New Zealand’s organic dairy farmers are heartbroken by the news that Fonterra plans to drastically reduce the organics side of its business. 

Fonterra announced yesterday that it would be halving the number of organic dairy farms it takes milk from.

Fonterra says the global financial crisis has hit the organics sector hard, and its research shows people are no longer prepared to pay premiums for organic goods.

The company said it would be concentrating its North Island organic suppliers, around its main organic processing site – in Hautapu, to reduce its transportation costs, and will focus on producing organic cheese.   

However, Fonterra has done a complete u-turn on organics in the space of a year. 

In May 2010 Fonterra was telling New Zealand it expected its organic business would grow by 140 percent over the next five years, and that it could barely meet the burgeoning global demand.

Then Fonterra told media that its organics business had grown a massive 60 percent in the last two years alone.

Its case was supported by Trade Minister Tim Groser who said global sales of organic dairy goods were up 400% between 2007-2009. 

Fonterra’s organic milk suppliers say the news came like a bolt out of the blue – with Fonterra sending an email telling them to attend meetings and advising them of the changes, the very same day.

Manawatu organic dairy farmer Gray Beagley says the mood at his meeting was one of disillusionment. 

“We had been told in the past that everything was positive and the growth was obviously in double digits – 18% prior to the global financial crisis – dropped down to 9 percent during it.

“And it’s still in single figures now, which I would say is probably still better than a lot of sectors in this current environment. So there was some pretty raw emotion and disappointment really.”

Gray Beagley says while many organic dairy farmers will feel devastated because of the time, money and passion they have invested into their operations – probably 99 percent of Fonterra’s shareholders would still be happy.

He says if the company had worked harder to get more farmers to convert to organics, it could have achieved critical mass and not incurred such transport costs.

Mr Beagley’s wife, Andrea, is asking for organic farmers affected by the move to contact her on 0800 327 646 (0800 FARMING).

Country 99TV understands Fonterra executives have been justifying the move by telling farmers that up to 80 percent of the organic milk the company was collecting was just mixed with ordinary milk.

Organic dairy farmers receive a premium of more than a dollar per kilo of milk solids they produce.

It is also telling farmers at the organic meetings that the company made fundamental errors in its business plan – it was too optimistic in setting targets and now it can’t meet them.  

Fonterra says it will honour all of its existing contracts and will work with farmers as they transit out of organics.

And that’s something that organic dairy farmers like Mr Beagley say they simple aren’t prepared to do.