Sunday, December 18, 2016

NDM vs. SMP

In a lot of publications, you see combined data for Skimmed Milk Powder (SMP) and Nonfat Dry Milk (NDM).  They are very similar.  Both remove the moisture from skimmed milk by drying and end up with a powder, which can be reconstituted by adding water.  So why do we have the same name for two identical products?  Well, they are not identical.

The real difference begins with who defines the standards for the product.  Most of us would have correctly guessed that NDM is defined by the USDA/FDA and the specifications are listed in the Federal Code of Regulations (FCR).  There are standards for flavor, physical appearance, bacterial plate count, milkfat content, scorched particle content, solubility, and acidity, with different parameters for "standard grade" and "extra grade."  The specifications also define three different levels of heat used in the drying process.  The specifications are detailed, specific, and available at this address.  NDM can be shipped without refrigeration and used to reconstitute milk, or as an addition to whole milk to meet the protein requirements for efficient cheese manufacturing, or as an ingredient in many other edible products.

So how is SMP different?  It begins with who sets the specifications.  In some of the earlier posts to this blog, there has been discussion of the World Trade Organization (WTO), and other groups primarily located in Geneva, Switzerland.  They negotiate, set, and arbitrate the standards for products traded globally.  For food products, the standards are defined in the "Codex Alimentarius", Latin for "Food Code."  The U.S. is a member of this group, as well as 186 other countries.  The complete file can be viewed at this website.    The standard for SMP can be viewed at this website - Pg 54-57.

The standard for SMP does require a minimum protein level of 34% which is not required by NDM.  The standard foe SMP does allow for the use of stabilizers, firming agents, acidity regulators, emulsifiers, anti-caking agents, and antioxidants, and appropriate protein concentrates.  These items are not allowed in NDM.  Because of the additives allowed in SMP, its use as a protein enhancer for cheese manufacturing is limited.

SMP is almost totally an export item for the U.S.  A great deal of NDM is also exported, primarily to Mexico; however, SMP is really the international product which competes head on with the EU, and New Zealand in the international markets.

It is possible to produce a product, which meets both standards.  The protein content of SMP is based on nitrogen content whereas the Federal Order standard for milk production is based on "true protein."  For the same product, protein based on nitrogen content runs approximately 5% higher than true protein.  When protein levels are defined by the same standard, typically NDM meets the protein level requirements of SMP.  If the additives allowed for SMP were not added, SMP would meet the requirements defined for NDM.  However, the various additives in SMP can provide some benefits which buyers may be requiring.

Sales of SMP are very dependent on the international market.  As can be seen below, production of SMP peaked in 2013 when demand and prices peaked in the international markets.  In 2014 and 2015 and continuing in 2016, sales of SMP have decreased.


The chart above shows that international business can be more volatile than domestic business.  This has been covered in prior posts (Free Trade Agreements and TPP) and is reinforced here.

Whole Milk Powder (WMP) which is also in the classification of powdered milk has not been a major product in the U.S.  However, other countries like New Zealand make and export a lot of WMP.  It is a major item in the international market.  The U.S. has been growing this business, but it is still quite small compared to NDM.  The Standard used for WMP production is based on the Codex, as it is primarily an export item.

For more details on the differences between NDM/SMP, see my recent article in Progressive Dairyman.


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