June 6, 2018 

Australia dairy co-operative expands into organic milk market

Norco, Australia's biggest dairy co-operative, is courting farmers in the country as far south as  Victoria for the supply of organic milk, ABC Rural reported. 

The move is part of Norco's expansion into the organic milk market. According its chairman, Greg McNamara, the price for a litre of the product was significantly higher than regular milk - a difference of around 30 cents a litre between what an organic farmer and a conventional farmer are paid.

McNamara claimed that organic farmers would get "somewhere between 85 to 87 cents a litre on a yearly basis," compared to conventional farmers who are receiving "around 57 to 58 cents a litre."

"We've got two farmers at the moment and we've got a number thinking about transitioning across," McNamara added.

"We advertised recently within our membership and within Victoria to actually look for organic supply and I think we had about 17 farmers that expressed an interest."

Norco is a 123-year-old co-operative, which is based in northern New South Wales (NSW) and has factories further south at Raleigh and Labrador on the Gold Coast.

McNamara is one of 326 active members on 214 farms in NSW and south-east Queensland supplying the co-operative with 222 million litres of milk per year.

"We've just finished off a strategic plan on organic milk and it's certainly showing that investing in the organic industry going forward from a milk perspective could give us a great reward," he elaborated.

"We actually see organics being somewhere between 10 to 15 percent of our annual production, which means in five years time, we could have up to 20 to 30 million litres of organic milk within our Norco system."

While the price difference between organic and regular milk is substantial and a definite reward for conversion, the cost of doing so is not cheap.

Farmers would take up to three years to transition from conventional dairy farming to organics, McNamara explained.

"[Farmers] move from a conventional style of farming to the organic, and that transition period certainly has a higher risk of failure because you're getting the same milk price as conventional but not achieving a higher milk price that you would under the organics," he said.

"Organic farmers are generally quite small in the sense that they're generally a little bit more labour intensive so they don't have the large scale and they need to be more focused."

Professor Carlo Leifert, director of the Centre for Organics Research at Southern Cross University in Lismore, believed more farmers would be willing to convert to organics if subsidies are made available.

He has recently called on the Federal Government to provide such support to organic farmers.

"It's not just a lack of R&D support and training; organic farmers here have to work in a much more volatile market environment," Leifert explained, pointing to European government's success in expanding the organic sector by offering subsidies.

"During conversion, it is most challenging for farmers because they already get reductions in yield [as] they're not allowed to use the inputs anymore. Their soil hasn't been improved enough to compensate for that and they cannot sell their product as organic, so they get a double hit," he said.

- ABC Rural