Monday, 15 April 2013 15:57

Fonterra strengthens organics business

Written by 

Fonterra is renewing contracts for some of its organic dairy farmers in the middle and lower North Island, following a turnaround in its niche organics business.

 Managing director fonterra nutrition, Sarah Kennedy, said the cooperative has worked hard over the past 18 months to return its organics business to profitability.

"Eighteen months ago we were losing money so we restructured the business to focus on markets in Asia, while also reducing our costs to ensure on-going profitability," Kennedy says. "We reduced transport costs by concentrating organic milk supply in the central and lower North Island.

"Our focus on Asia has also paid off with higher premiums for organic ingredients and increasing demand, mostly out of China.

"Based on this turnaround, we are now able to renew contracts for farmers in the middle and lower North Island who have contracts expiring this year. The remainder of our organic suppliers in these regions have between 1-2 years left in their existing contracts with us.

"We want to ensure we build a business that is sustainable. With that in mind, we are conducting a thorough review to ensure we have the right business model to cope with volatile markets and will come back to our farmers early next year.

"We know our farmers are looking for certainty but it's critical we get this right for the long-term benefit of the whole cooperative."

The organics plans outlined to farmers today mean:

• Farmers currently supplying organic milk in Manawatu, Taranaki and Wairarapa, who have contracts expiring in FY13, will have them renewed for a further two year term.
• Farmers currently supplying organic milk in the Waikato and Bay of Plenty, who have contracts expiring in FY13, will have them renewed for a further three year term.
• Fonterra will continue to concentrate organic milk supply in the middle and lower North Island, meaning Northland suppliers will not have their contracts renewed.
• Fonterra will update farmers who have contracts expiring in FY14 and FY15 by early next year.

Fonterra is meeting with farmers in Northland, Waikato, Manawatu and Taranaki over the next two days to provide a full update on its organics operations.

More like this

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

Editorial: A new era for two co-ops

OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.

Should co-op sell its consumer brands?

OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.

Featured

'One more push' to eliminate FE

Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

National

Machinery & Products

New McHale terra drive axle option

Well-known for its Fusion baler wrapper combination, Irish manufacturer McHale has launched an interesting option at the recent Irish Ploughing…

Amazone unveils flagship spreader

With the price of fertiliser still significantly higher than 2024, there is an increased onus on ensuring its spread accurately at…

» Latest Print Issues Online

Milking It

Tough times

OPINION: Dairy industry players are also falling by the wayside as the economic downturn bites around the country.

MSA triumph

OPINION: Methane Science Accord, a farmer-led organisation advocating for zero tax on ruminant methane, will be quietly celebrating its first…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter