Introduction

model process flow

This Web Application provides users with an operational and commercial analysis for a selected range of cheese whey options. The App gives an indication of the required capital, expected operating costs, Internal Rate of Return (IRR) and Net Present Value (NPV) for each of these options.

Users of the App start by entering their target cheese production quantities, or expected milk supply curve, across a 10 year period. The volume and composition of whey is subsequently calculated from the selected cheese production plan (type and quantity).

When the whey volume has been calculated, users can select from a range of whey products and by-products. The whey products currently available are D40 and WPC35 liquid concentrates plus whole whey, D40 and WPC35 powders. It is also possible to test a number of scenarios based on production and sale of raw or pasteurised liquid whey.

The model runs detailed operational and financial calculations for the chosen whey product and selected scale. These calculations are based on the operational and financial structure of an Australian dairy manufacturing business. Default settings are provided by the model. Alternatively, the user can set their own inputs including factors such as capital, labour, overheads, product yield, and utilities usage and cost.

Please note the Disclaimer in the detailed in the Help (?) Tab. Contact Dairy Innovation for more information and access to the full version of the App.

This project has been made possible by
the funding and support of Dairy Australia
Dairy Australia logo

Cheese
Production

Cheese & Whey Production

This form sets up the scale and seasonality of cheese and whey production. This simple version is based on selections for business scale and seasonality of milk supply.

In the full version of the App, the user can specify the exact milk supply and seasonality or alternatively input production for up to 6 cheese types simultaneously (ie a product mix can be chosen). Production growth over a 10 year period is also specified.

The full App version also has options for setting the annual supply, seasonality and year on year growth of an external whey purchase.

Annual Milk Supply
(Million Litres)
51.00
Million Litres
Tonnes
chart legend
Seasonal distribution of cheese (tonnes) & milk supply (million litres) - Year 1 of operations
Milk Supply Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total
Cheese 276 398 521 609 566 527 451 345 351 333 333 290 5,000
Volume (mL) 2.82 4.06 5.31 6.21 5.77 5.38 4.60 3.52 3.58 3.40 3.40 2.95 51.00
Volume (%) 5.5% 8.0% 10.4% 12.2% 11.3% 10.5% 9.0% 6.9% 7.0% 6.7% 6.7% 5.8% 100.0%
Fat 4.21% 4.16% 4.06% 4.00% 4.01% 4.11% 4.26% 4.46% 4.62% 4.72% 4.66% 4.44% 4.26%
Protein 3.39% 3.36% 3.31% 3.32% 3.24% 3.27% 3.26% 3.33% 3.48% 3.56% 3.60% 3.54% 3.37%

Whey
Production

Whey Product Selection

This form sets the target whey product and its associated by-products. Only one product may be chosen in each model scenario.

By-products are automatically produced with their associated primary whey product. They can be sold or discharged with the wastewater stream. Whey by-products include:

  • Whey cream - generated from whey clarification
  • Whey permeate - generated from ultra-filtration
  • Ricotta whey - generated from ricotta cheese

The full version of the App includes the option to set whey product price and freight cost.

Select whey product and by-product:
Price & Freight Cost :
$ / Litre or $ / Kg
Whey Product Sales Choice
Primary Liquid Raw Whey - Waste
Liquid Raw Whey - Sale
Liquid Pasteurised Whey
Liquid - Demin 40 Whey
Liquid - WPC 35 Whey
Whey Powder
Demin 40 Whey Powder
WPC 35 Powder
Ricotta Cheese
By-Product Whey Cream
Whey Permeate
Ricotta Whey
Sales Price Freight Cost
0.00 0.00
0.02 0.02
0.03 0.02
0.08 0.02
0.10 0.02
1.20 0.03
1.30 0.03
3.00 0.03
1.80 0.30
0.50 0.03
0.01 0.02
0.00 0.02
Seasonal distribution of whey and by-product production - Year 1 of operations
(Liquid product : million litres | Powder and cream : tonnes)
Whey Production Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total
Liquid Raw Whey - Waste 2.40 3.46 4.53 5.29 4.92 4.58 3.92 2.99 3.05 2.90 2.89 2.52 43.5
Liquid Raw Whey - Sale 2.40 3.46 4.53 5.29 4.92 4.58 3.92 2.99 3.05 2.90 2.89 2.52 43.5
Liquid Pasteurised Whey 2.38 3.43 4.49 5.24 4.88 4.54 3.88 2.97 3.02 2.87 2.87 2.49 43.1
Liquid - Demin 40 Whey 0.94 1.36 1.78 2.08 1.93 1.80 1.54 1.18 1.20 1.14 1.14 0.99 17.1
Liquid - WPC 35 0.52 0.75 0.98 1.14 1.06 0.99 0.84 0.65 0.66 0.62 0.62 0.54 9.4
Whey Powder 154 222 291 340 316 294 251 192 196 186 186 162 2,789
Demin 40 Whey Powder 142 205 268 314 292 272 232 178 181 172 172 149 2,577
WPC 35 Powder 49 70 92 107 100 93 80 61 62 59 59 51 882
Ricotta Cheese 96 138 181 212 197 183 157 120 122 116 116 101 1,738
Whey Cream 21 31 40 47 44 41 35 27 27 26 26 22 387
Liquid - Whey Permeate 1.86 2.68 3.51 4.10 3.81 3.55 3.04 2.32 2.37 2.25 2.24 1.95 33.7
Liquid - Ricotta Whey 2.57 3.71 4.85 5.67 5.27 4.91 4.20 3.21 3.27 3.10 3.10 2.70 46.5

Capital
Investment

Capital Investment Decision

These tables show the production capacity requirements and set the capital investment for each whey product.

In the full version of the App, the user can select the capital items that are included in the initial investment and also has more control over the capital cost of specific items.

The full version of the App provides for adjustment to expenses such as utilities, labour, and other overheads. Financing options are also incorporated to show the impact of debt on profit and cash flow.

Factory capacity analysis: generic range and selected production scenario
Production Capacity Guide * Small Medium Large Model Data Peak Prodn
Tonnes Cheese 2,000 5,000 10,000 5,975 8,732
Million Litres of Liquid Whey 17.4 43.5 86.9 43.5 75.9
Litre / Hour Processing 2,645 6,613 13,227 6,613 11,549
Tonnes Ricotta Cheese 695 1,738 3,476 2,077 3,035
Tonnes Whey Powder 1,116 2,789 5,578 3,333 4,871
Tonne / Hour Whey Drying 0.17 0.42 0.85 0.51 0.74
Tonnes WPC 353 882 1,765 1,054 1,541
Tonne / Hour WPC Drying 0.05 0.13 0.27 0.16 0.23

* Standard factory rates assume 20 hours per day x 365 days / year x % utilisation

* Model data is the annualised production in the highest month of production

Greenfield Site

This table shows a budget estimate for the new items at different factory sizes. The model capital cost is determined by correlation with this table. This is based on:

  • The whey product and byproducts chosen
  • The number of each capital item selected
  • The price range of the items
  • The percentage adjustment to price
  • Interpolation or extrapolation using the calculated production throughput

Adjusting the percentage cost sets a higher or lower cost of an item. This will allow for factors such as second hand equipment or existing business capital at depreciated value.

Capital cost range for major capital items
Item Small Medium Large Adjust Cost
Land 200 300 500 100% 449
Buildings 1,300 1,800 2,500 100% 2,322
Services - Gas Connection 100 150 200 100% 187
Services - Boiler 300 500 700 100% 649
Services - Electricity Connection 10 20 30 100% 27
Services - Water & Waste Connection 10 20 30 100% 27
Services - Waste Treatment 20 30 50 100% 45
Services - CIP 200 300 450 100% 412
Services - Chilling 200 300 450 100% 412
Whey Liquid Silo(s) 200 350 500 100% 924
Ricotta Production 200 500 800 100% 0
Pasteuriser / Clarifier 300 500 800 100% 724
Demin 40 Membrane Plant 200 400 600 100% 0
WPC Membrane Plant 200 400 600 100% 0
Whey Dryer 3,500 4,500 6,000 100% 5,619
WPC Dryer 2,000 3,000 4,000 100% 0
Total 6,540 9,120 12,710 100% 11,799

Model
Calculation

Model Output Report

Production Output & Financial Return

For each whey product, these tables provide "back of the envelope" calculations for production, income, cost and financial return. The return is referenced to the following alternatives:

  • Zero Based Costing - Actual income and cost calcuation
  • Compare to Waste Whey - Comparison with whey disposal to effluent
  • Compare to Whey Sale - Comparison with sale of liquid whey

The full version of this App runs much more detailed income and cost calculations over ten years of monthly data. This analysis generates monthly cash flow and a more accurate evaluation of investment return.

Download this example pdf report to see the full detail of the DIAL Whey App inputs and outputs.
PDF Download
Maximum Annual Annualised Peak Tonnes / Hr $ / Tonne $ / Kg Solids
Milk (Million Litres) 51.0 74.5
Cheese 5,000 7,306 1.1
Liquid - Raw Effluent 43.5 63.5 9.7 0 0
Liquid - Raw Sale 43.5 63.5 9.7 20 278
Liquid - Pasteurised 43.1 62.9 9.6 30 435
Liquid - Demin 40 17.1 24.9 3.8 80 485
Liquid - WPC35 9.4 13.7 2.1 100 982
Whey Powder 2,789 4,076 0.6 1,200 1,250
Demin 40 Powder 2,577 3,765 0.6 1,300 1,354
WPC 35 Powder 882 1,289 0.2 3,000 3,158
Ricotta Cheese 1,738 2,540 0.4 1,800 7,102
* Liquid as Million Litres, Powder and Ricotta as Tonnes
Revenue Freight Variable Cost Production O/H Depr & Insurance SGA EBIT Capital Estimate Simple Return
Liquid - Raw Effluent 0 0 1,334 9 7 0 (1,349) 89 -1523.8 %
Liquid - Raw Sale 869 869 44 17 18 9 (88) 221 -39.9 %
Liquid - Pasteurised 1,487 873 86 431 81 15 2 1,159 0.2 %
Liquid - Demin 40 1,560 353 96 426 134 23 526 1,681 31.3 %
Liquid - WPC35 1,132 199 107 468 170 14 174 2,123 8.2 %
Whey Powder 3,542 95 765 1,534 816 43 289 11,655 2.5 %
Demin 40 Powder 3,545 89 618 1,546 852 43 397 12,177 3.3 %
WPC 35 Powder 2,842 38 281 1,323 745 34 420 10,644 3.9 %
Ricotta Cheese 3,128 521 608 695 94 38 1,173 1,346 87.1 %

Year 1 Profit & Loss Summary

This chart shows the monthly income, expenses and key profit indicatiors for year 1 of operation.

The selected whey product is:

Whey Powder

Selected by-product sales are:

Whey Cream

$ Thousands

Year 1 Monthly Cash Flow

This chart shows the monthly cash flow and the cumulative cash flow for year 1 of operation. This does not include the initial capital investment, an estimate for which is given in the finance table above.

The model provides options for financing of the initial capital investment via a long term loan or shareholder equity. Working Capital requirements are funded from free cash flow or an overdraft.

Options are also given for distribution of profit and cash surpluses.

$ Thousands

Year 1 Working Capital Summary

This chart shows the monthly working capital requirements for year 1 of operation. This does not include the initial capital investment, an estimate for which is given in the finance table above.

Working capital is more often an issue with whey powder products. These have a higher requirement for Inventory and more exposure in Accounts Received.

$ Thousands

Help

Reference Section