Interested in Fonterra's Organics Programme? Learn more on what's required to get started and the current landscape.
Fonterra currently has four specialty milk programmes.
Many customers have very detailed acceptance specifications so they can provide their consumers with full traceability. Fonterra's Risk Management Programme (RMP) and comprehensive milk testing and monitoring programmes ensure that all milk is 'fit for purpose' – safe, suitable and truthfully labelled.
This RMP helps Fonterra farmers meet the required standards of excellence and Fonterra’s conditions of supply. Fonterra food safety programmes make a big difference to the quality of the milk we produce as a Co-op.
Organics
Winter Milk
Learn more about our Winter Milk programme.
Please note: we currently have sufficient supply and are not accepting new contracts.
Stolle
Stolle is a hyper-immune milk from Fonterra’s Specialty Milks stable. The Stolle programme has been operating in the Waikato since the early 1990’s.
a2 Milk™
Since September 2018, your Co-op has been manufacturing a2 Milk™ by Anchor. Our Co-op holds exclusive rights to produce and sell fresh a2 Milk™ in New Zealand.
Organic Milk
Generally, it takes up to three years for a farm converting to organic production to become fully certified to the standards required by Fonterra.
Download and view our latest Organic Advance Rates:
Organics is also referred to as biological, ecological or regenerative farming. An organic farming system is one that aims to work with natural biological cycles. Organic management recognises that, in any system, every element affects every other element and no one component can be changed or taken out of the system without affecting other components.
Organic management has a particular focus on optimal soil health and management. The soil is regarded as a living system on the basis that there is an essential link between creating healthy soils and healthy plants, animals and people. Fundamentally, organic management requires farmers to act proactively rather than reactively.
Organic management is based on a management system which aims to reduce or eliminate the need for most agricultural chemicals. Organic food is produced without the routine use of synthetic chemicals such as fungicides, herbicides, insecticides, growth regulators and soluble fertilisers.
But it is much more than “spray-free” or “residue-free”.
Organic farmers concentrate primarily on adjustments within the farm and farming system, in particular rotations using appropriate soil fertility management and cultivations, to achieve targeted production levels amd minimise the use of external inputs.
Key principles of organic farming are:
- Encouraging and enhancing biological cycles
- Maintaining and improving long-term soil structure and fertility
- Practising humane management of livestock
- Maintaining the genetic diversity of the agriculture system and its surroundings
- Cycling organic matter and nutrients within a production system
- Integrating management of soil, crop, and the environment for weed, pest and disease management
- Aiming to produce food of high nutritional quality in sufficient quantities
- Minimising all forms of pollution that may result from agricultural techniques
- Not allowing genetic engineering.
There are quite a few misconceptions about the principles of organic farming. Some of the more common misconceptions are discussed below.
- “Organic farming is farming without chemicals.”
All material, living or dead, is composed of chemical compounds. Although organic farming does seek to avoid the direct and/or routine use of synthetic chemicals, naturally-derived chemicals are frequently used in fertilising, plant protection and livestock husbandry. - “Organic farming merely involves substituting 'organic' inputs for so-called 'agro-chemical' ones.”
One of the founding principles of organic farming is working with natural cycles rather than trying to alter them by using external inputs. Although you could replace a number of non-organic elements with organic ones, the best farms work to improve their systems rather than use straight substitution of elements. - “Organic farmers don’t apply any fertiliser or manage weeds.”
While working with the natural processes, an organic farmer still needs to replace the nutrients that are lost with the removal of production of the farm. There are now a range of mainstream companies that offer organic certified products to farmers that provide the farm with essential elements.
Organic farmers are still required to manage the weeds on their farms to maintain farm production. This control includes more manual rather than chemical control of weeds. - “Organic farming means that production will drop by 20% plus.”
An organic system can be as productive as a conventional system, depending on the goal of the farmer. Any potential drop in production would depend on the farming system that is run prior to converting to organics and the production system that the farmer wants to run as their organic system. - “Organic farmers can’t look after their stock.”
An organic livestock farming system needs to have healthy stock to make a profitable farm. Therefore the animals need to be well looked after and treated well. The animals can be treated with certified organic inputs and a lot more work on disease prevention is carried out. However if an animal does not respond to organic treatment, then the farmer must use other methods of treating the animal. If this means that if a vet and conventional treatments are used, the animal is dealt with according to the certification level of the farm.
There are a number of products that have been approved for use in organic farming systems that can be used to treat animals. However in any farming system, the best cure is prevention, and this is the approach that organic farmers embrace.
All New Zealand livestock farmers must adhere to the Animal Welfare Act and treat animals accordingly. - “Organic farming is a return to farming as it was pre-1940’s.”
Farming practises and knowledge has greatly evolved since the early 1900’s and organic farming – like conventional farming – is making use of advances in our understanding of such things as mycorrhizal associations, rhizobia and the rhizosphere, the turnover of organic matter and other areas of soil life, crop and animal husbandry that modern science has revealed. Far from being a return to the past, organic farming is an agriculture system for the future. - “Organic farming requires a change of lifestyle on the part of the farmer.”
In recent years, organic farming methods have been adopted by a wide variety of farmers for a variety of reasons, including economic and social as well as environmental motives. Organic farming is certainly not the preserve of radical environmentalists. - “Organic farmers have higher on-farm costs.”
While some cost may increase under an organic production system, others will reduce. On average, costs like labour, brought in feed (per kg of dry matter) and fertiliser (per kg of nutrient) may increase, whilst other expenditure, such as vet bills and animal health costs, tend to decrease. On average, a well-run organic farm will see a drop in on-farm operational costs over time.
Becoming a certified organic farmer means that the farm is run under a set of rules and the farm and processers are audited annually by independent organic certifying bodies. There are a number of levels of certifications in New Zealand, and these then determine which market product can be sold into. The level of certification required for the Fonterra Organic programme is the United States Department of Agriculture National Organic Programme (USDA NOP) and Canadian Organic Regulations (COR). This gives the best access to markets around most of the world.
The time it takes to gain USDA NOP and COR certifications will depend on the farm system’s starting point and what has been use as a farm input. However the general rule is that it takes three years to certify the land from last use of a non-certified input and 18 months for stock. To find out where your farming system sits, you should always talk with a certifying body.
There are two certifying bodies in New Zealand that manage and conduct on-farm certification: BioGro and AsureQuality. Both work with input companies to approve inputs for use on organic certified farms.
We have now had the Organic Milk Price for some time and it seems right to look back and remind ourselves the reason why it was implemented:
- Reduce the volatility of milk price paid to farmers within a season (from opening forecast to closing price).
- To pay a market price that if fair and reflects the true value of organic milk.
The organic milk charge ensures that we can pay farmers that take the time and energy to supply organic milk a market price whilst adding value. This process is taken by all business units within our Co-op; the major difference is the price of the milk and who gets it.
The charge value of 20% of the Organic Milk Price was selected not at random, but one that was looked at as being a fair amount for our Co-op. It represents a mid-point return for many of the different business units that our Co-op has.
It is important to note that this charge is not profit for our Co-op. Within the organic programme there are a number of assets that we leverage, such as the audit and food safety team, planning teams, sales teams, finance teams plus many others. Other costs that are also covered by the organic milk charge include plant improvements to help with organic manufacturing.
If we were to try to replicate the assets we have access to now, the actual total costs could be a lot higher and impact directly on the returns to you.
We do appreciate the interest you have in making your Organic programme the best it can be. We don’t mind the difficult questions on what we are doing; in fact, this shows us that you are challenging us to make the programme better for you and future organic farmers.
Please contact Stuart Luxton - Organics Business Relationship Manager.
Email: stuart.luxton@fonterra.com or specialty.milks@fonterra.com
Mobile: 021 241 8797
- AsureQuality - www.organiccertification.co.nz
- BioGro - www.biogro.co.nz
- USDA - www.organiccertification.co.nz
- View the Farmgate Milk Price Advance Rates
Winter Milk
Please note the demand and supply of winter milk are closely matched.
There is sufficient supply to meet market requirements and we are not able to facilitate new allocation of winter milk contracts at this time.
Fonterra collects Winter Milk between 16 May and 15 July in the North Island, and between 1 June and 31 July in the South Island.
There are two classes of Winter Milk:
- Contract Winter Milk
- Uncontracted Winter Milk (or Winter Premium Milk)
Contract and Uncontracted Winter Milk attract a payment premium over the standard milk price.
For further information on our Winter Milk Programme, please refer to the latest handbooks:
- Stepped premiums: Recognising when the milk is needed the most.
- Winter milk period: 61 days for contracted and uncontracted winter milk.
- Under and over supply volumes: We allow tolerances for under and over supply.
Fonterra has supply commitments to various customers, both local market and export. Contracted winter milk provides greater certainty to Fonterra of supply to meet these commitments. Uncontracted milk provides an option for suppliers to provide milk with no commitments and Fonterra the option of selectively manufacturing higher returning products.
As the name suggests, Contract Winter Milk suppliers have a formal contract with Fonterra which sets out minimum quality and environmental standards, a minimum daily supply volume, a price premium and a defined supply period of 61 days.
Uncontracted Winter Milk is the milk supplied during the same period as Contract Winter Milk, which is not supplied under the Winter Milk Contract or any other specialty milk contract. Uncontracted Winter Milk receives a premium price per kgMS above the standard milk price. The programme has been designed to provide an opportunity for farmers to take advantage of the higher price Fonterra can command for milk it receives over this period.
We require the highest quality milk for our winter milk customers. Because of this, Contract Winter Milk and Uncontracted Winter Milk need to meet certain quality standards to avoid penalties being incurred by the farmer.
There are specific effluent and sustainability compliance requirements.
Please refer to the Winter Milk Handbooks and the Fonterra Farmers' Terms of Supply for the specific requirements for supplying Winter Milk (including Milk Quality and Environmental Sustainability).
To find out more information on our Winter Milk Programme, please reach out to your Co-operative Services Area Manager or download one of our Winter Milk handbooks below:
The market for dairy commodities can be extremely volatile. This in turn creates volatility in our Farmgate Milk Price. Fonterra farmers who supply milk in winter face unique challenges around this, particularly given they produce a large portion of their milk in June but only find out the Farmgate Milk Price for that month a few days before when we typically go out with our opening forecast for the season.
That’s why we’re trialling a new tool, Winter Milk Fixed Milk Price, that enables winter milk contract holders to get a fixed price in February 2024. This will only be available to Winter Milk Contract holders.
The aim of the new tool is to give you more control when budgeting, planning, and managing your business.
More information on the new Winter Milk Fixed Milk Price tool including the application rules and agreement terms can be found in this booklet or talk to your Co-operative Services Area Manager.
Why are these kinds of tools important?
Fixed Milk Price is part of a number of financial tools to assist current farmers and the next generation of farmers.
We recognise that not all farmers are the same, nor do they have the same business objectives or the same appetite towards risk.
Providing you with simple solutions gives you greater choice and flexibility to run your farm based on your own needs, while at the same time supporting the Co-op.
The Fixed Milk Price programme not only helps farmers manage risk, it also enables Fonterra to provide price risk management solutions to our customers. These solutions are important to customers and a key reason that they prefer Fonterra as a supplier. Customers all over the world buy these and use them to bring certainty to their businesses and to give them the confidence to innovate and launch new products. Products sold with price risk management solutions also tend to attract higher margins. So overall there is a benefit to all shareholders.
Stolle Milk
Stolle is a hyper-immune milk from Fonterra’s Specialty Milks stable. The Stolle programme has been operating in the Waikato since the early 1990’s.
Initial development of the Stolle concept commenced in Ohio in 1958 by Ralph Stolle. This concept has been developed over time and today there are around 26,000 cows involved in Fonterra’s Stolle programme, all within close proximity to Morrinsville in the North Island of New Zealand. Fonterra is the only manufacturer of Stolle powder globally. Each cow in the programme is treated to stimulate the natural production of immune factors in their milk. Studies suggest products made from this hyper-immune milk can provide a number of significant health benefits for humans.
Stolle herds are carefully selected based on location, herd size, facilities and very importantly must demonstrate an exceptional milk quality history.
For more information on the Stolle Programme, please contact the Service Centre on 0800 65 65 68. Please note there are currently no vacancies in the programme
a2 Milk™
Since September 2018, our Co-op has been manufacturing a2 Milk™ by Anchor. Our Co-op holds exclusive rights to produce and sell fresh a2 Milk™ in New Zealand. This product line is largely supplied by two farms.
a2 Milk™ is completely natural cows’ milk that people with digestion challenges may find easier to consume.
All cow’s milk contains a1 and a2 beta casein protein, however we can select cows that only produce milk that contains the a2 beta casein protein.
Some people find that they can consume a2 Milk™ without challenges to their digestive system.
The New Zealand Fresh Milk License is an exclusive licensing arrangement for Fonterra to produce, distribute, sell and market a2 Milk™ fresh milk for sale in New Zealand.
It’s about consumer choice – Fonterra markets a number of different products to meet consumer desires, and a2 Milk™ products will be another way to meet those consumer demands.
Today a range of products exists to meet consumer needs and tastes – lactose-free, organic and high protein.
No. Consumers will always want choice; and consumers demands will continue to evolve - it’s up to us to evolve with them.
Most of the value generated by our a2MC Fresh Milk Licence relationship will be returned to all farmers through the dividend, but a2MC will also pay a retainer and utilisation payment to participating farms. This:
- Recognises the costs a farmer may incur to provide the premium milk supply;
- Aligns with other speciality milk programmes which offer participating farmers the ability to add value to their business.
Production is going well and our market share continues strongly.
We are processing the milk at our Palmerston North plant, so it’s most cost-efficient to source milk from as close to the site as possible.
This doesn’t mean that we will only ever make a2 Milk™ products in Palmerston North, but this is where a2 Milk™ by Anchor is made for now.
The milk is being supplied by Fonterra-owned farms so that all Co-op farmers can benefit from the value created. Milk volume is supported by two other Fonterra suppliers.
a2 Milk™ by Anchor can be found in New World, Pak N Save and Countdown stores.