“Our forecast organic milk production for this season is 10 million kg MS, up from 9 million kg MS last season. This is in line with the increased conventional milk we’re expecting to collect this season and follows good pasture growth across the country.”

The co-operative’s organic sales forecast is up 25% compared to last year on a kilograms per milk solids basis and contracted sales are in a strong position for this time of the season, he said.

“Organic consumers are prepared to pay a significant premium for products they believe to be healthier and more sustainable. Our pasture-based farming in New Zealand offers a real point of difference that helps us to contribute to our co-op’s strategy and maximise value for our shareholders’ milk.”

While organic farmers do earn a premium, the programme contributes around 20% of its revenue back to the co-operative as a contribution to shared overheads and earnings – so all farmer shareholders benefit from it.

Fonterra’s organics programme has been running since 2002. Over the past four years the programme has more than doubled in size and currently includes more than 100 farms.

Global demand is growing as consumers are prepared to pay a premium for organic products. According to a recent Euromonitor report, the global organic dairy market is currently valued at around US$23 billion and is expected to reach around US$65bn by 2033.

Liquid milk (fresh and UHT) is the largest single segment of the organic dairy market, but there is significant growth in organic ingredient demand, including butter, cheese, milk powders and proteins.

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