Confident View Ahead: Dairy Operating Environment to 2031 – The Constraint Has Moved

Confident View Ahead: Dairy Operating Environment to 2031 – The Constraint Has Moved

For most of the last decade, the question that shaped dairy strategy was what consumers would buy. Over the next five years the question that will shape it is what regulators, customers and trading partners will permit. This paper sets out the twelve drivers behind that shift, how we classify them, and one of the four futures they produce.

Confident View Ahead | Confident Strategy Group | September 2026

In 2022, the dairy chief executives and regulators we worked with asked us two questions. The first was about demand: would plant-based alternatives keep taking share, and would consumers pay for provenance? The second was about technology: what would happen to the industry when milk proteins could be produced by fermentation rather than by a cow? On demand, our view was that dairy would prove more durable than the headlines suggested. Four years on, the evidence supports that view. The strongest demand signal in dairy today is for its proteins, and we set out that evidence below.

On technology, the change has been faster than on any other driver in this paper, and it has happened on the farm as well as in the factory. In the factory, fermentation-derived dairy proteins have moved from the laboratory to the market. The FDA has issued “no questions” letters on GRAS notifications for a fermentation-derived beta-lactoglobulin and for two recombinant bovine lactoferrins, which allows them to be sold in the United States, and the first Australian application, for a fermentation-derived beta-casein, is under assessment.1,2,4 On the farm, the methane-reducing feed additive 3-NOP, sold as Bovaer, has been authorised across the European Union since 2022 and is in commercial use, and Denmark has made feeding it, or raising dietary fat instead, a legal requirement for conventional herds of more than 50 cows.9,11 Processors and retailers now measure emissions, antibiotic use and animal welfare on individual supplying farms, and several pay for the results.14,15,16,18,20

In each of these cases the scientific question, whether the technology works, has been answered or is close to being answered. The commercial question, whether and where it can be deployed, is being answered by regulators, and their answers differ. The fermentation-derived proteins that can be sold in the United States have not been authorised in the European Union, and the only fermentation-derived dairy protein before the Australian regulator, a beta-casein, is still under assessment.3,4 The same feed additive that Denmark requires has been classified by the FDA as an unapproved drug, with sales permitted only under enforcement discretion that the agency can withdraw, and is now the subject of a reopened EFSA safety assessment after Danish authorities reported digestive and metabolic conditions on about a quarter of the farms that started using it.10,11 A dairy business that invests in either technology is therefore investing in a regulatory position as much as in the technology itself.

Regulators are not the only parties setting conditions. Customers now specify what a farm must demonstrate, and what they will pay for it, through supply contracts that change faster than legislation.14,15,16,18 Trading partners set conditions of their own: since September 2026 the European Union admits milk only from listed countries whose authorities certify compliance with EU restrictions on the use of antimicrobials on farm, and China registers foreign dairy plants only on the recommendation of the exporter’s own government.12,35 Taken together, these decisions determine which technologies and practices a dairy business can use, in which markets, and from when. That is what we mean when we say the constraint has moved: from what consumers will buy to what regulators, customers and trading partners will permit.

The questions the C-suite bring us now reflect that shift. Can we still ship this product line into that market? What will our largest customer require of our farms at the next contract renewal? If a competitor’s fermentation-derived ingredient is cleared for sale in the United States but not in Europe, what does that do to our export book?

These questions need a different method from demand forecasting. Demand can be modelled from consumer data. Permission has to be tracked at the level of the individual instrument in each jurisdiction: the regulation, the court judgment, the customer standard, the registration list. It also has to be worked, because most of these instruments are open to consultation and negotiation for months or years before they take effect. Very little of this material appears in the documents a commercial team reads, which is why it is so often missed.

This paper sets out the twelve drivers we track for dairy, how we classify each one, and one of the four futures they produce, worked through in full. It updates the scenario framework we published on Australian dairy in December 2022. We have tested both of the original axes against four years of evidence and retained them. We have shortened the horizon from 2040 to 2031 so that it matches the five-year period over which boards are now allocating capital.

The twelve drivers

Scenario planning depends on one distinction: between the forces that are near-certain over the planning horizon and the forces that are genuinely uncertain. The near-certain forces belong in the baseline of every scenario. Only the uncertain ones should define the axes of the scenario matrix, because only they produce different futures.

The table below lists the twelve drivers we track for dairy to 2031, our assessment of where each stands in September 2026, and how we classify it.

Driver Where it stands, September 2026 Classification
Novel protein approval pathways Fermentation-derived dairy proteins can be sold in the United States but have not yet been authorised in Europe or Australia. The FDA has issued “no questions” letters in response to GRAS notifications for a fermentation-derived beta-lactoglobulin and for two recombinant bovine lactoferrins. A GRAS notification is not an approval: the FDA records that it does not question the notifier’s own conclusion of safety, and the product can then be marketed. In the European Union the route is the novel food regulation. We can identify no fermentation-produced dairy protein yet authorised on the Union list; the beta-lactoglobulin authorised in 2022 is extracted from whey. In Australia, FSANZ has one application before it, for a fermentation-derived beta-casein, on which public consultation closed in August 2026.1,2,3,4 Critical uncertainty
Cost position of fermentation Fermentation is closest to competing on cost for proteins that are expensive to extract from milk, and its cost position at commodity scale is still unknown. Lactoferrin is the first commercial target because bovine milk contains only 20 to 200 milligrams of it per litre, a small fraction of one percent of total milk protein, so conventional extraction requires very large volumes of milk for each kilogram of product. Beta-lactoglobulin, the main whey protein, has also been produced by fermentation and has received a “no questions” letter from the FDA, which shows that the technology is not confined to the rarest proteins; its production cost has not been published. Bulk proteins such as casein and whey protein concentrate are abundant in milk and inexpensive to recover, and whether fermentation can approach that cost within the horizon is a question to watch rather than one that can be answered today. Investment in the sector has fallen: global funding for fermentation-based alternative protein companies dropped from US$632 million in 2024 to US$357 million in 2025. Part of that fall reflects tighter conditions across venture and growth funding generally, so we read it as an indicator of investor sentiment rather than a verdict on the technology.1,5,6,7 Critical uncertainty
On-farm technology and practice On-farm technology is advancing, its effect is narrower than the public debate assumes, and regulators now determine where it can be used. The feed additive 3-NOP, sold as Bovaer, reduces enteric methane by about a third in housed herds, with the effect declining as the fibre content of the diet rises. In grazing herds the reduction is about 5 percent across a full day, because the compound is metabolised in the rumen within hours and the milking parlour is the only practical place to administer it. Since January 2025, Denmark has required conventional herds of more than 50 cows either to feed a methane-reducing additive for at least 80 days a year or to raise dietary fat year-round; for grazing herds the additive route applies only in the months when cattle are housed, which is consistent with the evidence on efficacy. The FDA has classified Bovaer as a drug, has not approved it, and permits its sale under enforcement discretion. On a European Commission mandate of December 2025, EFSA is re-examining its safety for cattle after Danish authorities reported digestive and metabolic conditions on about a quarter of the farms that started using it; the opinion is due at the end of 2026. Regulation of on-farm practice is now also being applied to imports. Since 3 September 2026 the European Union admits animal products, including milk, only from countries on a published list whose authorities certify that antimicrobials were not used for growth promotion or yield increase and that antimicrobials reserved for human medicine were not used at all. The scope covers dairy products and dairy protein ingredients such as casein and lactalbumin as well as milk. The rule applies to imports a restriction that already binds EU farms under the same regulation, and it is enforced through certification by the exporting country’s authorities; Australia and New Zealand are both on the list. In Germany, Lower Saxony ordered an exit from tethered cattle housing on 2 June 2026, with transition periods of eighteen months to seven years.8,9,10,11,12,13 Critical uncertainty
Customer conditionality Customer requirements on farms are rising, and they extend beyond emissions. Two large dairy co-operatives, one in Europe and one in New Zealand, and a major British retailer each operate schemes that specify what they will pay a farm for demonstrating particular practices, with published criteria and start dates. None of the three rewards the use of a methane-reducing feed additive. A multinational dairy company that publishes no payment schedule is reported to be paying directly for the additive on some European farms. Trade reporting on how that company achieved its reported methane reductions attributes considerably more of the result to changes in its supply base than to feed additives. The more demanding conditions concern animal welfare and antibiotic use. The FARM Animal Care standard covers more than 99 percent of the US milk supply, and a processor that continues to buy from a conditionally decertified farm is itself delisted. A co-operative has required since June 2023 that every non-replacement calf enters a value stream, which ends on-farm euthanasia of bobby calves on its supplying farms. The British retailer prohibits routine prophylactic antibiotic use in its supply chain, a restriction broadly equivalent to the one European farms face by law under Article 107(3) of EU Regulation 2019/6. These requirements are imposed through supply contracts rather than legislation, and a supplier that cannot meet them loses the customer.14,15,16,17,18,19,20 Critical uncertainty
Claims law Claims law is tightening in most major markets, and the rules are diverging as they tighten. From 27 September 2026, the European Union prohibits any claim that a product is carbon neutral on the basis of offsets, and prohibits generic environmental claims such as “eco-friendly” or “green” unless the trader can demonstrate recognised excellent environmental performance. In May 2026 the UK Advertising Standards Authority upheld a complaint against an industry advertisement claiming that British milk has a carbon footprint a third lower than the global average. The figure was not found to be false; the ruling turned on the fact that the lifecycle boundary of the underlying study did not match what a consumer would understand by a full lifecycle claim. A Swedish court has prohibited a company from claiming a “net zero climate footprint”. The Dutch competition authority has written to the dairy sector listing the terms it considers misleading without substantiation, including “sustainable”, “climate neutral” and “natural”. India issued greenwashing guidelines in 2024. Canada added a substantiation requirement for environmental claims in 2024 and narrowed it in March 2026. In the United States, the federal baseline remains the Federal Trade Commission’s Green Guides, which are non-binding and were last revised in 2012.21,22,23,24,25,26,27,28 Predetermined — tightening
Naming and composition Rules on what a product may be called are being enforced more strictly, and they now reach brand names and trade marks as well as product descriptions. EU law reserves the terms “milk”, “cheese”, “butter” and “yogurt” for products of mammary secretion, and the Court of Justice has held that adding a qualifier such as “soy” does not make the term lawful. In February 2026 the UK Supreme Court held that the same reservation applies to a trade mark, so the exposure now extends to brand names and slogans. The Codex standard on dairy terms is broader again: it prohibits any labelling or presentation that “claims, implies or suggests” that a product is milk. Louisiana enacted a statutory definition of fermentation-derived dairy protein in 2026 and requires a front-of-pack disclosure on it; the sales prohibition in the same Act is contingent on other events and is not in force. The FDA’s draft guidance, by contrast, permits plant-based products to be labelled “milk”. On origin labelling, since April 2020 the European Union has required that where a food’s origin is stated and its primary ingredient comes from elsewhere, that difference be declared on the pack.29,30,31,32,33,34 Predetermined — tightening
Market-access registration Access to the major import markets now depends on a sequence of registrations, several of which are outside the exporter’s control. China replaced Decree 248 with Decree 280 on 1 June 2026. Dairy remains in the category of products for which a plant can be registered only on the recommendation of the exporting country’s competent authority, and registrations run for five years. The European Union admits dairy only from an establishment on its approved list in a country on its approved list. The practical risk is administrative delay rather than formal refusal. In February 2025 seven US dairy plants lost their Chinese registrations for about a month because the customs administration did not act on their renewals. In the same month Malaysia withdrew recognition from three foreign halal certification bodies, with a six-month wind-down for certificates already issued, so plants certified by those bodies lost access.35,36,37,38,39 Predetermined — compounding
Protein demand Demand for dairy protein is rising structurally in more than one region. Whey protein concentrate (WPC80) prices are reported to have more than doubled year on year in both the European Union and the United States to 31 August 2026. US exports of high-protein whey concentrate fell about 21 percent year to date while US production rose, and global trade in the category fell about 7 percent; the product is being consumed domestically rather than exported. New processing capacity is committed in the United States, Ireland, Denmark and New Zealand. The 2025–2030 US Dietary Guidelines set a protein goal of 1.2 to 1.6 grams per kilogram of body weight per day, roughly one and a half to two times the long-standing reference intake of 0.8 grams.40,41,42,43 Predetermined — re-sorting
Processing classification Classification of foods by degree of processing works against dairy proteins, because it is applied to the ingredient rather than the finished product. Whey protein, casein and hydrolysed proteins are listed markers of NOVA group four, the ultra-processed category. NOVA is influential in public health policy, scientifically contested, and adopted unevenly by regulators. California’s AB 1264 is the first US statute to define ultra-processed food, and the only dairy product it exempts is Class 1 fluid milk. Under the UK nutrient profiling model a drink is classified “less healthy” at a total score of one point, and once a product accrues eleven “A” points for energy, saturated fat, sugar and sodium it can no longer score credit for its protein. The formulations that most need the protein credit are therefore the ones that lose it. A federal US definition is at the Office of Management and Budget as a white paper, not as a proposed rule.44,45,46,47 Predetermined — tightening
Supply structure Farm numbers are falling in every major exporting region, while output is stable or rising. US licensed dairy herds fell 4.2 percent in 2025 to 23,609, while cow numbers rose by 153,000 and milk output rose 2.6 percent; production is consolidating into fewer, larger operations. New Zealand has lost roughly 190 herds a year since 2015/16, with 115 lost in the most recent season. The number of Dutch farms with dairy cows fell 26 percent between 2017 and 2025, to 13,361, while the dairy herd fell 10 percent. Australia had 3,772 dairy farms in 2024–25, 3 percent fewer than the year before, producing 8,315 million litres, 63.3 percent of it in Victoria.48,49,50,51 Predetermined — consolidating
Early-life nutrition rules Early-life nutrition rules are moving from national marketing codes to international compositional and safety standards. In the United States, Operation Stork Speed has opened the first comprehensive review of infant formula nutrient requirements since 1998. After two infant botulism outbreaks linked to a shared dairy ingredient supplier, the FDA advocated for the joint FAO/WHO expert body that advises Codex to assess spore-forming pathogens; a national incident has become an international standard-setting question. Codex revised its follow-up formula standard in 2023 and has a new standard for foods for older infants and young children at Step 4, due before its nutrition committee in November 2026. World Health Assembly resolution WHA78.18 extends marketing restrictions to digital environments. In Australia, infant formula must comply with the revised compositional standard by September 2029; that deadline is one national consequence of the international shift, and the international standards will determine what comes after it.52,53,54,55 Predetermined — globalizing
Trade instruments Trade instruments are being replaced as fast as they are struck down. The US tariff instrument invalidated by the Supreme Court in February 2026 was replaced four days later by a tariff under a different statutory authority. That replacement was held unlawful by the Court of International Trade in May, remained in force under a stay, and expired in July at the end of its 150-day statutory limit. China’s countervailing duties on EU dairy run to 2031 and apply to milk and cream above 10 percent fat and to cheese.56,57,58 Stress layer

What that classification tells you

Seven of the twelve drivers are predetermined. They will not reverse within five years, and several carry fixed dates. They are not scenario variables. They form the operating environment that every competitor will face, and a dairy business that treats claims law, registration regimes or the 2029 Australian infant formula deadline as uncertain is planning for the wrong contingency.

Where those seven are being decided matters as much as what they say. Claims law is being written in Brussels, London, Ottawa and New Delhi, and enforced by a Swedish court and the Dutch competition authority, and the resulting rules differ. An offset-based carbon-neutral claim that is legally risky in the United States becomes a prohibited commercial practice in the European Union on 27 September 2026, with no case-by-case defence. A single global pack design and a single global claims policy are no longer workable.

The registration regimes are Chinese and European, and, through the accreditation of halal certifiers, Malaysian. The protein re-sort is priced in the whey market, in both the European Union and the United States. California has enacted a processing definition and Washington is drafting one. The early-life standards are being set at Codex and the World Health Assembly. That last point carries legal weight. Under the WTO Agreement on Sanitary and Phytosanitary Measures, a national measure that conforms to a Codex standard is presumed consistent with that agreement and with GATT 1994. A country that wants a stricter rule must justify it scientifically, or set its own level of protection and support it with a risk assessment.59 Conformity with a Codex standard is therefore the default legally safe position for every WTO member, including Australia. In practice many importing countries go further: UNCTAD finds that developed economies apply on average 4.5 measures per agri-food product beyond those recommended by the international standards, and estimates that aligning national rules with those standards could cut the cost of non-tariff measures by 15 to 30 percent.39

Taken together, the seven predetermined drivers describe the operating environment every dairy business will face by 2031, whichever of the four futures arrives. Environmental claims will have to be substantiated to a legal standard that differs by market, and some claims that are lawful today will be prohibited. Product names and trade marks will be policed more strictly, and the reservation of dairy terms applies to fermentation-derived proteins as well as to plant-based products, because neither is a product of mammary secretion. Access to China and the European Union will depend on registrations and certifications that sit with governments and accreditation bodies rather than with the exporter. Demand will favour protein, while processing classifications penalise the ingredients that deliver it. Farm numbers will keep falling while output holds or rises. And the rules for early-life nutrition will be set internationally, with national compliance dates following from them; Australia’s September 2029 infant formula deadline and its proposed Health Star Rating mandate are two examples among many.60 Very little of this is decided in any one national capital.

Trade is treated differently from the other eleven drivers. It is high-impact and highly uncertain, but it does not produce a different operating environment. It changes prices and margins within whichever environment the other drivers produce, and it does so faster and more reversibly than any other driver on the list. We therefore run trade as a stress test across all four futures rather than as an axis of the matrix.

Four drivers remain genuinely uncertain, and they define the two axes.

The approval pathways for novel proteins, the cost position of fermentation and on-farm technology together determine the first axis, which we call technological transition: how far new technology reaches commercial cost, scale and regulatory permission by 2031, whether the technology is a fermentation tank or a feed additive. On both routes the binding decisions are taken by regulators, and that is the single most important fact about this axis.

Customer conditionality determines the second axis, socio-environmental force: what dairy businesses are required to demonstrate, to whom, and with what evidence. Over the last four years that requirement has grown faster through customer contracts than through legislation, and in several markets legislation has not followed at all. That is why we classify the second axis as uncertain. The pressure is real, but it is now exercised by buyers rather than legislators, and buyers change their requirements faster, with less notice and without public consultation.

The four futures

Crossing the two axes produces the same four futures we named in 2022, recalibrated to a 2031 horizon.

New & Natural Fusion. High technological transition, moderate socio-environmental force. New protein technology reaches commercial cost and regulatory permission in high-value ingredients. The regulatory pathway, rather than the technology, determines which companies grow. Incumbents and entrants compete for the same high-value ingredient customers. This is the future we work through below.

Brave & Natural New Food. High technological transition, strong socio-environmental force. The technology arrives and customer and financing conditions tighten at the same time. Market access narrows through customer standards and lender requirements without new legislation. Trust with customers and regulators becomes the scarce resource.

Dairy Evolution. Low technological transition, moderate socio-environmental force. New technology stalls on cost or on permission. Demonstrating compliance becomes a condition of supply rather than a source of premium. Advantage goes to operational discipline and cost.

Green Natural Dairy. Low technological transition, strong socio-environmental force. The technology stalls while requirements to demonstrate environmental and welfare performance intensify. Premiums exist but must be evidenced to a legal standard. Governance and data systems become the competitive asset.

Framework: Confident Strategy Group, 2022, recalibrated to a 2026–2031 horizon. Trade is applied as a stress test across all four futures.

We work through one future below. The matrix is a sorting tool. It tests each of your current commitments against all four futures and sorts them into three groups: those that hold in every future, those that hold in two, and those that depend on one.

Future 1: New & Natural Fusion

Premise. Fermentation-derived proteins reach commercial cost and regulatory permission in high-value ingredients, while socio-environmental pressure rises steadily without a step change. The regulatory pathway, rather than the technology, determines growth.

Driver settings. Approval pathways open in the United States and remain closed in the European Union. Fermentation is cost-competitive in lactoferrin and other specialist proteins but not in commodity protein. Customer conditionality rises steadily. Trade is assumed to remain rules-based, and the scenario is then stress-tested for fragmentation.

What the world looks like

The common reading of this future is displacement: animal-free protein takes share from dairy, and incumbents defend a shrinking core business. The regulatory record points to a different outcome. In every major market the rules on naming, allergen labelling and disclosure push fermentation-derived dairy proteins away from the consumer shelf and towards the ingredient channel, each for a different legal reason. The European Union reserves “milk”, “cheese” and the other dairy terms for products of mammary secretion, and its courts have held that qualifiers do not cure the problem, so a fermentation-derived protein cannot borrow the vocabulary of the category it resembles.29 The Codex standard goes further and prohibits any presentation that implies a product is milk.31 Louisiana requires a 30-point front-of-pack statement that the product was “Produced through microbial fermentation. Not derived from mammalian lactation.”32 In the European Union no fermentation-derived dairy protein has yet been authorised at all.3

Australia is the first jurisdiction to publish a complete assessment of one of these products, and it shows how a regulator reasons when it gets to the detail. We use it as the worked example for that reason, and not because the outcome is specific to Australia.

Eden Brew’s beta-casein preparation, produced by a genetically modified yeast, went to public consultation between 9 July and 20 August 2026.4 FSANZ concluded that there are no public health and safety concerns for the general population from adding the preparation to food, and noted that it would present an allergenicity risk to people who are allergic to milk proteins.61 Everything that follows is a draft variation open to consultation, and not a final decision. The commercially decisive material is in the labelling assessment.

Because the protein is expressed in yeast rather than secreted by an animal, FSANZ notes that it “technically would not meet the definition of ‘milk’ in the Code”. On a plain reading of the existing rules, a product containing it would therefore not have to declare milk as an allergen. FSANZ proposes to close that gap by amending the table to section S9—3 of Schedule 9 so that the preparation must be declared under the required name “milk”, on the reasoning that it is identical in amino acid sequence to the naturally occurring bovine beta-casein A2 variant and is expected to have the same allergenic potential.61 The declaration would apply to wholesale as well as retail supply. FSANZ also proposes a front-of-pack advisory statement, to the effect that the product is not suitable for people with milk allergy. The exact wording is not prescribed. The advisory would apply both to dairy analogue products and to any product represented as not containing milk, and the illustrative list of terms that would trigger it includes “animal-free”, “vegan”, “dairy-free” and, in some contexts, “plant-based”.62

Under the draft Australian rules, a fermentation-derived dairy protein would have to declare milk as an allergen and carry a front-of-pack warning for people with milk allergy. The warning would be triggered by the same terms the category uses to market itself.

Conventional dairy already declares milk as an allergen, so the declaration on its own does not disadvantage the new protein. The advisory statement does. A brand cannot market a product on the promise that it contains no milk while the pack carries a warning that people allergic to milk should avoid it. On these draft rules, the vegan and dairy-free retail shelf is closed to the product in Australia, and the European and Codex rules on dairy terms close it by a different route elsewhere.

What remains open is business-to-business functional nutrition, where the buyer is a formulator reading a specification rather than a consumer reading a warning. The applicant’s own proposed use levels point in the same direction: 15 percent in powdered beverage mixes and formulated meal replacements, against 3 percent in milk alternatives.61 The product that emerges from this process is an ingredient sold to manufacturers, with retail milk alternatives as a minor application.

The product also cannot use dairy vocabulary. FSANZ finds that “milk protein” and “milk solids” would not apply to the preparation, because both terms depend on the Code’s definition of milk, and that “cheese” would not apply to an analogue made with it.62 Under NOVA’s ingredient-based test the preparation is an isolated protein, so the ingredient market this product is directed towards is also the market most exposed to the processing classification described in the drivers table.44

What it means

The first consequence for a dairy business is that this future is a competition for the ingredient customer, and the incumbent starts with the stronger position. The entrant has a novel protein, a permission it has not yet secured in most markets, and a label it cannot use. The incumbent has the label, the customer relationships, a product that carries no advisory statement, and a category that is already repricing in its favour: US exports of high-protein whey concentrate are reported to have fallen about 21 percent year to date in 2026 because domestic demand is absorbing supply.41 The strategic risk to the incumbent is that an entrant with a cheaper or more functional protein reaches the same ingredient buyers first, at the moment those buyers are short of supply.

The second consequence is that the most valuable segment, early-life and clinical nutrition, is gated by a separate permission in every major market, and that permission has not yet been granted to any fermentation-derived dairy protein. In the United States a GRAS conclusion does not carry an ingredient into infant formula; a separate statutory submission is required, and none of the fermentation-derived proteins cleared so far has made one.63,2 In Australia the only lactoferrin permitted in infant formula is bovine, so a fermentation-derived one would need an application of its own.65 The commercial positioning has nonetheless begun: in July 2026 a global ingredients company took exclusive rights to commercialise a fermentation-derived lactoferrin for early-life nutrition, ahead of any permission to use it there.64 Whoever secures that permission first, in two regimes at once, takes the segment where fermentation economics are strongest and where incumbents earn their highest margins.

The third consequence follows from the first two. In this future the decisive capability is regulatory and public affairs expertise rather than fermentation science, because the timing of market entry is set by approvals and not by research readiness. For a chief executive the question is which position to hold while the permissions are decided: incumbent supplier of the conventional ingredient, partner to an entrant, or owner of the platform. Each is defensible. Holding none of them, and waiting for the regulatory picture to clear, is the position that this future punishes.

What a board does about it

Resource public affairs and regulatory affairs as growth functions. In this future the approval pathway is the product roadmap. Regulatory filings belong in the commercial planning cycle, across at least two jurisdictions, with launch dates modelled from approval timelines rather than from R&D readiness.

Settle the make-or-buy question now. A New Zealand dairy co-operative and European ingredient and nutrition companies have taken equity or commercial positions in fermentation companies over a period in which annual sector funding fell by more than 40 percent.6,7,64 The cost of securing that option rises with every notification that closes successfully.

Re-test every claim against what can be evidenced today, rather than against what was defensible when the claim was written. The EU prohibition takes effect on 27 September 2026 with no certification scheme that would guarantee a claim is compliant, and UK competition guidance now sets out the responsibilities of every business in the supply chain for the claims it makes or passes on.21,23

Plan the farm base against customer requirements rather than statute. The relevant question for farm planning is what your three largest customers will require at the next contract renewal, and whether your suppliers can evidence it when asked. Legislation will follow those requirements, if it follows at all.

What would tell you this future is arriving

  • A1342 approved with the proposed labelling conditions intact. This would confirm the business-to-business pathway and close the consumer shelf for the category in Australia.
  • A filing for a fermentation-derived protein in infant formula, in any jurisdiction. This would be the first move on the most valuable segment.
  • An EFSA opinion on any fermentation-produced dairy protein. This would end the split between the US and EU regimes and would materially change European portfolio planning.
  • An outright acquisition of a fermentation platform by a dairy processor or co-operative. Minority stakes, offtake agreements and research partnerships have already happened. The signal still to come is control.

The other three futures

Dairy Evolution turns on the cost of demonstrating compliance and on which businesses can absorb it. Green Natural Dairy turns on whether a premium can be evidenced to a standard that satisfies the new claims law. Brave & Natural New Food turns on whether customer trust and financing conditions tighten faster than the technology arrives. Each has its own driver settings, indicators and recommended actions. In two of the three, the actions that protect a business across all four futures are different from the actions that would make the most of that one future if it arrived alone. That gap is the reason to plan against all four futures rather than against the one a board considers most likely.

What holds across all four futures is the nature of the demand being made on dairy businesses. Whichever future arrives, your business will be asked to demonstrate something it cannot currently demonstrate, to a counterparty that is not a regulator, on a timetable it does not control. Three decisions take longer to carry out than the notice period on any date in this paper.

01. What can we prove, to whose standard, by when?

02. Which of our markets are gated by a registration regime rather than a tariff, and who in this company owns that file?

03. If the technology arrives on schedule, do we own the ingredient or buy it?

Confident Strategy Group has advised dairy boards, governments and regulators on regulation, nutrition policy, trade and public affairs for over twenty years. We build scenario plans with the drivers shown and the workings visible. If you would like to test your strategy against these four futures, we would welcome the conversation. This paper was produced using our Confident Futures™ capability.

Sources

  1. 1.GRAS Notice GRN 1200, β-lactoglobulin produced by Komagataella phaffii strain VIPLA, Vivici B.V., Delft — FDA response letter 28 February 2025. A GRAS notification is a submission by the notifier; the FDA responds that it has no questions about the notifier’s own conclusion of safety, and does not itself approve the substance. fda.gov
  2. 2.FDA GRAS Notice GRN 1219, recombinant bovine lactoferrin isolate from Komagataella phaffii M020 (TurtleTree Labs, Inc.), response letter 7 May 2025 fda.gov; GRN 1284, recombinant bovine lactoferrin isolate from K. phaffii Ppas_337 (All G Co Holdings Pty Limited, Waterloo NSW), response letter 25 March 2026 fda.gov Both are GRAS notifications, not approvals: the FDA states it has no questions about the notifier’s conclusion. All G’s notice states the ingredient “is not intended for use in infant formula”; FDA’s response letter on GRN 1200 records Vivici stating that its beta-lactoglobulin “is not intended for use in infant formula”. GRN 1219 contains no such exclusion — infant formula is simply absent from its intended uses — and CSG makes no claim about that notice here.
  3. 3.Union list of novel foods, European Commission DG SANTE, accessed September 2026 food.ec.europa.eu; Commission Implementing Regulation (EU) 2022/2534 of 21 December 2022 authorising bovine milk beta-lactoglobulin, holder Arla Foods Ingredients Group P/S eur-lex.europa.eu The 2022 authorisation is for a whey-derived protein — the specification describes production “from bovine whey” by filtration, concentration and crystallisation — not a fermentation-produced one. The Union list page does not enumerate entries; CSG traced the dairy authorisations through the amending regulations and identifies none that is fermentation-produced.
  4. 4.Application A1342 — Beta-Casein Protein Preparation (GM Komagataella phaffii), Food Standards Australia New Zealand. Published on the register 25 November 2025; assessed under the General Procedure (General Level 5) with one round of public consultation, 9 July – 20 August 2026. foodstandards.gov.au
  5. 5.Lactoferrin concentration in bovine milk of 20–200 µg/mL — FSANZ, Record of views formed in response to enquiries (Standard 1.5.1 Novel Foods), updated July 2026. foodstandards.gov.au (PDF) The ten-thousand-litres-per-kilogram figure is an arithmetic implication of that concentration at full recovery, and is therefore a floor rather than an industry constant.
  6. 6.“Fermentation: meat, seafood, eggs, dairy and ingredients — State of the Industry”, Good Food Institute, 2026. Investment figures are GFI analysis of Net Zero Insights data. gfi.org
  7. 7.“Helaina and Nestlé partner to advance new bioactive proteins for early-life nutrition”, Helaina, 2 June 2026 myhelaina.com; “Fonterra and dsm-firmenich backed Vivici cooks up fermentation-derived BLG”, DairyReporter, 21 August 2023 dairyreporter.com
  8. 8.Kebreab E and others, “A meta-analysis of effects of 3-nitrooxypropanol on methane production, yield, and intensity in dairy cattle”, Journal of Dairy Science 2023;106(2):927–936 — reductions of 32.7 percent, 30.9 percent, and 32.6 percent for methane production, yield and intensity at an average dose of 70.5 mg/kg dry matter in housed systems, with efficiency falling as dietary fibre rises escholarship.org; Costigan H and others, “The effect of twice daily 3-nitrooxypropanol supplementation on enteric methane emissions in grazing dairy cows”, Journal of Dairy Science 2024;107(11):9197–9208 — “reductions in CH4 production of 28.5% recorded in the 3 h after additive consumption … however, levels of CH4 production returned to that of the control group thereafter. When CH4 production was considered across the entire 24-h period, the cows offered 3-NOP produced ∼5% less CH4 than the control” pubmed.ncbi.nlm.nih.gov Kebreab’s three central estimates sit between 30.9 and 32.7 percent; the lower figures reported elsewhere reflect dose and dietary fibre. The gap between housed and grazing systems is a delivery problem, not a chemistry problem: in a grazing system the only practical dosing point is the parlour, and 3-NOP is metabolised in the rumen within hours. A Melbourne meta-analysis of confinement-fed herds puts the dairy figure at 26.4 percent at the recommended dose and states the result is “only suitable for confinement-fed systems”.
  9. 9.Danish requirement for methane-reducing feed, in force from 1 January 2025 for conventional herds of more than 50 dairy cows — “konventionelle mælkeproducenter skal fodre køerne med metanreducerende fodertilsætningsstof i mindst 80 dage om året”, per Landbrug & Fødevarer, with the obligation resting on section 40 of the livestock authorisation order lf.dk; compensation and dosing conditions in the Danish Agricultural Agency guidance for 2026, which sets the 3-NOP obligation on grazing farms in the windows January to March and October to December only lbst.dk (PDF) Feeding a methane-reducing additive is one of two compliance routes; the alternative is raised dietary fat year-round. The Danish rule confines the additive route on grazing farms to the housed months — a regulator conceding in operative text that the additive is a housed-system technology. The separate Danish livestock carbon tax rests on the tripartite agreement of 24 June 2024 and is not due to commence until 2030; CSG has not verified its enactment and does not state it as law.
  10. 10.US Food and Drug Administration Center for Veterinary Medicine letter to Elanco US, Inc., file G-150438, 24 May 2024 — “Based on the information provided in your letter, Bovaer® 10 is an article (other than food) intended to affect the structure or any function of the body of an animal, and therefore it is a drug”, and “Although Bovaer® 10 is an unapproved drug, at this time we do not intend to initiate enforcement action with respect to the drug requirements”. fda.gov (PDF) This is enforcement discretion, not a marketing authorisation, and it is limited by its own terms — “at this time”, lactating dairy cows only, and effectiveness data evaluated for no more than 105 days of feeding.
  11. 11.“Call for data on the use of 3-nitrooxypropanol in ruminants”, European Food Safety Authority, published 3 February 2026, deadline 10 April 2026 — “This request follows the reporting by the Danish authorities of clinical signs of digestive and metabolic disorders in dairy cows in approximately 1/4th of the dairy farms which started using the additive 3-nitooxypropanol (approximately 400 out of 1600 farms) since December 2025.” efsa.europa.eu; the underlying authorisation is Commission Implementing Regulation (EU) 2022/565 of 7 April 2022, valid to 28 April 2032 eur-lex.europa.eu The re-examination follows a European Commission mandate of December 2025; the February 2026 call for data is a step within it, and the opinion is now due at the end of 2026. An EU feed authorisation can be suspended or withdrawn under Regulation (EC) No 1831/2003. The manufacturer disputes any causal link and has published an Aarhus University analysis of 73 Danish herds reporting no negative effect; CSG has not seen that report other than through the sponsor’s account of it.
  12. 12.Regulation (EU) 2019/6 on veterinary medicinal products, Article 118(1): the prohibition on using antimicrobials to promote growth or increase yield “shall apply, mutatis mutandis, to operators in third countries … in respect of animals or products of animal origin exported from such third countries to the Union”; Commission Delegated Regulation (EU) 2023/905, Article 1(2), which applies the rules to products of animal origin under Combined Nomenclature Chapters 2 to 5, 15 and 16 (Chapter 4 is dairy produce) and under HS headings 3501, 3502 and 3504 (casein, albumins including lactalbumin, and milk protein substances), Article 3 (the two prohibited categories) and Article 4 (entry only from a listed country and with an official certificate attesting compliance) eur-lex.europa.eu; Commission Implementing Regulation (EU) 2026/1189 of 4 June 2026, OJ L 2026/1189 of 5 June 2026, inserting Article 2b and Annex XVIa into Implementing Regulation (EU) 2021/405, repealing Implementing Regulation (EU) 2024/2598, with Article 1 applying from 3 September 2026 eur-lex.europa.eu Verified against the Official Journal text on 6 October 2026. Milk, dairy products and dairy proteins are within scope by tariff chapter and heading. Annex XVIa lists countries by species and commodity rather than by product, so milk enters under the bovine, ovine and caprine listings: Australia and New Zealand are both marked for bovine and ovine/caprine animals and products. The prohibition is confined to two categories, antimicrobials used for growth promotion or yield increase and antimicrobials reserved for the treatment of certain human infections under Implementing Regulation (EU) 2022/1255; ordinary therapeutic use does not bar listing. Recital 17 records that Brazil’s listing for bovine, equine, poultry, aquaculture, honey and casings was deleted because the Commission had not received guarantees of compliance by 3 September 2026.
  13. 13.Runderlass of the Niedersächsisches Ministerium für Ernährung, Landwirtschaft und Verbraucherschutz, 2 June 2026, on the exit from tethered cattle housing, made under § 16a(1) of the Tierschutzgesetz — tethered housing is not permissible in new cattle buildings, year-round tethering must be notified within six months and converted or ceased within eighteen, with longer clocks for seasonal tethering. ml.niedersachsen.de (PDF) A Runderlass directing the competent lower authorities to issue general administrative orders, with transitions running from eighteen months for year-round tethering to seven years for seasonal systems; nothing is prohibited on the ground in 2026. A decree of one German state, not a federal rule. Tethered housing is concentrated in Bavaria and Baden-Württemberg, which makes this a test of regulatory contagion rather than a settled national position.
  14. 14.“Fonterra announces new incentives for farmers to reduce emissions”, Fonterra, 18 February 2025; effective from the season commencing 1 June 2025. fonterra.com
  15. 15.“Arla’s incentive model — Q&A”, Arla Foods, accessed September 2026. Nineteen levers and up to 117 points across five categories, each point adding 0.03 eurocent per kilogram of milk until January 2027 and 0.04 eurocent thereafter; the climate check is a precondition of eligibility. arla.com Arla’s page also carries a legacy reference to 80 points; 117 is the current figure. The widely quoted €270 million is a launch projection on 2021 volumes, not current distribution.
  16. 16.Tesco Sustainable Dairy Group, announced 29 August 2025 — up to an additional 2.5p per litre, with more than £9.5m in additional payments across its producer groups in the first year, on criteria covering emissions reduction, animal health, feed conversion efficiency and genetic improvement. fwi.co.uk As with the Fonterra and Arla schemes, no methane feed additive is named among the rewarded actions. The £9.5m spans all of Tesco’s producer groups, not dairy alone.
  17. 17.“How Danone cut methane emissions 29.8% ahead of schedule”, DairyReporter, 17 March 2026, reporting Danone’s 2025 results including the composition of the reduction. dairyreporter.com Single-source trade reporting. Neither the 29.8 percent nor the lever breakdown appears in Danone’s own 2025 Mission Committee Report, and CSG has located no Danone primary source for either. Danone’s vice-president for sustainability has separately said the company is “helping pay for some farms to use Bovaer in some markets in Europe where it is approved”.
  18. 18.National Dairy FARM Program, Animal Care Version 5, in force 1 July 2024 to 31 December 2027 — “MORE THAN 99% of the U.S. milk supply comes from farms participating in the FARM Animal Care Program”; mandatory corrective actions include pain mitigation for disbudding by any method and compliance with the ban on routine tail docking; “A program participant will be delisted from FARM if they continue to procure milk from a ‘Conditionally Decertified’ facility” — a defined status following an unresolved corrective action plan. nationaldairyfarm.com A private standard with no premium attached. The consideration is continued market access, and the delisting rule is what converts a voluntary scheme into a condition of supply.
  19. 19.Fonterra Terms of Supply, in force from 1 June 2023 — supplying farms must ensure all non-replacement calves “enter a value stream — either beef, calf-veal or petfood”; from the 2025/26 season every supplying New Zealand farm must hold an Animal Wellbeing Plan prepared with its veterinarian. fonterra.com An effective prohibition on on-farm euthanasia of bobby calves, imposed by contract rather than by statute.
  20. 20.Tesco antibiotic report, September 2025 — “We do not allow the routine use of antibiotics for prophylactic purposes in our supply chain”; the highest-priority critically important antibiotics are permitted only “as a treatment of last resort, where no other viable treatment is available”; “Tesco’s target is for no more than 40% of the herd on each farm to receive antibiotic dry cow treatment.” tescoplc.com (PDF) Tesco bans routine prophylaxis and permits vet-prescribed preventative treatment for diagnosed high-risk animals; Article 107(3) of Regulation (EU) 2019/6 bans prophylaxis other than in exceptional cases and confines antibiotic prophylaxis to an individual animal. The two are close but not identical.
  21. 21.Directive (EU) 2024/825 of 28 February 2024 on empowering consumers for the green transition, Article 4 (“They shall apply those measures from 27 September 2026”) and the new points 4a and 4c inserted into Annex I of Directive 2005/29/EC — point 4a catches a generic environmental claim the trader cannot support by demonstrating “recognised excellent environmental performance”, and point 4c catches a claim, “based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions”. Point 4c is unconditional; point 4a is not. eur-lex.europa.eu 27 September 2026 is the application date; the transposition deadline was 27 March 2026. Annex I practices are prohibited without a case-by-case unfairness assessment, but the Directive operates through national transposing measures and enforcement will vary by Member State.
  22. 22.Advertising Standards Authority ruling A25-1278659, Agriculture and Horticulture Development Board, 13 May 2026, upheld in part — the claim “British milk … has a carbon footprint a third lower than the global average”, footnoted “Full lifecycle emissions of CO2 eq per kg of milk”, breached CAP Code rules 3.1, 3.3, 3.7, 11.3 and 11.4 because the substantiation covered only cradle-to-retail stages and “the evidence presented was insufficient to support the full life-cycle claims in the ads, which is how the average consumer was likely to interpret them”. asa.org.uk Two of the three grounds complained of were not upheld, and the ruling required the two advertisements to be withdrawn in the form complained of rather than prohibiting the claim; AHDB announced the campaign’s return the same day. The figure was not alleged to be false. The claim failed on the boundary of the assessment, which is a harder test than substantiation and one that reaches every cradle-to-farm-gate carbon figure now published in this sector.
  23. 23.“Making green claims: getting it right, across the supply chain”, Competition and Markets Authority, 22 January 2026. gov.uk
  24. 24.Patent and Market Court of Sweden, case PMT 17372-21, judgment 2 February 2023, on an application by the Swedish Consumer Ombudsman — Arla prohibited from using the expression “net zero climate footprint” and similar claims in the marketing of dairy products, on penalty of SEK 1 million, the court finding that consumers would not understand the promise rested on climate-compensating activities rather than actual emissions reductions. business-humanrights.org Reported in English translation; the 6 February date carried by much of the trade press is the date of reporting, not of judgment. Arla had already discontinued the claim voluntarily in spring 2022, and CSG has found no record of an appeal or reversal. A Dutch advertising ruling reached a similar conclusion on Arla’s “climate neutral” organic dairy claim in 2022.
  25. 25.“Sector letter regarding sustainability claims in the dairy sector”, Netherlands Authority for Consumers and Markets, 28 April 2021 (reference ACM/21/050276, published 3 May 2021), compliance deadline 14 June 2021 — naming “sustainable”, “carbon neutral”, “climate neutral”, “natural”, “pure nature”, “happy earth”, “happy animals”, “honest”, “good for the environment” and “responsible” as terms that “can mislead consumers as the specific sustainability benefit of the product is unclear”. acm.nl (PDF); one of three parallel sector letters issued that week, alongside energy and clothing, and extended to the whole food sector on 24 April 2025 acm.nl
  26. 26.Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024, Central Consumer Protection Authority, announced 15 October 2024 — words such as “sustainable, natural, organic, regenerative” and similar assertions “shall not be used without adequate, accurate and accessible qualifier”. pib.gov.in Quoted from the Government of India press release; CSG could not retrieve the guidelines document itself, and does not state the statutory power relied on or a commencement date.
  27. 27.Competition Act (Canada), paragraphs 74.01(1)(b.1) and (b.2), added by the Fall Economic Statement Implementation Act, 2023 (S.C. 2024, c. 15) in June 2024, with a private right of action from 20 June 2025 — see the Competition Bureau guideline “Environmental claims and the Competition Act”, 5 June 2025, modified 27 March 2026 competition-bureau.canada.ca; narrowed by Bill C-15, Royal Assent 26 March 2026 (S.C. 2026, c. 3), which removed the requirement that business-level environmental claims be substantiated “in accordance with internationally recognized methodology” and eliminated the private right of action for those claims parl.ca The private right of action survives for product-level claims under paragraph (b.1). The arc matters: the ratchet ran forward in 2024 and part-way back in 2026.
  28. 28.Guides for the Use of Environmental Marketing Claims, 16 CFR Part 260 — source note “77 FR 62124, Oct. 11, 2012”, with the eCFR recording “No changes found for this content after 1/03/2017” as at 17 September 2026 ecfr.gov; the review opened by the Federal Trade Commission on 20 December 2022, docket FTC-2022-0077 federalregister.gov Part 260 are non-binding guides rather than legislative rules. CSG identified no revised Guides, proposed rule or Green Guides enforcement action published since the March 2023 workshop notice.
  29. 29.Regulation (EU) No 1308/2013, Article 78(2) and Annex VII Part III — “milk” means “exclusively the normal mammary secretion obtained from one or more milkings without either addition thereto or extraction therefrom”, and the reserved designations “may not be used for any product other than those referred to in that point” eur-lex.europa.eu; Case C-422/16 Verband Sozialer Wettbewerb v TofuTown.com, Court of Justice of the European Union, 14 June 2017 — the reserved designations may not be used for a purely plant-based product “even if those terms are expanded upon by clarifying or descriptive terms indicating the plant origin” eur-lex.europa.eu The instrument spells the reserved designation “yogurt”. Annex VII wording is taken from the judgments that reproduce it verbatim, the consolidated EUR-Lex text being too large to extract reliably. A proposed extension to evocation and imitation, the so-called Amendment 171, was dropped in trilogue in May 2021 and never became law.
  30. 30.Dairy UK Ltd v Oatly AB [2026] UKSC 4, United Kingdom Supreme Court, 11 February 2026 — “The prohibition bites where the designation has been used for a relevant product, and it is not necessary that it has been used as the name of the product.” Appeal dismissed. supremecourt.uk (PDF) The case concerned the trade mark “POST MILK GENERATION” and the assimilated Regulation (EU) No 1308/2013. The reservation therefore reaches trade marks and slogans, not only the statement of identity on a pack.
  31. 31.Codex Alimentarius, General Standard for the Use of Dairy Terms (CXS 206-1999), section 4.6.3: “No label, commercial document, publicity material or any form of point of sale presentation shall be used which claims, implies or suggests that the product is milk, a milk product or a composite milk product.” fao.org (PDF) Materially broader than the EU reservation, which reaches designations rather than implication, and it is the reference standard for WTO purposes. Section 4.6.2 preserves an exception where the nature of the product is clear from traditional usage.
  32. 32.Louisiana Act No. 837 of the 2026 Regular Session (originating as House Bill 783) — a “non-lactational dairy protein product” is “a food product containing dairy-identical or dairy-derived proteins produced through microbial fermentation and not derived from the natural lactation of a mammal”, and where permitted such a product must carry, on the principal display panel in at least 30-point type, “Produced through microbial fermentation. Not derived from mammalian lactation.” legis.la.gov Section 1, carrying the definition and the disclosure duty, took effect on the Governor’s signature on 6 June 2026. The prohibition in Section 2 is doubly contingent: it commences only if House Bill 512 of the same session takes effect, and that bill is itself contingent on a US Supreme Court ruling upholding cell-cultured protein bans. The ban is not in force. The reengrossed and enrolled versions define the product term differently; confirm against the session-law print before onward citation.
  33. 33.“Labeling of Plant-Based Milk Alternatives and Voluntary Nutrient Statements”, draft guidance for industry, US Food and Drug Administration, 88 Fed. Reg. 11449, 23 February 2023, docket FDA-2023-D-0451 — plant-based milk alternatives “may be labeled with the term ‘beverage,’ ‘drink,’ or ‘milk’”, with a voluntary nutrient statement recommended. fda.gov Still a draft as at September 2026, and marked “Not for implementation. Contains non-binding recommendations.” CSG identified no action on the docket after January 2025. The federal US position is therefore the opposite of the European one, which is the point.
  34. 34.Regulation (EU) No 1169/2011, Article 26(3), and Commission Implementing Regulation (EU) 2018/775, which applies from 1 April 2020 — where the country of origin of a food is given and is not that of its primary ingredient, the origin of the primary ingredient must “also be given” or “be indicated as being different to that of the food”. eur-lex.europa.eu The duty arises only where the origins differ, the second limb allows the difference to be flagged without naming the origin, and protected geographical indications and registered trade marks are out of scope.
  35. 35.“Decree 280 – GACC Update to Overseas Food Facility Registration”, USDA Foreign Agricultural Service report CH2025-0204, 18 November 2025 — GACC Decree No. 280, announced 14 October 2025, effective 1 June 2026, replacing Decree 248; “The registration period for overseas producers of imported food is 5 years” fas.usda.gov; the implementation catalogue of products requiring official recommendation includes dairy products — FAS report CH2026-0034, 24 March 2026, and Australian Department of Agriculture, Fisheries and Forestry Industry Advice Notice 2026-28, 11 June 2026 agriculture.gov.au Under Decree 280 the firm files directly with GACC while holding the competent authority’s inspection report and recommendation letter. GACC moved from a fixed category list to a risk-based catalogue published separately, so the scope of recommendation-required products can now change without amending the decree.
  36. 36.Commission Delegated Regulation (EU) 2022/2292, Article 13(1): consignments “shall only enter the Union where those consignments are dispatched from, and obtained or prepared in, establishments that appear on lists drawn up and kept up-to-date in accordance with Article 127(3)” of Regulation (EU) 2017/625, for products of animal origin falling within CN Chapters 2 to 5, which include dairy eur-lex.europa.eu; Commission Implementing Regulation (EU) 2021/405 lays down the corresponding lists of permitted third countries, with dairy at Articles 14 to 16 eur-lex.europa.eu 2022/2292 repealed Delegated Regulation (EU) 2019/625. Dairy is captured by cross-reference to the customs nomenclature rather than being named in the article. Both the listed country and the listed establishment must be satisfied.
  37. 37.“Exporter Alert – Lack of Response by China Customs on Establishment Registrations”, USDA Foreign Agricultural Service report CH2025-0040, February 2025 — registrations for 4 beef, 7 dairy, 2 pork and 71 poultry facilities left unrenewed, with “several hundred more U.S. establishments” expiring in March and April fas.usda.gov The failure mode is administrative lapse rather than formal suspension, and it was temporary: a later FAS report records approximately 14 US dairy establishments renewed on 15 and 17 March 2025, though it does not tie those renewals to the seven February lapses. Beef was not resolved on the same timetable.
  38. 38.Announcement of the Department of Islamic Development Malaysia (JAKIM) withdrawing recognition of the Ritual Association of Lyon’s Great Mosque (France), the Centre for Halal Quality Certification (Croatia) and the China Islamic Association from its list of Recognised Foreign Halal Certification Bodies, effective 19 February 2025. halal.gov.my Certificates already issued, and goods in transit, were accepted to 19 August 2025 under a six-month wind-down; product already landed remained acceptable. Second-order gatekeeping nonetheless: a compliant plant can lose access because its certifier was de-listed. There is no tariff analogue.
  39. 39.Invisible Barriers: The Costs of Non-Tariff Measures, UNCTAD Global Trade Update, Policy Insights, May 2026 (UNCTAD/DITC/INF/2026/5), page 2: “Despite rising tariffs, non-tariff measures (NTMs) impose higher costs on exports for 88 per cent of countries”; and “They shape trade, by determining who trades, what is traded and to which markets.” Page 15: “Regulatory convergence where countries align their domestic rules with each other or with international standards could reduce the costs associated with NTMs by between 15 and 30 per cent, without jeopardising safety objectives”, naming Codex Alimentarius, the IPPC and WOAH as the agri-food reference bodies; Figure 6 records that developed economies apply on average 4.5 measures per agri-food product beyond those recommended by international standards. unctad.org (PDF) Verified against the report on 6 October 2026. The document is marked as not formally edited. The 88 percent figure is a count of countries, on trade-weighted costs across all goods exports, and is not specific to agri-food.
  40. 40.Expana price assessments reported in “US and Europe vie for premium whey as demand climbs”, FoodNavigator, 10 September 2026 — EU WPC80 at €25,995 per tonne and US instant WPC80 at US$12.25 per pound as at 31 August 2026, against roughly €11,700 and US$5.25 a year earlier. foodnavigator.com A single price agency reported by a single trade outlet; CSG has not verified the assessments against a second series. Both markets were easing month on month through August off late-July peaks.
  41. 41.“US exports of high-protein whey concentrate have fallen 21% year to date, as surging domestic demand … has left less available for overseas buyers, according to the US Dairy Export Council” — The Dairy Site, 21 August 2026. thedairysite.com Trade reporting of USDEC data. The figure covers high-protein whey concentrate, not whey protein generally, and the report does not state which months the year-to-date period covers.
  42. 42.“Whey protein shortage drives major global investments”, DairyReporter, 16 January 2026 — committed capacity including Glanbia at Clovis, New Mexico; Idaho Milk Products; Arla Foods Ingredients at Valley Queen, South Dakota and Videbæk, Denmark; Tirlán in Ireland at €126 million; and Fonterra at Studholme, New Zealand. dairyreporter.com Trade reporting aggregating company announcements; CSG has not verified each investment against the company’s own release.
  43. 43.Dietary Guidelines for Americans 2025–2030, US Department of Health and Human Services and US Department of Agriculture, released 7 January 2026 — “Prioritize high-quality, nutrient-dense protein foods as part of a healthy dietary pattern”, with a stated goal of “1.2–1.6 grams of protein per kilogram of body weight per day”; and “When consuming dairy, include full-fat dairy with no added sugars.” cdn.realfood.gov The protein goal is a serving goal rather than a reference intake; the long-standing RDA of 0.8 g/kg is unchanged, and a 2026 Perspective in the Journal of Nutrition argues the evidence base is weight-loss trials in adults with overweight or obesity. The guidelines retain a saturated fat limit of 10 percent of calories, and do not use the term “ultra-processed”.
  44. 44.Monteiro CA, Cannon G, Levy RB and others, “Ultra-processed foods: what they are and how to identify them”, Public Health Nutrition 2019;22(5):936–941 — the identification rule is to “check to see if its list of ingredients contains at least one item characteristic of the NOVA ultra-processed food group”, and the listed markers include “hydrolysed proteins, soya protein isolate, gluten, casein, whey protein and ‘mechanically separated meat’”. cambridge.org NOVA’s test is ingredient-based, so the classification follows from the presence of an isolated protein rather than from any assessment of the finished product’s nutrition. The framework is contested in the scientific literature and adopted unevenly by regulators. CSG asserts no classification for any named commercial product.
  45. 45.California Assembly Bill 1264, signed 8 October 2025, inserting Health and Safety Code section 104661 — an “ultraprocessed food” is one containing a listed substance (including stabilisers, emulsifiers, flavouring agents and nonnutritive sweeteners) together with either a saturated fat, sodium or added sugar threshold or a listed sweetener such as sucralose or steviol glycosides. The exemptions at section 104661(b) include “Class 1 milk”, not dairy generally. School phase-out from 1 July 2029. legiscan.com Read via LegiScan; confirm against the chaptered statute before onward citation. A separate exemption for “minimally processed prepared food” is undefined in the statute and left to the California Department of Public Health. CSG’s reading is that a stabilised, sweetener-containing high-protein milk drink meets the definition on the face of the section, whatever its protein content.
  46. 46.Department of Health, Nutrient Profiling Technical Guidance (the 2004/2005 model), January 2011 — “Foods scoring 4 or more points, and drinks scoring 1 or more points, are classified as ‘less healthy’”, and “if a food or drink scores 11 or more ‘A’ points then it cannot score points for protein unless it also scores 5 points for fruit, vegetables and nuts”. gov.uk (PDF); UK television and paid-for online advertising restrictions on less healthy food came into force 5 January 2026, with location restrictions from 1 October 2022 and volume price restrictions in England from 1 October 2025 — House of Commons Library briefing CBP-10061 parliament.uk; consultation on replacing the model with NPM 2018, closed 17 June 2026, outcome pending gov.uk The “one point” threshold is a total score; the “eleven” is the ‘A’ points subtotal, a different quantity. The fruit, vegetable and nut exception is not reachable for a dairy drink. Milk-based drinks with added sugar or sweeteners fall within the restricted categories; whether a particular milk drink is caught turns on the milk-content test in the Soft Drinks Industry Levy Regulations, which CSG has not verified.
  47. 47.“Ultra-Processed Foods; Request for Information”, joint FDA and USDA, docket FDA-2025-N-1793, 90 Fed. Reg., 25 July 2025 — “FDA and USDA (we) are requesting data and information to help develop a uniform definition of ultra-processed foods (UPF or UPFs) for human food products in the U.S. food supply”; comments closed 23 October 2025 federalregister.gov; “White Paper: Proposed Definition of Ultra-Processed Food”, RIN 0910-ZD60, received at the Office of Information and Regulatory Affairs 3 August 2026, pending reginfo.gov The pending federal instrument is a Notice-stage white paper, not a rulemaking. It would carry no codified definition and no direct labelling effect on publication, contrary to much trade reporting.
  48. 48.Milk Production, US Department of Agriculture National Agricultural Statistics Service, 20 February 2026 — 23,609 licensed dairy herds in 2025 against 24,645 in 2024; “the annual production of milk for the United States during 2025 was 232 billion pounds, up 2.6 percent from 2024”; the average number of milk cows “up 153,000 head from 2024”. usda.gov (PDF) The 2024 herd count was revised from 24,811 in the February 2025 edition. The 4.2 percent decline is a CSG calculation from the published counts, not a USDA-published figure.
  49. 49.New Zealand Dairy Statistics 2024-25, DairyNZ and LIC, November 2025 — 10,370 herds and an average herd size of 451 cows in 2024–25; “the total number of herds have steadily declined by approximately 190 herds per year”. dairynz.co.nz (PDF) The 190 figure is a decade average since 2015/16; the most recent season recorded 115 fewer herds. New Zealand average herd size has largely plateaued over the last three years, so its consolidation is now driven by farm exit rather than scale growth.
  50. 50.Statistics Netherlands (CBS), StatLine table 80783ENG, “Agriculture; crops, livestock and land use by general farm type, region”, all farm types, Netherlands, variable Grazing livestock › Number of farms › Cattle › Dairy cows (≥ 2 years): 18,062 farms in 2017, 13,884 in 2024 and 13,361 in 2025; dairy cows (≥ 2 years) 1,693,804 in 2017 and 1,526,837 in 2025. Read from the CBS open data service on 6 October 2026. opendata.cbs.nl; the 2017–2024 decline is also stated in “Dairy cow population down slightly in 2024”, CBS, 28 November 2024 cbs.nl The percentages are CSG calculations from the published counts: farms down 26.0 percent and cows down 9.9 percent between 2017 and 2025. The 2025 figures are from the 2025 agricultural census as published in the table and may be revised.
  51. 51.Australian Dairy Industry In Focus 2025, Dairy Australia — 3,772 dairy farms in 2024–25, down 3 percent year on year; 8,315 million litres of milk, against 8,376 million litres in 2023–24; Victoria 63.3 percent of national production. assets.dairyaustralia.com.au
  52. 52.“HHS, FDA Announce Operation Stork Speed to Expand Options for Safe, Reliable, and Nutritious Infant Formula”, US Department of Health and Human Services and US Food and Drug Administration, 18 March 2025 — six workstreams including “the first comprehensive update and review of infant formula nutrients by the FDA since 1998”, increased contaminant testing, and extension of the personal importation policy fda.gov; the nutrient review Request for Information, docket FDA-2025-N-1134, 90 Fed. Reg. 20475, 14 May 2025, comments closed 11 September 2025 federalregister.gov; “FDA’s Actions to Respond to Clostridium botulinum Illnesses Associated with Consumption of Powdered Infant Formula” — FDA “advocated for” JEMRA “to conduct a risk assessment on spore-forming pathogens, including Clostridium botulinum” and wrote to the infant formula industry on ingredient selection fda.gov Both the November 2025 and June 2026 outbreaks were linked to the same US milk supplier and spray drier, but FDA states that “there is not enough evidence to determine if milk was contaminated before drying or during the drying process” and that its root cause investigation is ongoing. As at September 2026 the 1998 nutrient requirements remain in force: FDA describes “a strategic, phased approach” and has issued no proposed rule. JEMRA is the Joint FAO/WHO Expert Meetings on Microbiological Risk Assessment, whose advice feeds Codex.
  53. 53.Codex Alimentarius, Standard for Follow-up Formula for Older Infants and Product for Young Children (CXS 156-1987), revised and adopted by the Codex Alimentarius Commission on 28 November 2023, restructuring the standard into follow-up formula for older infants aged 6–12 months and drink for young children over 12 months fao.org; the Standard for Infant Formula and Formulas for Special Medical Purposes Intended for Infants (CXS 72-1981), amended in 2020, 2023 and 2024; and the agenda for the 45th Session of the Codex Committee on Nutrition and Foods for Special Dietary Uses, Nuremberg, 2–6 November 2026, carrying a “Draft standard for foods for older infants and young children (at Step 4)”, 91 Fed. Reg. 57858, 11 September 2026 federalregister.gov Codex has amended its infant formula standard repeatedly since 2020. The US nutrient requirements have not been revised since 1998.
  54. 54.Resolution WHA78.18, “Regulating the digital marketing of breast-milk substitutes”, Seventy-eighth World Health Assembly, adopted 27 May 2025, urging Member States to “develop and strengthen robust regulatory measures to regulate the marketing of breast-milk substitutes and foods for infants and young children, including in digital environments”; preceded by WHO, Guidance on regulatory measures aimed at restricting digital marketing of breast-milk substitutes, 16 November 2023 who.int The resolution reaches beyond breast-milk substitutes to “foods for infants and young children”, and asks Member States to safeguard against conflicts of interest in developing the measures. The Director-General is to report on implementation to the World Health Assembly in 2028.
  55. 55.“P1028 — Infant Formula”, Food Standards Australia New Zealand — “The approved variation is subject to a transition period of 5 years (inclusive of stock-in-trade), commencing on 13 September 2024. During that 5-year period, infant formula products may be sold if they comply with either the Code as in force (as if the variation had not taken effect) or the Code as amended by the draft variations.” New Zealand opted out under Annex D of the trans-Tasman food standards agreement. foodstandards.gov.au
  56. 56.Learning Resources, Inc. v. Trump, decided 20 February 2026; the Section 122 replacement effective 24 February 2026, held unlawful by the Court of International Trade on 7 May 2026, stayed by the Federal Circuit on 12 May 2026, and expired on the statutory 150-day limit on 24 July 2026 — analysis, Covington & Burling cov.com; “USTR Section 301 action in response to failure of 60 economies to ban imports produced with forced labor”, Office of the United States Trade Representative, July 2026 ustr.gov
  57. 57.“U.S. imposes 50% tariffs on Canadian products effective August 22, 2026”, Blakes blakes.com; “List of products from the United States subject to counter-tariffs effective September 8, 2026”, Department of Finance Canada, 25 August 2026 canada.ca
  58. 58.MOFCOM Announcement 2026 No. 9, Ministry of Commerce of the People’s Republic of China, 12 February 2026 — duties effective 13 February 2026 for five years; HS codes 04015000 and 04061000–04069000. mofcom.gov.cn; provisional rates and product exclusions as reported in “EU dairy hit by Chinese tariffs: all you need to know”, DairyReporter, 5 January 2026 dairyreporter.com The final company-specific rates are set out in an annex to the determination that CSG was unable to retrieve; they are not stated here.
  59. 59.Agreement on the Application of Sanitary and Phytosanitary Measures, Article 3.2: measures “which conform to international standards, guidelines or recommendations shall be deemed to be necessary to protect human, animal or plant life or health, and presumed to be consistent with the relevant provisions of this Agreement and of GATT 1994”; Article 3.3 permits a higher level of protection “if there is a scientific justification, or as a consequence of the level of sanitary or phytosanitary protection a Member determines to be appropriate in accordance with the relevant provisions of paragraphs 1 through 8 of Article 5”. Annex A(3)(a) names the Codex Alimentarius Commission as the food safety reference body. Text as published at OJ L 336/40, 23 December 1994. eur-lex.europa.eu The presumption in Article 3.2 runs to that Agreement and GATT 1994, not to a member’s trade obligations at large, and on the Appellate Body’s reading in EC — Hormones a measure must rest on a risk assessment under Article 5.1 by either route.
  60. 60.“Food Ministers’ Meeting communiqué — 13 February 2026”, Food Regulation Secretariat — ministers agreed by majority to request that FSANZ “prepare a Proposal on mandating the HSR system in the Australia New Zealand Food Standards Code”, after voluntary uptake reached 39 percent in Australia and 36 percent in New Zealand against a 70 percent target. foodregulation.gov.au; FSANZ Proposal P1067, first call for submissions 7 May – 5 July 2026, second round and ministers’ final decision pending foodstandards.gov.au A mandate is proposed, not decided. The Health Star Rating is a nutrient-profile system, not a processing classification, and its algorithm credits protein.
  61. 61.Application A1342, Supporting Document 1: Risk and technical assessment, FSANZ, July 2026 — the safety conclusion (“no public health and safety concerns for the general population associated with the addition of BCPP1 to food”, with an allergenicity risk noted for people allergic to milk proteins), the amino acid sequence reasoning, PDCAAS (47.3 ± 2.89 against a bovine beta-casein reference of 46.0, p=0.68), and the applicant-proposed use levels in Table 6. foodstandards.gov.au (PDF) Use levels are proposed by the applicant for the dietary intake assessment, not limits set by FSANZ. The PDCAAS result shows parity with isolated bovine beta-casein, not with whole-protein references such as casein (94) or soy (100).
  62. 62.Application A1342, Supporting Document 2: Labelling, FSANZ, 9 July 2026 — the “technically would not meet the definition of ‘milk’ in the Code” finding, the proposed amendment to the table to section S9—3, its extension to food sold to a caterer or manufacturer, and the proposed front-of-pack advisory statement. foodstandards.gov.au (PDF) All labelling requirements described are draft variations released for public consultation, not final decisions. The wording of the advisory statement is not prescribed, and the trigger is expressed as an open, illustrative list rather than a closed set of terms. The finding that “milk protein” and “milk solids” would not apply, and that “cheese” would not apply to an analogue, is paraphrased from two separate passages rather than quoted as one sentence.
  63. 63.“Guidance for Industry: Frequently Asked Questions about FDA’s Regulation of Infant Formula”, US Food and Drug Administration — GRAS status of a substance does not substitute for the statutory infant formula submission. The ninety-day requirement sits at section 412(c)(1)(B) of the Act (21 U.S.C. 350a(c)(1)(B)), which bars introduction of a new infant formula unless the person “has at least 90 days before marketing such new infant formula, made the submission to the Secretary required by subsection (d)(1)”; subsection (d)(1) prescribes the content of that submission. fda.gov
  64. 64.“Novonesis and TurtleTree enter partnership to support commercialization of lactoferrin”, Novonesis, 8 July 2026 — “Novonesis will exclusively undertake efforts to scale, manufacture and commercialize LF+® for the early life nutrition market”. novonesis.com Novonesis also took selected commercial rights for dietary supplements and made a minor investment in TurtleTree. Syndicated wire copies of the announcement carry a later date.
  65. 65.Schedule 29 of the Australia New Zealand Food Standards Code permits lactoferrin at up to 40 mg per 100 kJ as an optional nutritive substance in infant formula and follow-on formula (sections S29—7 and S29—8), in the single permitted form “bovine lactoferrin” (sections S29—9 and S29—23), subject to a brand-exclusivity condition introduced by Application A1253 (section S29—9A). FSANZ, Record of views formed in response to enquiries, updated July 2026, records bovine lactoferrin in dairy products as a traditional, non-novel food with no entry for recombinant lactoferrin. foodstandards.gov.au The permitted form is milk-derived. CSG identified no FSANZ application on foot to permit a recombinant or fermentation-derived lactoferrin in infant formula as at September 2026.

Driver classifications, scenario narratives and implications are Confident Strategy Group’s analysis, built on the cited facts. Regulatory positions are stated as at September 2026. Confident Strategy Group is not a law firm and this paper is not legal advice.