NZ: Fonterra to cut organic dairy operations

By Katie Smith | 22 August 2011

Fonterra cuts organic dairy operations

New Zealand dairy giant Fonterra is planning to scale back its loss-making organic dairy operations.

Fonterra plans to reduce the number of organic farmers supplying the company. Farmers will be concentrated around Fonterra's "key" organic processing plant in Hautapu, it said today (22 August). The group also plans to reduce the amount of products processed at its sites in Waitoa and Morrinsville.

The company said no jobs will be lost as a result.

"We understand the big commitment many of our farmers have made to the organics programme and that this transition will not be an easy one to make," Fonterra's group director for supplier and external relations Kelvin Wickham said today (22 August).

"The decision to reduce our organics operation was not taken lightly but we need to get the business back into a break-even situation. Research shows people are now less willing to pay the premium for organic products.

"In addition, consumers are gaining more confidence that everyday products are being produced more sustainably and are more acceptable - so they no longer see the need to pay the premium for most organic products."

Fonterra plans to focus its organic product range on cheese, which it said provides the best returns, as well as emerging organic markets in Asia and Australia where "there are stronger returns and growth potential", it added.

Sectors: Dairy, Natural & organic

Companies: Fonterra

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