Fonterra scales back on NZ organic dairy operations
New Zealand-based dairy co-operative multinational Fonterra is cutting its dairy organic operations in New Zealand following a drop in profits.
The dairy giant, which owns Australians brands Brownes Calcium Plus, Bega Cheese, Peters and Brownes, and Riverina Fresh, plans to reduce the number of organic suppliers. Fonterra employs 2,000 people in Australia, collects 21 per cent of Australia’s milk, and operates 11 manufacturing sites.
“People less willing to pay the premium for organic products”
Fonterra’s group director supplier and external relations, Kelvin Wickham said, “We understand the big commitment many of our farmers have made to the organics programme and that this transition will not be an easy one to make.
“The decision to reduce our organics operation was not taken lightly but we need to get the business back into a break-even situation. Research shows people are now less willing to pay the premium for organic products.
“In addition, consumers are gaining more confidence that everyday products are being produced more sustainably and are more acceptable – so they no longer see the need to pay the premium for most organic products.”
The dairy firm also plans to focus its organic product range on cheese, which provides the best returns, as well as emerging organic markets in Asia and Australia where “there are stronger returns and growth potential.”
Impact on organic farmers
The Soil & Health Association of New Zealand (SHANZ) has described Fonterra’s move as a “shock” for New Zealand’s organic farmers “whose livelihoods, dedication and dreams have been shaken by Fonterra’s announcement.”
SHANZ Organic NZ spokesperson Steffan Browning said, “Fonterra has never really been committed to organic production. Aiming for 200 farms and a 140% increase in production from 2005 was a very limited vision. Organic production across all New Zealand’s dairy herd should have been in any long term vision for clean green 100% pure New Zealand.
“Most of Europe and Scandinavia and many other countries have targets for farm production conversion to organics, because the environmental and social benefits are well-recognised, but in New Zealand there appears to be a blind adherence to short term economic benefit including GE, even when non-GE alternatives are proven.”