Fonterra reduces organic suppliers

New Zealand dairy giant Fonterra is cutting the number of its organic supplier farmers across the North Island by about half. It is restructuring “to bring the loss making business into a break-even situation”, according to group director supplier and external relations Kelvin Wickham.

“The co-operative remains committed to the organics market, but growth in this market has significantly slowed since the global financial crisis,” he said in a statement. “Market indications are it will not recover to previous levels.”

Fonterra entered the organic market with its first production of New Zealand-made organically certified cheese and milk powders in 2002. However, since consumers are now not willing to pay a premium for organic, it is now reducing the numbers. In 2005, Fonterra had 31 organic farmers, and sought to increase it to 200 in order for it to satisfy export markets. At the time of the cuts, it has 100 farmers producing milk certified as organic.