It is not acceptable to give zakat al-fitr except in the form of foods that are regarded as the usual staple according to local custom, in the sense that most people rely on it as a basic item for lunch and dinner, such as wheat, rice and the like.
Therefore, it is not acceptable to give zakat al-fitr in the form of powdered milk, unless it has become a basic staple food for people in some country.
I put this question to our Shaykh, ‘Abd ar-Rahmaan al-Barraak (may Allah preserve him), and he said: It is not acceptable to give zakat al-fitr in the form of milk, but if there are some people whose main food is milk, then there is nothing wrong with it. End quote.
And Allah knows best.