Fonterra is expanding its organic milk programme into New Zealand’s South Island for the first time, as it looks to build on the strong performance of the business and growing global demand for organic dairy products.
Group director Farm Source, Anne Douglas, said the move reflects confidence in the long-term growth prospects of Fonterra’s organic business and its contribution to the co-op’s overall earnings.
The co-op is inviting applications from conventional farmers interested in converting, as well as existing organic producers. Initial recruitment will focus on farms in Southland and extending up to the Canterbury region. This will sit alongside ongoing recruitment in the North Island, where more than 100 farms are currently part of the organic programme.
“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.
“Our plan is to be able to process organic dairy products at our Stirling site from the 2028/29 season, with the recruitment process starting now to allow time for converting farmers to achieve organic certification.”
Fonterra said capital works at its Stirling site will enable segregated processing of organic milk, with construction to begin once sufficient supply is secured to ensure operational efficiency and scalability.
The expansion comes as global organic dairy continues to record consistent year-on-year retail value growth, driven by consumer demand for products aligned with sustainability, animal welfare and clean-label credentials.
Fonterra said its broad market access, diversified product portfolio and established customer partnerships position it well to capture this demand.
GM Organics, Andrew Henderson, said the co-op provides structured support to farmers considering a 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 shareholders, but for those interested in converting it has the potential to unlock additional returns.”
Since the Organic Milk Price was introduced in the 2016/17 season, it has delivered an average premium of around $2 per kilogram of milk solids above the Farmgate Milk Price. Henderson also pointed to the potential for lower input costs typical of New Zealand’s grass-fed organic systems.
Fonterra’s organic business has been operating since 2002, with processing currently centred at Hautapu, Morrinsville and Waitoa UHT. Since the 2021/22 season, fully certified organic suppliers have received an Organic Milk Price exceeding $10 per kgMS, with record payouts achieved in each of the past three years. Last season’s final payout reached $12.35 per kgMS, while the current forecast for the 2025/26 season is $13.10 per kgMS.
“At the heart of this business are farmers who are passionate about the principles of organic farming and who create goodness for customers and consumers around the world that value organic dairy,” Henderson said.
“We’re excited about its potential for further growth.”
