The organic dairy industry is welcoming Fonterra's announcement that it will lift the price it pays for organic milk, in an attempt to attract more suppliers.
Fonterra has announced it will increase the premium it pays for organic milk solids by 45 cents, to $1.50 a kilogram of milk solids over and above the $4.70 farmers supplying standard milk are forecast to get.
The co-operative said it wanted to build up the number of organic farmers supplying milk because there had been a 40 percent drop in the last five years.
Organic Dairy and Pastoral Group chair, Bryan Clearwater, who is also a dairy farmer in South Canterbury, sad it was a first step.
He said with demand for pure dairy products rapidly increasing, Fonterra should put more effort into encouraging farmers to convert to organic production.
He said only time will tell whether the new premium is enough to get more farmers on board with organic dairying, but he is on the fence as to whether it will work.
"I'm not overly confident on a personal level, but they've done their homework and I think with the support of existing suppliers it can be achieved.
"I just look at my own business and think well am I going to go out to my neighbours and say listen for an extra 45 cents you can farm organically and do so profitably? I just can't do that. Here in the South Island our cost structures are very different from those in the north and arguably the incentive provided in the North Island could well be sufficient to attract new entrants."
