Growing Organic: Fonterra's South Island Plans Gather Momentum

The Future is organic!

There is real momentum building in the organic dairy sector, and for South Island farmers, a significant opportunity has arrived.

Fonterra has announced its intention to expand organic milk collection to the South Island for the first time, with plans targeting the 2028-29 season. A formal board decision is expected later this month. But whether that expansion proceeds depends on one thing: farmer commitment.

Andrew Henderson, Fonterra's General Manager of Organics, shared an update directly with OANZ members at our recent Organic Council Meeting. He reported strong interest from both existing organic farms and regenerative farms considering conversion, and noted that interest from dairy, sheep, and beef farmers has been an encouraging boost to the sector. The co-operative is targeting 30 or more farms in the South Island, with recruitment focused on Southland, Otago and Canterbury, and milk to be processed at Fonterra's Stirling plant in South Otago.

To green-light work at the Stirling site, Fonterra needs to reach around 75% of its target milk solids through farmer sign-ups. According to Mat Cullen, Farm Source's Regional Head for the South Island, that threshold has already been reached, which is an encouraging sign for the announcement expected this month.

The financial case for converting is strong. Since the organic milk price was first established in the 2016-17 season, it has delivered an average premium of around $2/kg MS above the conventional milk price, along with the potential for lower input costs typical of New Zealand's grass-fed organic systems. Record highs have been set for the past three seasons, with the current forecast for 2025-26 sitting at $13.10/kg MS. Globally, US demand for organic dairy remains strong, and Andrew noted that Fonterra believes it could convert five times its current organic supply volume to meet what customers are asking for.

For South Island farmers weighing up whether this is the right move, now is the time.

Thinking about converting? Here's where to start.

Get certified! New Zealand has two dedicated organic certification bodies that can guide you through the process.

BioGro New Zealand is the country's longest-standing organic certifier, operating for over 40 years and offering certification across a wide range of production systems, including dairy, horticulture, livestock, and processing. BioGro provides practical support throughout the conversion process, with a team that understands the realities of farming in NZ. Visit biogro.co.nz to learn more or get in touch.

AsureQuality Organics offers organic certification with a free 2-3 hour no-obligation on-farm pre-conversion meeting, and decades of South Island auditing experience across dairy, meat processing, sheep, beef, arable, vegetable and apiculture production. There are no upfront costs, with charges beginning only once you submit your Organic Management Plan. Visit asurequality.com/organic-certification or call 09 573 8000.

This is a moment of real momentum for the organic sector, and for South Island farmers weighing up their options, the timing could not be better. Fonterra's expansion signals growing confidence in the future of organic dairy, and with strong certification support on hand, the pathway is clearer than ever.