Demand for organics continues to grow, with US, Europe recording a deficit.

Fonterra has paid $10.92/kg milksolids to more than 100 supply farms for organically produced milk, a record premium of more than $3 in the 2023-24 season.

Last season’s farmgate milk price for organic milk is a record, surpassing $10.80 in the 2022-23 season.

It is the fourth time that the organic milk payout has exceeded $10.

The $3.09 price margin over conventional milk is the biggest since the introduction of the market-based organic milk price in 2016-17. Previously the record margin was $3.05 in 2019-20.

The forecast FGMP range for the current season is $9.85 to $11.35, with a mid-point of $10.60, on which the advance payment rate is based.

Fonterra’s general manager for organics, Andrew Henderson, said the organics programme has been running since 2002 and in the past four years the number of supply farms has doubled.

“Demand for organic products continues to grow and to keep up with this we are looking to further expand the programme.

“Last season saw a shift from a surplus of organic milk globally over the previous four seasons to a deficit across both the United States and much of Europe.

“We were able to capitalise on this shift, which saw our sales volumes increase by 21.7% on a milk solids basis.

“We have seen particularly strong demand out of the US resulting new partnerships with some exciting and fast-moving startup brands that are already delivering considerable growth across butter, cheese and paediatric powders.

“Organic consumers are prepared to pay a significant premium for products they believe to be healthier and more sustainable.

“Our pasture-based farming offers a real point of difference that helps us to contribute to our co-op’s strategy and maximise value for our shareholders’ milk.”

Henderson said strong demand has enabled Fonterra to sell forward for 60% of its anticipated organics production volume in the current season.

“We continue to benefit from improving market conditions.

“The tight supply of organic milk in the US and Europe is expected to have a positive impact on demand and pricing for at least the next few years.”

Fonterra makes organic milk powder and butter at Morrinsville and UHT milk at Waitoa, and  delivers liquid milks to various processors around the country.

You can now read the most important #news on #eDairyNews #Whatsapp channels!!!

🇺🇸 eDairy News INGLÊS: https://whatsapp.com/channel/0029VaKsjzGDTkJyIN6hcP1K