Fonterra creaming it over A2
Consumers are paying top price for the newly launched Anchor A2 milk, but Fonterra is paying no more to the farmer who supplies it with the special variety.
That approach is at odds with the deal the dairy giant has with organic producers, in which it pays farmers well over $2 extra per kilogram of milksolids, compared with conventional farmers.
The new line of milk is fetching the premium price of $3.99 a litre in North Island supermarkets.
Federated Farmers dairy chairman Chris Lewis said it was smart of Fonterra to be charging a high price for the milk while paying suppliers the same.
‘‘If they are managing to get a premium for the milk, then good on them.’’
Synlait supplier and Canterbury farmer Michael Woodward said he received 20 cents per kg for his A2 milk above conventional. ‘‘Fonterra’s not offering any incentive for farmers to shift over because they don’t want to be seen to be disadvantaging farmers who supply it with A1 milk,’’ he said.
A1 milk contains a beta-casein which has been linked to a rising tide of type 1 diabetes, although Fonterra has argued against the findings.
However after years of holding out, it has now joined forces with the A2 Milk Company, which offers a proprietary testing system and a marketing brand that Fonterra is keen to exploit.
Fonterra Brands New Zealand acting sales director Grant Watson said ‘‘the consumers have spoken’’ as the reason why Fonterra had dipped its toe into A2.
‘‘A2 brings to Fonterra a fantastic product that meets consumer needs. Twenty years ago we had two varieties of milk, today we have 10, ranging from organic to lactose-free. There is a need there and we will deliver.’’
‘‘It’s about providing consumers with choice, we can create value across both varieties. A1 milk is great, A2 is great. We believe it’s priced appropriately,’’ Watson said.