Dairy giant Fonterra opens South Island recruitment for organic milk supply

Fonterra says rising global demand is driving new organic opportunities for farmers. Photo / Brett Phibbs

Fonterra says its organic business has been going from strength to strength in recent years, and the dairy co-operative is now inviting applications from South Island farmers for the first time.

The new South Island recruitment of farmers interested in converting (as well as existing organic farms) will initially focus on those around Southland and up to the Canterbury region.

This is in addition to Fonterra’s ongoing recruitment of organic farmers in the North Island, where more than 100 farms are already part of the Fonterra Organic Programme.

Anne Douglas, group director for Fonterra Farm Source, said the expansion into the South Island was another positive milestone for the co-op.

“We already have a strong performing organic business, but have more room for growth based on increasing demand from customers around the world.”

Douglas said Fonterra planned to process organic dairy products at its Stirling site from the 2028/29 season, with recruitment starting now to allow converting farmers time to achieve organic certification.

Before work begins at Stirling to enable segregated processing of organic milk, Fonterra said it was looking to meet minimum recruitment targets in the South Island to ensure operational efficiencies.

“Expanding the programme 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 said.

In recent years, the global organic dairy category has shown consistent year‑on‑year growth in retail sales value.

Fonterra said it was well-positioned to capitalise on rising demand through its diverse product range, broad market access and strong customer partnerships.

Andrew Henderson, Fonterra’s general manager organics, said the co-op offered support to shareholding farmers throughout their transition to organic production.

“Our support package includes conversion incentives, advice, networking opportunities and linking farmers up with peers who can mentor them through the process.”

Henderson said organic farming might not be the right fit for all the co-op’s farmers, but it could unlock additional returns for those interested in converting.

“For example, since the organic milk price was first established in 2016/17, it has delivered an average premium of around $2 per kgMS above the farmgate milk price.

“There’s also the potential for lower input costs that are typical in New Zealand’s grass-fed organic systems.”

Fonterra’s organic business has been operating since 2002, with Hautapu, Morrinsville and Waitoa UHT currently producing the majority 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 their organic milk solids.

Since the 2021/22 season, fully certified shareholding farmers in the programme have received an organic milk price of more than $10 per kgMS.

New record highs have been set in each of the past three seasons on the back of growing demand, culminating in a final payout of $12.35 per kgMS last season.

The current organic milk price forecast for the 2025/26 season is $13.10 per kgMS.

Henderson said Fonterra was excited about the further growth potential of organic milk.

“[We] would encourage any interested farmers to get in touch.”

– Content supplied by Fonterra