Fonterra has announced this week that it will expand its organic milk business to help meet growing demand. This decision follows Fonterra’s recent review on how best to position this speciality business for sustained growth.
At meetings with farmers this week, Fonterra’s global business manager for Organics, Craig Deadman, said the Co-operative is committed to developing its organic milk supply over the long term to meet escalating demand.
“Following our review, we have refreshed our growth strategy to enable us to grow the business, profitably and sustainably. This strategy reflects the volumes our customers have indicated they need to satisfy increasing demand for organic dairy.”
Fonterra is also increasing the total certified organic payment to $1.50 per kg milk solids from
1 June 2015. This reflects a new farmer payment of an additional 45 cents per kgMS to contribute to the costs of maintaining organic certification, in addition to the certified organic milk premium of $1.05 per kgMS.
Mr Deadman said that, while organic dairy remains a speciality product, more people are choosing organic dairy products and he expects this trend to continue, particularly in South-East Asia, China and in the United States.
“Chinese consumers are quickly developing a strong liking for organic dairy and organic options are always welcomed.”
Mr Deadman said that Asian consumers also favour organic milk powders, especially infant formula and fortified milk powders.
“We have recently launched Anchor organic milk powder in China and it is already proving very popular with shoppers there.”
He said that growing Fonterra’s Organics business is all about developing and selling higher-value speciality products at premium market rates.
“This approach enables all Fonterra farmers to benefit from heightened returns,” he said.