Fonterra expects 140% growth in organics business

Fonterra’s organic business expects to see a 140 per cent increase within the next five years on the back of burgeoning global demand for organic dairy ingredients.

“Although organics is a small part of Fonterra’s milk supply and production, dairy is the fastest-growing category in the international organic market, and having seen 60 per cent growth over the last two years we are well placed to build on this,” says Fonterra’s organic global category manager Rick Carmont.

The New Zealand Organic Sector Report released by Trade Minister Tim Groser today highlights that the demand for organic products continues to grow rapidly, especially in high-value markets such as the United States and Europe.

“We are in a very strong position to deliver on this demand. Fonterra supplies its ingredients in more than 9,000 major retail outlets across the world – with the majority of our customers based in Asia, North America and Oceania,” says Mr Carmont.

Fonterra’s organic range of dairy ingredients is used in cheese, milk powder, proteins and butter.

Although only one per cent of Fonterra’s revenues come from organics, suppliers receive a premium and the profits from organic ingredients come back to the Co-op to benefit all shareholders.

“We are the only organics dairy supplier to meet the government standards for all 71 major organic markets around the world – so we are in a leading position,” says Mr Carmont.

Fonterra has more than doubled its organic milk supply over the past year to help meet demand and has accredited manufacturing sites at Hautapu, Waitoa and Morrinsville.

“We are over half way in meeting our target organic milk supply and are actively recruiting farmers into our Organics Conversion Programme,” says Mr Carmont.

Fonterra’s Organics Conversion Programme offers a full resource and support package to farmers over a three year period including organic premium payments from day one of the contract and no cap on volumes supplied under the organic contract.

“Not only do Fonterra’s fully converted organics farmers receive a NZ$1.05 premium per kilogram of milk solids, but many of our current farmers have found organic farming a positive alternative that is more than just financially rewarding - there are some real sustainability benefits,” says Mr Carmont.