Fonterra expects to see the organic side of its dairy ingredients business grow 140 per cent over the next five years.

Driven by the ever increasing popularity of organic dairy products, Fonterra said its organic dairy ingredients, which are used in cheese, milk powder, proteins, and butter, are set to enjoy continued high growth.

Fonterra has more than doubled its organic milk supply over the past year to help meet demand and has accredited manufacturing sites at Hautapu, Waitoa, and Morrinsville.

Room to grow

The rate of progress partially reflects the small starting base – Fonterra said organics currently account for only one per cent of its revenues.

However, Rick Carmont, head of organics at Fonterra, said: “Although organics is a small part of Fonterra’s milk supply and production, dairy is the fastest-growing category in the international organic market, and having seen 60 per cent growth over the last two years we are well placed to build on this.”

Carmont added that Fonterra is actively recruiting farmers to its Organics Conversion Programme to help the company deliver on its growth expectations. He highlighted the advantages of turning to organics, including a three year support system guaranteeing premium payments from day one of the contract and no cap on volumes supplied.

Mixed signs

The comments from Carmont came as the New Zealand trade minister Tim Groser published a report on the organic sector, highlighting continued rapid growth, especially in high-value markets such as the United States and Europe.

Despite the optimism about the potential in the organic sector, there is some evidence that the category has come under pressure during the recession.

A recent Soil Association report said that while demand grew across Europe as a whole in 2009, organic food and drink sales in the UK were down 12 per cent. But the certification body and lobby group said organic milk did perform a lot better than other organic products in the UK, with sales up 1 per cent compared to 2008.