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Fonterra restructures organic operations
Fonterra’s Kelvin Wickham says the cooperative is committed to the organics market, but as growth has significantly slowed since the global financial crisis, Fonterra needs to make changes.
Fonterra is meeting with its organic famers to take them through a four-point plan to bring the loss– making business into a break-even situation.
The plan includes:
- Concentrating Fonterra’s North Island organic suppliers in one hub around its key certified organic processing site, Hautapu. This will reduce the number of Fonterra’s organic suppliers.
- Reducing the amount of product processed at Fonterra’s other two certified organic sites, Waitoa and Morrinsville.
- Prioritising the organic product range to focus on cheese, which provides the best returns.
- Focusing on emerging Asian and Australasian organics markets where there are stronger returns and growth potential.
Wickham, director of external relations, said: “We will honour all of our organic contracts through to their formal termination dates, which in some cases are 4–5 years away and we will work with our farmers as they make the transition out of the organics programme.”
Wickham says the organics market was hit hard by the global financial crisis and market indications are that it will not recover to previous levels. He said: “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.”
Source: Fonterra
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