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Title: Ultra-high-temperature processing of fluid milk. Implications for the Florida dairy industry
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Title: Ultra-high-temperature processing of fluid milk. Implications for the Florida dairy industry
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Language: English
Creator: Degner, Robert L.
Publisher: Food and Resource Economics Dept., IFAS, University of Florida
Publication Date: 1978
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Table of Contents
    Front Cover
        Front cover
    Title Page
        Page i
    Center information
        Page ii
    Table of Contents
        Page iii
    List of Tables
        Page iv
    List of Figures
        Page v
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
Full Text
1 o

Ftuld


Staff Report
















FLORIDA

AGRICULTURAL MARKET RESEARCH CENTER

FOOD AND RESOURCE ECONOMICS DEPARTMENT
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611



















ULTRA-HIGH-TEMPERATURE PROCESSING OF FLUID MILK:

IMPLICATIONS FOR THE FLORIDA DAIRY INDUSTRY

By
Robert L. Degner


Staff Report 4


November 1978


Staff papers are circulated without formal
review by the Food and Resource Economics-
Department. Content is the sole responsi-
bility of the author.







Food and Resource Economics Department
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611













The Florida Agricultural Market Research Center is
a service of
the Food and Resource Economics Department
of the
Institute of Food and Agricultural Sciences.


The purpose of this Center is to provide timely, applied research

on current and emerging marketing problems affecting Florida's agri-

cultural and marine industries. The Center seeks to provide research

and information to production, marketing, and processing firms, groups

and organizations concerned with improving and expanding markets for

Florida agricultural and marine products.

The Center is staffed by a basic group of economists trained in

agriculture and marketing. In addition, cooperating personnel from

other IFAS units provide a wide range of expertise which can be applied

as determined by the requirements of individual projects..














TABLE OF CONTENTS

Page

List of Tables ............................................ iv

List of Figures ............................................ v

Introduction ............................................... 1

History of UHT ......................................... 2
Barriers to Adoption of the UHT Process in the U.S. ...... 4
Product Barriers ................................ .......... 4
Legal Barriers .................. ......................... 7
Economic Barriers .......................................... 8
UHT Advantages and Disadvantages ........................ 12
Farmer Advantage ...... ................................... 12
Processor Advantages ..................................... 13
Processor Disadvantages ................................. 15
Retailer Advantages .......................................... 15
Retailer Disadvantages .................................. 16
Consumer Advantages ...................................... 16
Consumer Disadvantages .................................. 17

Questions Raised By UHT ...................................... 17

Alternatives for Florida Dairy Producers and Processors ... 19

Summary ................................................... 20

References ..... ........... ....................... ........ 21


















iii














LIST QF TABLES


Table Page

1 Definitions of processing terms...................... 2

2 Market share of UHT milk in selected countries....... 3

3 Estimated wholesale costs for U.S. dairies............ 11














LIST OF FIGURE

Figure Page

1 Hypothetical long run average costs for UHT and
HTST processing.................................. 9












ULTRA-HIGH-TEMPERATURE PROCESSING OF FLUID MILK:
IMPLICATIONS FOR THE FLORIDA DAIRY INDUSTRY

Robert L. Degner


Introduction


Ultra-high-temperature processing (UHT) of fluid milk and other

dairy products has gained interest for several years among leaders in

the U.S. dairy industry. The purpose of this paper is to examine the

latest developments in UHT processing and relate the possible impact of

such processing on the Florida dairy industry.

What is UHT? The International Dairy Federation has recommended

this definition for UHT milk: "a milk which has been subjected to a

continuous flow heating process at a high temperature for a short time

and which afterwards, has been aseptically packaged". UHT has also been

described as "a product with a strange flavor and apparently, the gift

of eternal life". From a practical standpoint UHT milk is ordinary

fluid milk, either low fat or whole milk, which after processing and

packaging, requires no refrigeration. The typical shelf life of such

milk ranges from about three to six months, although researchers have

reported a satisfactory product after one year had elapsed with no

refrigeration (Hansen, 1978).

From a technical standpoint, UHT milk is usually defined as that
0 0 0 0
milk heat treated at 145 to IbO C, (293 to 302 F, although some sources
0 0
give 2/5 to 300 F) for two to six seconds. This compares with a temper-
0 0
ature of 71.5 C (160.7 F) for 15 seconds for the process that is currently

the industry standard (Table 1).








Table l.--Definitions of processing terms.


Temperature Time Term Needs refrigeration


30.0 minutes


15.0 seconds


1.0 second



0.05 second



0.01 second



2.0 seconds
or more


1450-1500C 2.0-6.0 seconds
2930-3020F


680C
145.40F

71.50C
160.70F

88.50C
191.30F



95.50C
203.90F



100.00C
212.00F


1380C
280F


Low temperature
Longer time (LTLT)

High temperature
Shorter time (HTST)

Ultra high tempera-
ture (UHT) or higher
heat shorter time
(HHST)

Ultra high tempera-
ture (UHT) or higher
heat shorter time
(HHST)

Ultra high tempera-
ture (UHT) or higher
heat shorter time (HHST)

Ultrapasteurization


Sterilization,
also commonly called
"UHT".


Source: Southeastern Dairy Review, September, 1978, p. 10.


History of UHT


As novel as the concept of unrefrigerated milk may seem to us here in

the U.S., the basic process has been investigated for approximately a

quarter of a century. This kind of fresh tasting, long-life milk was

produced and distributed in bottles in the 1940's by the Avoset Company

and in cans in the 1950's by Real Fresh, Incorporated. Millions of pounds

of such products have already been produced by several cooperatives in

Wisconsin, Maryland and New York, and sent abroad, especially to Viet Nam

(Hsu, 1969).


Yes


Yes



Yes



Yes



Yes, but product
has longer shelf
life

not until opened
if packaged asepti-
cally








Meanwhile, UHT processing has been extremely successful in other

countries. At present, there are approximately 800 UHT plants in operation

worldwide (Danish Dairy Industry...Worldwide, 1978). UHT milk currently

has approximately 50 percent of the total fluid milk sales in Italy.

The proportion captured by UHT milk in Germany is approximately 45 to 50

percent, and in Switzerland about 40 percent. UHT sales in France

constitute about 25 percent of all fluid milk sales. Several years ago,

Canada obtained it's first UHT processing facility in Quebec. It is

estimated that UHT's current share of the market is very small, but

apparently growing (Table 2).

Table 2.--Market share of UHT milk in selected countries.


Country Percent of fluid milk sales

-------- Percent --------

Italy 50

Germany 45 50

Switzerland 40

France 25

Source: Danish Dairy Industry...Worldwide, June, 1978.

There are few UHT processing units in the United States. Currently

there are no full scale commercial plants in operation producing fluid

milk for domestic consumption. A number of existing UHT plants in the

U.S. are primarily research units at such places as North Carolina State

and the University of Maryland. The University of Florida also has a

small unit for research purposes.





4
S If UHT milk is such a fantastic product, what has kept it out of

the U.S.? There are a number of factors in the U.S. fluid milk market

which have served as barriers to adoption of the UHT process.

Barriers to Adoption of the UHT Process in the U.S.

The basic underlying factor acting as a barrier was expressed very

succinctly by William R. Boardman, Executive Vice President, Dairy

Farmers, Inc., when he said "We have an excellent product in fresh

Florida milk" (Southeastern Dairy Review, 1978). The same can be said

of fluid milk practically all over the U.S. The American consumer has

had an abundance of fresh fluid milk, and contributing to this abundance

has been adequate energy and refrigeration equipment needed to provide a

storage and distribution system unmatched anywhere in the world. Low-

cost energy has made much of this possible. The changing energy situation

in the U.S. may provide the incentive for UHT to make an impact soon.

Refrigerated distribution systems may be a luxury that Americans will

not be able to afford in the future.

Aside from energy, barriers to adoption of the UHT process in the

U.S. can be classified into three general categories. The first of
these pertains to the product itself. This barrier involves the basic

organoleptic and nutritional properties, packaging, and overriding

consumer attitudes. Each of these will be discussed in greater detail

below. A second major barrier is the present legal framework under

which fluid milk and dairy products are regulated. Thirdly, there are
very important economic barriers confronting the dairy processing

industry and dairy distribution system.

Product Barriers

The ultra high temperature required in processing milk with this
process gives the product a flavor which has been described as a "cooked"








or "scorched" flavor. Earlier processes, some of which are still being

used in Europe, undoubtedly leave much to be desired with respect to

organoleptic properties. However, a concern is that leaders in the

American dairy industry do not recognize the advances that have been

made in improving the taste of UHT processed milk in recent years.

Perhaps these attitudes have been fostered by unfavorable evaluation of

UHT milk years ago when there were definite flavor problems. For example,

four out of the five dairy farmer association managers in the state of

Florida recently made statements to the effect that UHT milk has flavor

problems. One said, "an uphill battle...flavor is a major problem...people

still want fresh milk". Another said [the] biggest problem..[with

UHT milk]...is flavor". Still another comment was [UHT milk has] "...a

flavor disadvantage to overcome", and a fourth said [UHT milk will have

a decided impact]"...if the producers of UHT milk can correct the

flavor problems...".

There is substantial evidence that the flavor problems that many

feel exist are not as severe as they may seem. For instance, a University

of Illinois taste panel test revealed that regular milk scored lower

than UHT in the taste panels. The University of Maryland, in their

dairy store on campus, sells UHT processed milk on an every other weekend

basis, packaged in conventional containers, and they have had no reaction

to different flavors. Their customers have not detected the weekly

change from regular milk to UHT or vice versa (Russell, 1977). Dr. W.

M. Roberts, Head of the Food Science Department at North Carolina State

University, recently said "UHT treated milk will probably be more readily

accepted by consumers than the industry may realize" (Roberts, 1978).








American travelers in Europe report that milk, particularly in Germany,

tasted very good. Furthermore, a survey by the Canadian Department of

Agriculture revealed that 40 percent of all people surveyed perceived no

difference between UHT and regularly pasteurized milk, and an additional

25 percent detected only a slight difference.

Packaging is another important product characteristic that has

probably constituted a barrier to UHT adoption. In order to obtain the

extended shelf life of three to six months, it is essential that the

milk be packaged in aseptic containers. Early attempts at aseptic

packaging used cans and glass containers. In recent years though, there

have been advances in using multilayered paper containers which provide

the required product protection. Actually, in addition to paper, several

layers are polyethylene and one is a metal foil. Three of the leading

"paper" containers are the familiar Tetra Pak, a triangular shaped

package, the Tetra Brik pack, which is a brick-shaped package, and the

Pure Pak, a more conventional container made by the Ex-Cell-o Corporation.

These multi-layered paper packages have been more expensive than other

conventional packages because of their increased component cost.

Another major consideration may be that of a consumer acceptance of

these aseptic packages. The triangular shaped Tetra Pak may be particularly

unwieldy for any container size larger than a pint or liter. The Tetra

Brik is probably the most successful container at present. The Tetra

Brik is currently being used by Canadian dairy; it is sold singly or in

a shrink wrap four-pack, which makes the unit purchase equivalent to or

slightly greater than the current one gallon size commonly sold in the

U.S. Blow-mold plastic containers have also been tested but with little









success. The basic problem with blow-mold plastic has been that of

oxygen permeability. During prolonged storage, oxygen permeates the

container resulting in product deterioration. Light penetration of the

plastic container also contributes to product deterioration.

A major barrier may be that of the consumer's image of the product

and ingrained buying habits. Many consumers are creatures of habit and

years of conditioning to refrigerated milk may have caused the American

consumer to expect that all fresh milk be refrigerated. The American

housewife may be extremely skeptical of such an innovative concept and

thus may refuse to purchase the product even though research shows it to

be satisfactory. Other products have encountered this type of resistance.

For example, poultry farmers and processors have been attempting to get

consumers to accept frozen broilers for years. Considerable research

has been done to determine why consumers will not purchase frozen broilers,

but despite many attempts to market the product the poultry industry has

failed. Until more is known about the consumer images and the concept

of UHT milk, little can be said concerning consumer acceptance.

Legal Barriers

Legal barriers currently exist because no official definition

exists for UHT milk which has been aseptically packaged for non-refrigerated

distribution. However, there are provisions for the distribution of

ultrapasteurized products such as whipping cream products. Under current

regulations, only grade A products are sold in Florida. Such products

must be produced by grade A farms and grade A processors, and all grade

A products must be refrigerated. Thus, if UHT milk products are design-

ated as grade A, they are required to be refrigerated, thus eliminating

many of the cost advantages inherent in the UHT process.








With respect to interstate shipments of UHT products, there have

been no requests to import UHT products into the state of Florida,

according to Jay Boosinger, Director of the Dairy Division, Florida

Department of Agriculture and Consumer Services. Boosinger also reports

that there is a proposed change in the Federal Milk Ordinance that

states "milk products hermetically sealed in a container and so process-

ed either before or after processing as to prevent microbial spoilage

are not required to be grade A". If this change is adopted, the Florida

regulations would be in conflict because such products are defined and

regulated as grade A products (Southeastern Dairy Review, 1978).

With widespread adoption of UHT processing other legal barriers may

also arise due to farmers' Federal Marketing Orders which regulate milk.

Canada is currently wrestling with such problems as inter-provincial

shipments of UHT milk. Their problems have not been resolved; con-

siderable controversy and discussion continues (Modern Dairy, 1978).

Legal barriers can usually buy time, but historically, where a food

product has been involved they usually can be overcome. A good example

is the anti-oleomargarine legislation that existed a generation ago.

Economic Barriers

Unknown relative production costs constitute another major barrier

to adoption of UHT in the U.S. Very little is known about the relative

savings of UHT processing versus conventional processing, primarily

because costs typically decrease with increased volume (Figure 1).

Currently the conventional process, (high temperature short time or

HTST), has virutally 100 percent of the fluid milk market. The average

cost per unit is probably at a all-time low. UHT processed milk on the

other hand has virtually no market at present. Assuming that it will be





























$










LAC, UHT LAC, HTST

-I















0 ---------Market share, UHT-------------------100%

100%-------Market share, HTST-------------------- 0%






Figure 1.--Hypothetical long run average costs for UHT and
HTST processing.


4-,




V) 0


0



GS-
c=
5-

0








introduced in American markets, it would be expected that the average

cost per unit will decline rapidly. On the other hand, as it captures

more and more of the fluid milk market the average cost per unit of

conventionally processed milk would probably increase slightly. Obviously,

a processor that has to install a UHT line initially, along with his

conventional equipment, receives few benefits in the form of reduced

costs due to non-refrigerated transportation. The greatest savings

would come with complete elimination of all refrigeration.

One can deduce something about the relative cost from comparison of

retail prices in countries where UHT milk is processed. In Canada, UHT

milk currently sells for about 10 cents per liter more than conventionally

processed milk and in the United Kingdom the price differential is

approximately 22 1/2 percent higher for UHT milk than for regular milk.

However, in Germany where 50 percent of the fluid milk market has been

captured by UHT milk and where a number of dairies have completely

eliminated refrigeration, the cost of UHT milk is 20 percent less than

conventionally processed milk.

Examination of processors' production cost components indicate

where UHT processing might be beneficial in reducing their cost (Table

3). The raw product currently represents about 65 percent of the processors

cost in the U.S. There appears to be very little possibility for reducing

the raw product cost under UHT processing given present production

efficiencies. The quality level demanded by UHT processing is very

stringent (Roberts,1978). Thus the raw product cost may actually increase.

However, as farmers adjust to more efficient seasonal production cycles,

raw product prices could conceivably be reduced. The net effect is very

uncertain.








Table 3.--Estimated wholesale costs for U.S. dairies.


Type of processing
HTST UHT


Item


(Percent)

65

5

7


Raw product

Processing

Packaging

Cooler, loadout

Distribution

Administration

Profit


(Change)
-?

-?

+?

-?

-?

-?

?


3

15

3

2


100


Total


Source: Adapted from (Russell, 1978).


Processing costs amount to about 5 percent of the total cost and

little is known about the actual operational cost of processing equipment

for UHT. From the labor standpoint, however, UHT processing could

reduce total processing costs because of the automated nature of the

equipment. Packaging currently amounts to about 7 percent of the total

processors' cost and UHT would probably increase these costs somewhat,

due to the more expensive packaging materials. Cooler and loadout costs

currently amount to 3 percent; UHT processing would probably reduce

these costs somewhat due to the non-refrigerated nature of the product.

The primary gains would come from using non-refrigerated transportation

for distribution. Conventionally processed milk distribution costs

currently amount to 15 percent of the total wholesale cost. These


___









distribution costs could possibly be reduced 25 percent under UHT

processing methods (Russell, 1978). Administration, which amounts to 3

percent, could possibly be reduced with a smaller labor force; this is a

big unknown. Profit, the reaminaing 2 percent for U.S. processing firms

would probably remain unchanged. While specific processing cost comparisons

for UHT and conventionally processed milk are still unclear, there are

other factors which can be compared.

UHT Advantages and Disadvantages

The UHT process promises both advantages and disadvantages for

every segment of the American dairy industry. Each major segment of the

industry is examined and discussed below.

Farmer Advantage

From the farmer's standpoint UHT processing offers several advantages.

One of the most obvious is to level out production to sales differences.

Seasonal production and seasonal demands are frequently quite different,

especially in Florida where a heavy influx of tourists during the winter

months occurs. Farmers are usually faced with the necessity of attempting

to schedule their production in a less than efficient seasonal production

cycle. Thus, UHT processing and long term storage would allow more

efficient production cycles. Another advantage, distinctly more remote,

is that of using small capacity, compact processing equipment at the

farm level. With such equipment, farmers could eliminate the necessity

for refrigerated storage at the farm and refrigerated transport to

market,(Southeastern Dairy Review, 1978). Farmer disadvantages

Probably the greatest threat to farmers at the present is that in a

competititive climate, areas with lower production cost could capture









part of Florida's market. Obviously, every effort must be made by

Florida dairy farmers to reduce production costs in order to remain

competitive.

Another disadvantage facing the farmer is uncertainty as to consumption

effects. The UHT process could effectively reduce consumption of milk

from the farmers' standpoint by reducing overall spoilage. Additionally,

consumption may be effectively reduced by the nature of the product or

packaging. On the other hand, expanded markets may effectively increase

demand. Little is known about the effects of the product upon consumption.

Processor Advantages

Processors could gain a number of distinct advantages with adequate

volume of UHT production. The greatest potential savings could result

from refrigeration and energy savings. The non-refrigerated product re-

quires no expensive refrigeration equipment nor would it require the

massive amounts of energy for storing and distribution. The product's

extended shelf life would mean less spoilage. There would be fewer

returns and fewer dumps. The typical shelf life would be approximately

three months.

There would also be a high rate of equipment utilization. Not

only regular milk but low-fat milk, cream, other milk- based drinks,

orange juice, fruit drinks, custard, and ice cream mixes could be processed

with the same equipment. With bulk aseptic storage, the UHT system

would also allow storage of unpacked products, affording versatility of

package sizes or perhaps finished products.

Labor savings could also be substantial. Most of the UHT equipment

currently available in the world is highly automated and requires little

manual control during operation or cleaning. Because larger runs of







individual products could be made at one time and then stored, improved

scheduling could permit processors to work on a typical 8:00 AM to 5:00 PM

day or some other more convenient schedule. Additional labor savings

would be gained by easier product handling for storage and distribution.

Rather than handling a refrigerated product under cold and wet conditions,

workers could more efficiently handle a dry product on pallets with

fork lifts.

Additional savings would be gained through lower transportation cost.

The longer product life would enable processors to make fewer trips to

retailers. As discussed earlier, delivery could be made in non-refrigerated

vehicles at a savings that have been estimated to be approximately 25

percent.

Another possible advantage for processors would be that of expanded

sales. Expanded sales could result from developing markets where little

refrigeration exists, such as foreign markets, recreational markets, etc.

Greater sales could also be attained through broader product distribution.

Non-refrigerated milk could be sold at newsstands, service stations, and

vending machines. Increased sales could also occur in conventional retail

establishments due to fewer out of stock situations, particularly during

holidays and other high volume times when product needs are frequently

underestimated. An interesting example of market expansion is provided

by the Canadian plant that is currently producing UHT milk in Quebec.

They have expanded their markets by selling to the maritime industry,

to U.S. Armed Forces in Puerto Rico, and to disaster food programs in

Guatemala. These and similar markets are among many that the Florida

dairy industry could expect to gain with UHT product.









Processor Disadvantages

Consumer acceptance is probably the greatest unknown with respect

to UHT milk in the U.S. Since the product has not been commercially

available, most processors are very reluctant to test the water and take

the initial plunge. A reason for the reluctance is the expense involved.

UHT processing equipment is very expensive and so is packaging and

distribution hardware. Early adopters could invest in expensive equip-

ment that may be obsolete in a short time. Another major disadvantage

is the type of packaging that is currently available. Packaging equipment

is not only more costly but packaging materials are more expensive as

well. Also, consumer acceptance of the product may be lacking. Further,

the effects of packaging on overall consumption is unknown and may

either increase or decrease consumption. Too little is known about the

effects of packaging.

Still another disadvantage is that of product inventory. UHT milk

immediately after processing usually has a very strong cooked flavor.

However, this flavor tends to dissipate within 2 to 7 days after processing.

Therefore, the product must be stored until the flavor is acceptable for

consumption. These increased inventories would contribute substantially

to many processors' capital requirements. Another disadvantage would be

that of having to retrain production personnel to cope with the new

equipment.

Retailer Advantages

Retailers would share many of the same advantages as processors.

Major advantages would be in energy and equipment savings with respect

to refrigeration equipment, both out front and in the back room. Labor

savings would be another major inducement to retailers to adopt UHT

milk. Labor savings would accrue from having fewer deliveries and thus








less time involved in check-in and handling, and further, in palletized

handling of the dry product versus a cold wet product. Retailers would

also benefit from extended shelf life. Less time would be spent in

product rotation and there would be fewer product returns. Further,

there would be fewer out of stock situations enabling them to sell more

product. UHT milk would also give the retailer flexibility in merchandis-

ing. No longer would the retailer be restricted to merchandising milk

in the refrigerated section in the dairy department. The non-refrigerated

product could be displayed on pallets, in center displays as it is

currently done in Canada and Europe, or it could appear in the beverage

section alongside canned and bottled soft drinks and other canned beverages

and juices. It would also expand the retailer's market. There are

certain market segments that UHT milk with its exceptionally long life

would appeal to, such as small households, campers, etc.

Retailer Disadvantages

The major problem confronting the retailer could be consumer resistance,

but it is not known how the consumer will react. However, potential

resistance is probably less important to the retailer than to the processor

because retailers are faced with consumer resistance on new products all

the time. UHT milk really has few disadvantages to the retailer because

it is so similar to the 10,000 or so dry groceries and non-grocery items

he now handles. If the product meets with insurmountable consumer

resistance all the retailer has to do in most instances is refuse to

stock it.

Consumer Advantages

Consumers stand to benefit from UHT milk as well as other segments

of the dairy industry previously discussed. The major advantage to the








consumer would be that of convenience. Shoppers currently have to buy

fresh milk quite often. UHT milk would enable the consumer to stock up,

store the milk at home in a non-refrigerated area and refrigerate milk

as necessary for consumption. Non-refrigerated storage at home would

also benefit the consumer through energy savings. The long shelf life

would also benefit the consumer through less product spoilage at home.

Taste might even be viewed as an advantage by some consumers. In

informal tests some people actually preferred UHT milk to conventional

milk, thus, the product may offer them a taste advantage. Ultimately,

if UHT milk is widely available, the cost savings may be eventually

passed on to the consumer, resulting in a lower priced product.

Consumer Disadvantages

In the short run the primary disadvantage faced by the consumer

would be higher cost. As previously mentioned, the product sells for a

premium in Canada and the United Kingdom. Another disadvantage, especial-

ly in the early stages of UHT technology, will be that of variable

product quality. There is still considerable product variation depending

on the type of UHT processing equipment used and UHT milk from one

processor might be quite different from that produced by another, depending

on the type of equipment used. Therefore, consumers will be faced with

differing product taste if not necessarily quality. And finally, some

consumers may find the taste objectionable.
Questions Raised By UHT

From the farmers standpoint, the most critical question raised by

the UHT process is "can Florida dairy farmers remain competitive?"

Extended shelf life for fluid milk products and elimination of refrigerated

storage and transportation could allow highly efficient production areas







to become dominant. Surplus milk production now going into manufacturing

could be UHT processed and shipped to areas to compete with less efficient

producers unless prevented by marketing orders or other legal barriers.

Are Florida producers currently competitive? Most probably are, but UHT

could pose a serious threat.

Questions faced by retailers with respect to UHT milk do not appear

to be as grave as those faced by farmers and processors. However,

widespread introduction and acceptance of the product could affect

refrigeration requirements for new stores. Another consideration faced

by retailers is the possibility of restructuring the delivery system for

fresh milk. Rather than have daily store deliveries by processors as is

presently done, retailers may prefer to have warehouse delivery so that

milk could be delivered to stores along with other grocery products.

Florida dairymen have made great strides in improving efficiency in

recent years, but continued improvements are essential for long-run

survival.

UHT milk processing poses a number of very serious questions for

processors too. Foremost among these questions is probably "what

distribution system will evolve?" Retailers no longer dependent on

critical timing of deliveries of a highly perishable product may conceivably

bypass the present distribution system altogether. The non-refrigerated

product could be delivered along with the other items from a central

warehouse. Processors may deliver directly to retailers' warehouses

with increasing frequency compared to the present situation rather than

be bypassed completely.

Another intriguing quesiton is "who will UHT processors be?" Many

current processors may be locked into their present processing facilities








due to financial commitments. Many will be unwilling or unable to risk

investment in a new venture such as UHT, particularly where their fluid
product market share is relatively small. The first UHT processors will

probably be larger firms with broad geographic distribution. Since the

product's market share in any location will be relatively small during

the early stages of its introduction, a large territory will be required

in order to have sufficient total volume to be economically feasible.

Questions faced by retailers with respect to UHT milk do not appear

to be as grave as those faced by farmers and processors. However,

widespread introduction and acceptance of the product could affect

refrigeration requirements for new stores. Another consideration faced

by retailers is the possibility of restructuring the delivery system for

fresh milk. Rather than have daily store deliveries by processors as is

presently done, retailers may prefer to have warehouse delivery so that

milk could be delivered to stores along with other grocery products.

Alternatives for Florida Dairy Producers and Processors

One alternative is to ignore UHT. Judging from the success of UHT

in other countries of the world the use of the process is likely to

increase. Most present firms, whether producers, processors or retailers,

can probably survive for quite a while by ignoring UHT, but firms that

fail to adopt technological change in order to increase their efficiency

usually fall by the wayside. There are many firms that have gone out of

business in the last decade simply because they failed to adapt to changing

technology and marketing developments. Florida dairymen have made great.
strides in improving efficiency in recent years, but continued improvements

are essential for long-run survival.








An alternative for processors is to be an early adopter and offer

UHT milk. Obviously this is a risky alternative given the present

knowledge of processing equipment and consumer acceptance.

Another alternative is to act together as an industry to explore

the cost and benefits associated with UHT processing. Comprehensive

cost studies should not only be made for the production and processing

sections but the retail sector as well. Consumer acceptance of the

concept and perhaps even product testing may also answer many of the

questions faced by the industry. Such studies could allow firms that

are currently contemplating necessary changes in equipment to make

better decisions.
Summary

There is a considerable amount of interest in UHT milk in the U.S.

at the present time. Noted food scientists have greatly improved the

product's quality and many feel its introduction in the U.S. is imminent.

UHT's success has been notable in Europe, currently accounting for up

to 50 percent of the fluid milk market in some European countries.

While successful in Europe, UHT faces many unknowns in the U.S. A

foremost concern is that of consumer acceptance of both the product and

the package. The dairy industry needs to know more about the consumer's

probable reaction to both.

Cost savings will be the incentive for the processor and the re-

tailer. Product savings to the consumer will be an ultimate test as well,

although there will be a certain market segment that will purchase UHT

milk even at a cost-higher than that of conventional milk because of the

unique storage qualities that it offers. However, in order to be emminently

successful UHT milk will have to be offered at a lower price than conven-

tional milk.









U.S. consumers have an excellent fresh product. But, as energy

cost escalate, can they continue to afford it? Fresh milk may eventually

be viewed as a luxury. Keep in mind the current situation of butter

versus margarine.

There are apparent advantages to UHT processing in the long run for

processors, retailers, farmers, and consumers. However, if UHT processing

becomes widespread, there may be serious implications for Florida processors

and farmers. Now is the time to be thinking about the possibilities

required to remain competitive.


References

Hsu, David S. Ultra-High-Temperature (U.H.T.) Processing and Aseptic
Packaging (A.P.) of Dairy Products, Damana Tech. Inc. N.Y., N.Y.
1970.

Reeves, Melissa. "UHT: Threat or Promise?" Southeastern Dairy Review,
Vol. 14, No. 9, September 1978.

Roager, Vagn. "How Big A Future Has UHT Milk?" Danish Dairy Industry-
Worldwide. Danish Dairy Manager's Association and Danish Dairy
Engineer's Association, June 1978.

Roberts, W. M. "Status of Long Shelf Life Milk," paper presented at the
Dairy Farmers Inc. annual meeting, Daytona Beach, Florida, June
12-14, 1978.

Russell, Charles. "Paper Packages for Long Shelf Life," Dairy and Ice
Cream Field, Vol. 160, No. 7, July 1977.

Stakenberg, Bert. "I-s Interprovincial Trade in Milk Coming?" Modern
Dairy, January 1978.




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