The success of Fonterra’s organic business has prompted the Co-operative to introduce an independent organic milk price linked to market returns for organic products.
From June 2016, organic milk payments will reflect the performance of the organics business.
Organic farmers currently receive a fixed premium together with the conventional Farmgate Milk Price for their organic milk supply.
Organic farmers can choose to move to the new payment approach or stay under the existing payment system.
At a meeting with organic farmers, Craig Deadman, Fonterra’s global business manager – Organics, said paying market-linked prices for organic milk recognised the improved performance of the organic business, which reflected greater demand and stable prices for global organic milk products.
“Organic milk products provide high-value returns for the Co-operative. We want to grow our organics business over the long term. Linking the organic milk price to organic market returns will help us to increase the number of organic farmers.”
Mr Deadman said that historically market prices for organic milk products have been less volatile than conventional Milk Price products and the organic milk price has the potential to provide farmers more certainty in operating their Organics businesses.
He said the move also recognises the effort and commitment of Fonterra organic farmers to producing premium organic milk.
- Fonterra