The value chain for dairy co-products started with whey as a co-product of cheese manufacture. Whey’s evolution started with land spreading (fertilizer), fuel, animal feed and ultimately human food. The valuable component of whey has been the protein, especially now since we are seeing the highest prices for whey proteins ever in their history. As the U.S. has expanded its production of high-protein dairy ingredients such as whey protein concentrates/isolates, milk protein concentrates/isolates, and ultrafiltered milk to meet consumer demand, production of their co-product — permeate — has increased along with it.
Permeates have also been going through their own value chain progression. A decade ago, the 2016 American Dairy Products Institute (ADPI) Utilization and Production Trends Report listed a total production of U.S. dry whey permeate at about 454,000 metric tons and milk permeate at about 26 metric tons, while lactose production was 499,000 metric tons. The food categories listed for whey permeate utilization were dairy products, prepared dry mixes and beverages, which accounted for less than 5% of the total production.
The following is a guest column from KJ Burrington, ADPI Vice President of Technical Development, published on May 8, 2026 with Cheese Market News.
Lactose was primarily used for confections, infant formulas, prepared dry mixes and blends, and dairy products. Milk permeate has typically been used for standardization of nonfat dry milk (NDM) to make skim milk powder, which is the product sold outside of the U.S. Dried milk permeate hasn’t been tracked for its end uses due to its smaller volume. Not all permeate is dried, but it has been difficult to track the amount of liquid permeate produced over the years. Today we are producing more permeate than ever before, creating more urgency for ways to use it.
The ADPI Permeate and Lactose Committee was formed to address this growing opportunity. The committee consists of permeate and lactose manufacturers and traders in the global dairy ingredients industry. Several objectives were defined by the committee in 2025, with a primary one being to conduct a census on U.S. permeate and lactose production.
The committee collaborated with Mike McCully of McCully Consulting to do a census of U.S. production of permeate and lactose. The U.S produced over 816,000 metric tons (MT) of liquid permeate, over 763,000 MT of dry permeate (milk permeate~59,000 MT and whey permeate~704,000 MT), and 680,000 metric tons of lactose in 2025. Most of the liquid permeate was used for animal feed, with 5% used for ethanol production and the remaining amount disposed of. Only about 10% of dry permeate is used for human food and the remainder is animal feed, while the majority of lactose is used for human food.
These numbers may be surprising to some, especially the low level of permeate utilization in human food.
After all, we have been working on permeate utilization for decades and lactose utilization even longer.
Permeate utilization is improving because 10% of 680,000 metric tons is still larger than if 10% of the 2016 volume was used for human food. To help promote more research and use of permeate and lactose, the committee’s working groups developed some resources to help support academic research as well as product development.
A review of non-food applications for permeate and lactose — Lactose and Permeate Valorization in Non-Food Applications: A Literature Review and a Permeate and Lactose Application Guide — were published by ADPI in 2025. A short summary of the literature review, “Lactose and permeate — part of our everyday lives,” was published as a guest column by Stephanie Clark, manager of academic engagement at ADPI, in the July 4, 2025, issue of Cheese Market News.
Like other dairy ingredients, whey permeate got its start as a replacement for its more expensive counterpart, whey. Decades ago, whey protein concentrate with 34% protein (WPC34) was developed to be a more economical replacement of NDM. The dairy industry tends to be good at cannibalizing its own ingredients when more economical co-products are available. Today, the cost of NDM is substantially less than WPC34, so recommending NDM to replace WPC34 is possible and something the industry never would have predicted. Permeates are now being used in food applications where whey was typically used, like hot cocoa and cappuccino mixes, process cheese products, bakery applications, confections and more. Whey permeates are more commonly used in the food industry because they are more available.
Both milk and whey permeates have a lot of untapped potential in food applications. Both have similar composition as outlined in the ADPI Standard for Dairy Permeate (Milk & Whey), available at https://adpi.org/ingredient-resources/dairy-milk-permeate/. Though they are predominantly composed of lactose, they both contain valuable milk minerals such as calcium, potassium, sodium, magnesium, phosphorus and chloride. Lactose is a sugar that provides less sweetness and a lower glycemic index than sucrose and has prebiotic effects that are beneficial to the gut. Because milk permeate is a co-product of the ultrafiltration of milk, it is known for its consistent composition, white color and clean flavor. Because whey permeate is derived from whey, it will have more flavors from the cheesemaking process and is more off-white in color. Formula cost reduction is a big target for the use of permeates as a replacement for whey or even a partial replacement of NDM. Both lactose and permeates can be used as a clean label alternative to replace other carbohydrates such as dextrose and maltodextrin. Permeates are not considered added sugar on a product label, and when used in beverages, yogurts or other fluid applications, the lactose can be hydrolyzed to make a lactose-free product while also contributing more sweetness. Permeates are known for their salty flavor, which primarily comes from their potassium content. That saltiness can be used to help reduce sodium in foods and also enhance flavor in both savory and sweet applications. Milk permeate has also been used in a sports drink where the naturally occurring milk minerals are able to provide better hydration than water or other popular sports drinks.
These end uses for permeate and lactose represent just some of the potential that they can bring to food applications. Support for the valorization of these co-products is critical for the future of the dairy ingredients industry.
