New Zealand-based dairy giant Fonterra has announced that it will expand its organic milk business to “help meet growing demand”.

Fonterra said the decision followed its recent review on how best to position this speciality business for sustained growth.

At meetings with New Zealand farmers last week, Fonterra’s global business manager for Organics, Craig Deadman, said Fonterra was “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,” Mr Deadman said. “This strategy reflects the volumes our customers have indicated they need to satisfy increasing demand for organic dairy,” he said.

Demand for ‘organic’ increasing in export markets

Mr Deadman said that, while organic dairy remained a speciality product, more people were choosing organic dairy products in South-East Asia, China and the US.

“Chinese consumers are quickly developing a strong liking for organic dairy and organic options are always welcomed,” Mr Deadman said.

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,” Mr Deadman said.

Mr Deadman said that growing Fonterra’s Organics business was about developing and selling higher-value speciality products at premium market rates.

“This approach enables all Fonterra farmers to benefit from heightened returns,” Mr Deadman said.

Certified organic milk payment to increase

Fonterra said it would also increase the total certified organic payment in NZ to its organic farmers to $1.50 per kg milk solids from 1 June 2015. The Company said this reflected 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 kg MS.

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