A2 director eyes potential for $2 billion in revenue from tests

By NZPA

Tuesday 1st April 2003

"I really believe there is a ... genuine moral imperative here to do what is correct," Mr Paterson said. He also believed A2 Corporation would make "a lot of money" but told an ABC television current affairs programme, Four Corners, that money was not his primary motive.

Mr Paterson said cows producing A2 beta caseins, instead of A1 or a mix of A1 and A2 were closer to the original composition of milk found in cows, sheep, goats, and buffalo. Some scientists have said that A1 caseins are a natural mutation which has spread widely in commercial milking herds in the developed world because they are found in holstein-friesian breeds which produce high volumes of milk.

A2 Corp has claimed milk without A1 proteins would be healthier.

"What we're simply saying with A2 milk is let's test the cows, put it all back, so people can have milk as it was, you know, pure A2 milk -- the original milk," Mr Patterson told the programme, which was broadcast last night in Australia.

The programme said Mr Paterson and some of his associates took a 25 percent stake in A2 Corp, when it was launched in 2000, while the Company founder, Dr Corran McLachlan took 35 percent in return for his research contribution.

A2 spent an initial $8 million buying a half share in a patent for testing cows for their production of A2 milk in relation to its claimed ability to avoid triggering juvenile diabetes. The other half was owned by the old Dairy Board, now Fonterra.

In its own right, A2 Corp owns another patent for identifying A2 cows for producing milk to avoid other illnesses such as heart disease.

It tests tail hairs from cows, at a genetics laboratory in Dunedin, charging farmers $20 for each cow.

"We believe there's ultimately, in the Western world, up to 80 or 100 million tests to be done on cows to get the herds right," Mr Paterson said. "There is a situation where A2 Corp could receive a royalty on pure A2 milk".

Mr Paterson owns dairy farms on both sides of the Tasman, and has so many farms in Tasmania that he will soon have over 20,000 dairy cows in the country, many of them "converted" to producing A2 milk.

Asked about the progress of scientific research which would substantiate health claims about A2 milk, Mr Paterson said: "If you actually line all the scientific evidence up, you've got a situation there where, you know, it's got a tail, it's got four legs, big white teeth, it barks and answers to Rover.

"It's pretty obvious to me that it's a dog."

Mr Paterson said he had talked at one stage to the Dairy Board about the possibility of an A2 joint venture, but the talks collapsed.

"One of the reasons they broke down was they felt it was outrageous that we were to take 50 percent of such a joint-venture company," he said.

The chief executive of the Dairy Board at the time, Warren Larsen said the proposal collapsed because Mr Paterson wanted to have the global dairy industry charged a levy for the use of A2 milk in all parts of the world.

A spokesman for New Zealand dairy farmers, Kevin Wooding, told the programme that the cost of changing a herd to produce A2 milk only would be prohibitive for the average dairy farmer, whose cows lived seven or eight years.

"They have over $2 million invested in their operations and, when you go to put that sort of money at risk, they think hard and long about the decisions they make on-farm and especially into a breeding programme when we've invested so much into the breeding of the animals we've got today"

Mr Larsen said it was technically possible to "convert" herds but there was not enough credible science showing such a change was necessary.

"We could have made significant quantities of A2 milk very quickly," he said. "We could have done it far faster than A2 Corporation or anyone else. We chose not to."

Mr Wooding, who is chairman of Dairy Farmers of New Zealand, said A2 Corp's efforts to seek a health warning on ordinary milk was designed to frighten consumers.

"It is a scare campaign," he said.

However, Mr Paterson said there was a difference between a scare campaign and what was true. "In our case, I believe we have the huge advantage of being right," he said.

Fonterra executives declined to appear on the programme but said there was no scientific evidence currently available to Fonterra, that A1 milk caused the negative health effects claimed by A2 Corporation.

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