Fonterra moving Asia focus to organic dairy

The announcement comes shortly after Fonterra confirmed it will acquire 18.8% of Chinese infant formula manufacturer Beingmate. In the background is the ongoing 1080 poison threat, made last year but revealed by New Zealand police last week, through which an eco-terrorist demanded an end to the use of 1080 pesticide by the government.

Increasing demand from Asia​

Fonterra’s head of organics, Craig Deadman, said demand for organic products is growing, particularly in southeast Asia and China, even though they continue to be seen as speciality products.

“Chinese consumers are quickly developing a strong liking for organic dairy and organic options are always welcomed​,” Deadman said.

“[Our] strategy reflects the volumes our customers have indicated they need to satisfy increasing demand for organic dairy​.”

He said that Asian consumers were also favouring organic milk powders, especially infant formula and fortified milk powders.

“We have recently launched Anchor organic milk powder in China and it is already proving very popular with shoppers there​.” 

Organic payment rise​

Growing Fonterra’s Organics business is all about developing and selling higher-value speciality products at premium market rates, he added.

“This approach enables all Fonterra farmers to benefit from heightened returns​,” he said.

The news came as Fonterra announced it would increase its total certified organic payment to NZ$1.50 (US$1.1) per kg of milk solids (kgMS) from 1 June 2015. 

This reflects a new farmer payment of an additional 45 cents per kgMS to contribute to the costs of maintaining organic certification, in addition to the certified organic milk premium of NZ$1.05 per kgMS.