Following Fonterra’s recent announcement that it plans to introduce a market-linked organic milk price for its organic milk farmers, the Co-operative has forecast an opening market-linked organic milk price of $9.20 per kg milk solids for the 2016/17 season.
Paul Grave, Head of Co-operative Affairs, Waikato, says while the opening forecast organic milk price is a big step up from the $5.65 per kgMS payment organic farmers currently receive (the organic fixed premium on top of the Farmgate Milk Price), it reflects consistently high prices for organic milk products in its global markets.
Mr Grave said the marketplace for organic milk is very competitive and the market-linked organic milk price will help Fonterra to secure a steady stream of organic milk.
“The growth of the organics business is good news for the whole Co-operative. Organic farmers actively participate in creating value by providing Fonterra with a certified organic milk stream and all farmer shareholders share in the value created by the organic business through dividend payments.”
Increasing demand for organic milk products, and organic food in general, is leading to high prices for these products in international markets. While global milk prices have been volatile recently, prices for organic dairy ingredients have remained at the same relatively high levels since 2013/14, said Mr Grave.