Scientists have found a new way to make a substitute for cow's milk that could have a radical effect on the dairy industry.
It's called precision fermentation - creating cow protein in the lab - and could replace dairy ingredients, which make up a significant proportion of New Zealand's export market.
"Precision fermentation of dairy proteins which creates a very easy pathway for creating proteins without using dairy cows," University of Otago Professor Hugh Campbell explained.
"If this area takes off, it improves New Zealand's economic prospects because a whole lot of things happen that are high value, but it does shrink our livestock footprint on the land."
Food technologist Anna Benny has worked in food science for decades and has found herself living on a dairy farm in South Otago, so she has a unique perspective on the future of the dairy industry.
"My concerns are we are right in the firing line if this technology can take off," she said.
Benny said New Zealand was vulnerable because three-quarters of our dairy exports could be replaced.
"The types of products that precision fermentation will produce are ingredients and powders. The types of products that we specialise in."
A new study funded by the National Science Challenge looked at how alternative proteins, which also include plant-based proteins and meat grown from cells, could have a major impact on land use in New Zealand, with one scenario predicting a 35 percent reduction in land used for dairy farming.
While bad news for dairy, the study found employment and economic output would be boosted in a scenario where farmers switched to growing crops, which would also result in significant reductions in emissions and nutrient loss.
Fonterra has been researching and investing in precision fermentation for several years. It says while scaling it to industrial scale is possible, there will be challenges - like a shortage of sugar to use as feedstock and precision fermentation can't yet create the nutrients found in milk.
"I can't see parents ever being happy putting lab-grown meat and milk in their kids' lunchboxes... it's just not gonna happen," Federated Farmers dairy chair Richard McIntyre said.
But Benny said it's New Zealand's high-value dairy products like lactoferrin - a protein derived from milk - that are most at risk of disruption.
"When you're competing a dairy-extracted protein versus something that can be made in a tank, that's the same as mother's milk, there's not really any contest there."
Researchers warning New Zealand needs to invest in research, or be left behind.
"No one who's working in the R&D space in agriculture and across the whole research sector thinks we're in good shape at the moment," Campbell said.
It's time to prepare for big shifts on the horizon for farming as we know it.
