New Zealand-based dairy co-operative Fonterra has renewed organic milk supply contracts with its organic dairy farmers in the middle and lower North Island.
Farmers currently supplying organic milk in Manawatu, Taranaki and Wairarapa, who have contracts expiring in FY13, will have them renewed for a further two year term.
Similarly farmers in the Waikato and Bay of Plenty will have their contracts renewed for a further three year term.
Northland suppliers will not have their contracts renewed.
The dairy co-operative will update farmers who have contracts expiring in FY14 and FY15 by early next year.
Fonterra nutrition managing director Sarah Kennedy said that in the past 18 months, the company's organic business has returned to profitability.
"18 months ago we were losing money so we restructured the business to focus on markets in Asia, while also reducing our costs to ensure ongoing profitability," Kennedy added.
"We reduced transport costs by concentrating organic milk supply in the central and lower North Island.
"Our focus on Asia has also paid off with higher premiums for organic ingredients and increasing demand, mostly out of China.
"Based on this turnaround, we are now able to renew contracts for farmers in the middle and lower North Island who have contracts expiring this year. The remainder of our organic suppliers in these regions have between 1-2 years left in their existing contracts with us."
