March 24, 2015


Fonterra expands organic milk business 



Fonterra has announced it will expand its organic milk business in response to growing demand.


Fonterra, a New Zealand-based co-operatively owned company, said this decision follows its recent review on how best to position this specialty business for sustained growth.


Craig Deadman, Fonterra's global business manager for Organics, told farmers last week that 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", he said.


Fonterra said it is also increasing the total certified organic payment to A$1.50 (US$1.18) per kilogram milk solids from June 1 this year. This reflects an additional 45 cents (US 35 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.


Deadman said that while organic dairy remains a specialty product, more people are choosing organic dairy products, and he expects this trend to continue, particularly in Southeast Asia, China and the US.


"Chinese consumers are quickly developing a strong liking for organic dairy and organic options are always welcomed", he said


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".


Fonterra is the world's largest exporter of dairy products and New Zealand's biggest company. Recently it figured in the news when an unidentified blackmailer threatened to contaminate its infant formula products with the pesticide 1080, which is used to kill rats and possums.


Samples of infant formula turned in by consumers for forensic analysis were all found negative for 1080, the police said last week.

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