Looking to build on its performance and growing demand for organic dairy products, Fonterra is expanding its organic milk program into New Zealand’s South Island.
Fonterra’s organic business has grown steadily and is now inviting applications from farmers in the South Island.
The recruitment will initially focus on farmers in Southland and the Canterbury region, including those interested in converting to organic production as well as existing organic farms.
This follows continued recruitment in the North Island, where more than 100 farms are part of the Fonterra Organic Program.
“We already have a strong performing organic business but have more room for growth based on increasing demand from customers around the world,” said Anne Douglas, group director for Fonterra Farm Source.
“Our plan is to be able to process organic dairy products at our Stirling site from the 2028/29 season, with the recruitment process starting now to allow time for converting farmers to achieve organic certification.”
Before work begins at Stirling to enable segregated processing of organic milk, the company aims to meet minimum recruitment targets in the South Island to ensure operational efficiency.
“Expanding the program seeks to offer South Island farmers another supply option and is also expected to benefit all Fonterra farmers based on the positive contribution our organic business makes to the wider co-op’s earnings,” Douglas added.
According to Fonterra, retail sales of organic dairy have shown steady growth in recent years. Andrew Henderson, Fonterra’s general manager organics, said the co-op supports shareholders throughout the transition to organic farming.
“Organic farming might not be the right fit for all shareholders, but for those interested in converting it has the potential to unlock additional returns,” Henderson said.
“For example, since the Organic Milk Price was first established in 2016/17, it has delivered an average premium of around $2 per kilogram of milk solids (kgMS) above the Farmgate Milk Price. There’s also the potential for lower input costs typical in New Zealand’s grass-fed organic systems.”
Fonterra’s organic business has operated since 2002, with Hautapu, Morrinsville and Waitoa UHT sites producing most of the co-op’s organic dairy products.
The Organic Milk Price was introduced in 2016/17 to provide suppliers with a market-based return for organic milk solids. Since the 2021/22 season, fully certified shareholding farmers have received more than $10 per kgMS.
New record highs have been reached for the past three years, with a final payout of $12.35 per kgMS last season. The forecast for 2025/26 is $13.10 per kgMS.
“At the heart of this business are farmers who are passionate about the principles of organic farming and who create goodness for customers and consumers around the world that value organic dairy,” Henderson added.
“We’re excited about its potential for further growth and would encourage any interested farmers to get in touch.”