New Zealand dairy giant Fonterra has said it plans to increase its production of speciality dairy ingredient colostrum, in order to take advantage of the rapidly expanding market for the product.

Fonterra said it is aiming to ramp up collection of colostrum, which is used in a range of niche health products, during the 2004/05 season.

Liquid colostrum is taken from the first four milkings (48 hours) after calf birth from pasture fed, non-immunised cows. Last year in China, market demand for Fonterra's colostrum product was well above forecasted figures due to the outbreak of SARS there. Asian consumers believe use of such products can boost immune systems and prevent disease, Fonterra said.

Rodd Hodgson, shareholder relations manager, said indications from Fonterra's global network are that demand for colostrum is up significantly on last year and will continue to grow.

"Our network people are telling me that there are new colostrum products going into the market, particularly in both the United States and Asia that will continue to drive demand for colostrum supply from our farmers," he said.

Hodgson said Fonterra has committed to a minimum three-year colostrum collection programme, which will be expanded to the South Island this season.