Organic farming given Dairy Board's blessing

By PHILIPPA STEVENSON

The Dairy Board has thrown caution to the wind and will encourage some farmers to produce organic milk to satisfy a $200 million demand.

When it launched an organic butter spread made from Austrian milk in the UK nine months ago, the board said a cautious approach to the rapidly growing organic foods market was well justified.

Kevin Marshall, the board's director of global research and development, said production of Anchor Organic could be switched to New Zealand if circumstances justified it, but "while the proponents of organic production often paint a picture of exponentially expanding demand, the evidence ... is rather less convincing. We need to proceed with care."

Now, a report suggesting organic dairy products will become a profitable, long-term niche market worth up to $200 million a year within a decade has convinced the board to foster organic farming in New Zealand.

New Zealand currently exports about $60 million-worth of organic products, mostly fruit and vegetables.

Board commercial strategist Dr Ellen Carter, who investigated market possibilities and wrote the report, said the organic market was unlikely to exceed 5 per cent of the board's $7.6 billion business, but "it is a niche we want to exploit."

The decision has been welcomed by the fledgling Organic Dairy Producers Group, which was formed to push the organic dairying concept after fears New Zealand was missing out on a lucrative market.

Group chairman Warwick Roberts said it was a triumph the board had found potential in the organic market.

Dr Carter said a critical volume of at least a million litres of milk at the peak of the season would be needed for the production of export organic products to be cost-effective. That would require at least 260 farms in a fairly concentrated area, though farms could be "cherry-picked" and a whole district would not have to convert to organic farming.

It was likely an existing dairy factory could process the milk, switching to organics in the same way it changed between different traditional milk products.

At present, fresh milk and yoghurt were the main organic products on the market in affluent countries such as Japan, the US and in Europe, but it was expected that this could expand to include a full range of dairy products.