Organic milk demand rises
There is a ‘‘crying demand’’ for organic milk but not enough cows to meet it, says Bill Quinn of the Organic Dairy Hub Co-operative of New Zealand.
He said New Zealand’s 17,000-strong organic cow herd was still much smaller than it was in 2010 when there were 29,000 cows.
‘‘The biggest issue with the domestic market is that we haven’t got 365 days’ supply. If it isn’t there for three weeks in winter, consumers will buy someone else’s product,’’ Quinn said.
To overcome the shortfall, the hub is boosting winter supply, with a further 130 per cent of June/July milk compared with last year. There was an ‘‘unbelievable’’ level of inquiry from farmers interested in converting to organics. The hub would take on a further eight farmers this autumn. The hub supplies milk for a number of liquid organic brands, including Lewis Rd, Kapiti (a Fonterra brand), Puhoi and Meadow Fresh (both Goodman Fielder), and Zany Zeus.
Foodstuffs head of external relations Antoinette Laird said over the past year organic milk sales had grown by 30 per cent and made up 4 per cent of all white milk sold in its stores.
A recent report by US company Allied Market Research said the global organic dairy food and drinks market was expected to reach $36 billion by 2022 from $14.5b now, an annual growth rate of 14.25 per cent. Organic milk supply in New Zealand peaked in 2010 when 127 farmers signed contracts with Fonterra, but the dairy giant later cancelled them, citing high transport costs.
In recent years prices have skyrocketed, bringing fresh impetus to the market. For the 2016-17 season, Fonterra is paying organic farmers $9.20 per kilogram of milksolids, compared with its forecast of $6 per kg/MS for conventional farmers, excluding the dividend.
Quinn said the hub took some credit for the premium paid by Fonterra to organic farmers, because it coincided with the arrival of the hub and the higher prices it was offering.
Fonterra refused to forecast what next season’s price will be, but Quinn believes it will rise above $9.20. It also declined to confirm the latest international price for organic milk powder, which was reported as being $14,000 per tonne last year, other than to say it remained ‘‘stable’’.
ASB economist Nathan Penny said he would assume that, with a 30 per cent rise in conventional powder prices, organic powder would have risen at least 10 per cent. Asked if the rise in prices being paid to conventional farmers might see a brake on conversions to organics, a Fonterra spokesman said it was too early to tell. ’’The organic milk price reflects the lower volatility in the organics markets where Fonterra operates. We are still seeing strong interest in converting to organics,’’ he said. Fonterra had hoped to process an extra 600,000kg/ms in this 2016-17 season, a figure it has met. It said there was a waiting list of farmers wanting to join its programme but would not say how many were already supplying the dairy giant.
Lewis Rd founder Peter Cullinane said the long term prospects for organic dairy were positive.