global production, followed by India, China, Russia and Brazil (as of 2012.) Since the
1970s, most of the expansion in milk production has been in South Asia, which is the main driver of milk
production growth in the developing world. The countries with the highest milk surpluses are New Zealand,
the United States of America, Germany, France, Australia and Ireland.17
 Table 10. Production of Milk around the World

By Region (1992-2010)

Table 9. Top Milk Producing Countries in

the World (2012)

1.2.2 Philippine Market

Market Supply

Producing less than one percent of its growing dairy requirement of 1.991 million metric tons
(MMT) in 2015, the Philippines continues to be a major global importer of dairy products, especially milk
powder. The country produces less than one percent of its total annual dairy requirement and imports the
balance. Data from the Philippine National Dairy Authority (NDA) shows that local dairy production was
at 20,010 metric tons (MT) in 2014, up from 19,530 MT in 2013. The value of dairy production in 2014
amounted to P629 million ($13.56 million). Local milk production has reached 21,000 MT in 2015 and will
likely continue expanding on an annual basis due to strong demand for fresh milk and growing dairying
capabilities. As of January 2015, the Bureau of Agricultural Statistics estimated the nations total dairy herd
at 19,792 dams and does, an increase of 2.5 percent from the previous year. These were comprised of dairy
cattle (10,036), water buffalo (8,736) and dairy goats (1,020). Dairy cattle numbers increased in 2015 due
in most part to the ongoing government herd build-up programs and the growing number of dairy multiplier
farms of the NDA. Dairy cattle numbers are expected to continue increasing by about 1,000- 1,500 head
per year for the next several years.18

Table 11. Philippines Total Dairy Herd, Source: Bureau of Agricultural Statistics

TOTAL DAMS/DOES
2014 2015
Cow 9,831 10,036
Carabao 8,501 8,736
Goats 976 1,020
TOTAL 19,308 19,792

The average Philippine milk production per animal (8 liters/day) remains low due mainly to
poor feed and management practices as well as high production costs and a lack of an adequate dairy
infrastructure. According to various sources, the average daily milk yield in the United States is around 30
liters/day and about 20 liters/day in the United Kingdom. According to the NDA, the average farm gate
price of milk as of July 2015 was P25/liter ($0.55/liter). By contrast the corresponding farm gate price of
milk in the U.S. is about $0.38/liter ($16.60 hundred weight) as of July 2015. There are four main types of
dairy farms in the Philippines: individual smallholder producers (who consume and sell locally what they
produce), smallholder cooperatives (who deliver their milk to a collection point for transport to a processing
plant), commercial farms (which supply processors), and government farms (which supply school and rural
community feeding programs). Dairy, Cheese Dairy, Dry Whole Milk Powder Dairy, Milk, Nonfat Dry
Dairy, Milk, Fluid In answer to the countrys cold chain challenges and limited production, a significant
amount of Philippine fluid milk supply is actually Ultra High Temperature (UHT) milk reconstituted from
imported milk powder. 19

Market Demand

NDA estimates 2014 domestic dairy requirements to be at 1.991 million MT. According to FAO
estimates, annual per capita milk consumption in the Philippines is at 22 kg, compared with Thailand at 26
kg, Malaysia at 52 kg and the United States at 287 kg. With a strong economy and a growing population of
roughly 102 million in 2015, the Philippines is a large and rapidly expanding market for milk and milk
products. Other factors contributing to the long term trend of strong growth in local dairy consumption are
expanding cold chain capacity, an increase in the number of supermarkets, and a blossoming food
processing industry According to NDA, one out of every three glasses of fresh liquid milk (not reconstituted
from powder) consumed in the Philippines is produced locally. A Filipino family now spends a little over
P4000 ($90) per year for dairy products. According to the NDA, half of smallholder milk production goes
to school and community milk feeding programs and the rest to local commercial sales or household
consumption. With dairy production in the country being more community-based, maintaining the quality
of fresh milk is a challenge due to the lack of processing and distribution systems, and a dependable,
continuous cold chain. Below are retail prices of various dairy products as of September 2015:

Table 12. Retail Prices of Dairy Products (September 2015) Source: UAP Food and Agribusiness
Monitor Fresh fluid milk in a mid-range Manila supermarket sells for P90-120 per liter ($1.94-$2.59).
Note: US$1 =PhP46.40, as of October 6, 2015.20

Retail Prices of Dairy Products (as of September 2015)

Powdered filled Milk (370g) P 191.50
Evaporated Milk (150 ml) P 19.95
Butter (225g) P 86.00
Cheese, processed (200g) P 41.00
Ice cream ( 1 gallon) P399.00

Markets Target Consumers

The greater Manila area remains as the major fresh milk market in the country and is classified
into business and consumer sectors. The business sectors include the institutional and retail operations such
as coffee shops, hotels, restaurants, supermarkets and small retailers. The consumer sectors include
households and schools through the government milk feeding program. The main targets of local milk
processors are the institutional buyers, especially coffee shops. Specialty coffee shops are good markets
because of the continuing trend towards coffee consumption as a lifestyle in the country. Locally sourced,
fresh milk dominates this market because of its superior foaming properties, as compared to UHT milk.
The major suppliers of fresh milk to coffee shops are processors from Southern Luzon, particularly from
Batangas and Laguna. Other suppliers to coffee shops produce UHT milk reconstituted from imported milk
powder and packaged under their own brand. The specialty coffee shop industry is projected to sustain
growth of 10-15 percent over the next five years. Analysts attribute this expansion to the growing consumer
preference for specialty coffee and the improving image of coffee in general. (Food and Agribusiness
Monitor, University of Asia and the Pacific).21

Market Players

Nestl Philippines Inc dominated drinking milk products in 2016 with a value share of 50%,
the same proportion of sales that it accounted for in the category in 2015. This strong position is partially
due to the companys presence in several drinking milk products categories including dairy only flavoured
milk drinks, powder milk and shelf stable milk. Its leading brand remains Bear Brand, which ranked first
in both powder milk and shelf stable milk in 2016. Bear Brand powder milk alone is estimated to have
contributed more than 65% of the companys total value sales in drinking milk products in 2016. Its
significant contribution is partly due to the wide age bracket to brand caters, spanning youngsters to only
people through the Bear Brand Adult Plus brand. In general, Nestls favourable position in drinking milk
products can also be attributed to its strong reputation for high quality, its sustained promotions, its use of
various pack sizes to improve affordability and the extensive distribution of its products and brands.22

Milk Demand Projection

Aside from the growing health consciousness which continues to drive Philippine consumers to
make better food choices, another lifestyle trend that is boosting growth in drinking milk products is the
increasingly busy lifestyles being led in the country, especially among urban dwellers. This has led to
increased consumption of drinking milk products as an alternative to a snack or an energy drink. Drinking
milk products is expected to post a value CAGR of 4% at constant 2016 prices over the forecast period,
which is set to be an improvement on the 1% value CAGR recorded in the category at constant 2016 prices
over the review period. Improvements are set to come as the consumer base for drinking milk products has
sufficient room for expansion, especially among older consumers. More adult Filipinos re likely to consume
drinking milk products more regularly as a way of conveniently nourishing themselves in between main
meals.23

Target Age Group in the Philippines

The Philippines recorded a total of 92,097,978 household population or non-institutional

population in the 2010 Census of Population and Housing (CPH). Of this household population,
approximately 28 million are adults which will be the target customers of the milk powder to be
produced. Figure shows the age-sex percentage in the household population.
 Figure 3. Age-Sex Pyramid of Household Population: Philippines

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https://www.climate-policy-watcher.org/food-processing/current-status-of-waste-problems-
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importance of non-cattle milk production worldwide. International Dairy Journal, 24 (2): 50-56.
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the husbandry of animals kept by resource-poor people in developing countries. Nottingham,
Nottingham University Press.
7. Anonymous, Statistics:Dairy Cows,Compassion in World Farming, page 1.
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Information Outlook, page 3.
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Information Outlook, page 4.
10. Ang, Pia A., Philippines Dairy and Products Annual Situation and Outlook, Global Agricultural
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Information Outlook, page 8.
12. Anonymous, Dairy in the Philippines, Euromonitor International, page 3, website:
http://www.euromonitor.com/dairy-in-the-philippines/report
13. Anonymous, Dairy in the Philippines, Euromonitor International, page 5, website:
http://www.euromonitor.com/dairy-in-the-philippines/report