Fonterra’s organic farmers are set to receive a record-high payout of $12.35/kg MS for the 2024–25 season, marking a milestone moment for New Zealand’s largest dairy co-operative.
The result reflects not only favourable market conditions but also a robust demand story for organic dairy, according to Andrew Henderson, Fonterra’s General Manager for Organics.
“This record organic payout is a milestone for Fonterra. It marks a fifth straight year of organic milk price increases, highlighting the exceptional efforts of our farmers and the strong appetite for organic milk,” Henderson said.
Organic dairy sales surged 27% year-on-year in the 2025 financial year, driven particularly by the United States, where consumers continue to pay premiums for grass-fed, organic dairy from New Zealand. Fonterra’s organic milk collections rose by 7.5% to 9.7 million kg MS, underscoring the co-op’s capacity to meet rising global demand.
Looking ahead, the forecast organic milk price for the 2025–26 season remains exceptionally strong, in the range of $12–$14/kg MS, with a midpoint forecast of $13/kg MS — another record projection.
Fonterra’s previous high for organics was set in 2023–24 at $10.92/kg MS, meaning the current payout represents a significant uplift in just two years.
Growth Momentum in Organics
The co-operative is doubling down on its organic programme, particularly in the Waikato region of New Zealand’s North Island, where it sees the most immediate potential for expansion.
“Demand for organic products continues to grow, and to support this trend, we’re looking to expand our organics programme further. We encourage farmers interested in converting to organic production to get in touch with us about the support options available,” Henderson added.
Fonterra positions organics as a premium-value stream that aligns with broader sustainability and health trends. In markets like the US, organic dairy now aligns with consumer preferences for grass-fed, regenerative, and clean-label nutrition, providing New Zealand’s exports with an added advantage.
Industry Perspective
The record price underscores how organics are evolving from a niche play into a resilient, high-margin category for New Zealand dairy. With mainstream dairy payouts under pressure from global commodity cycles, organic farming represents a stable, value-accretive opportunity for both farmers and the co-op.
At the same time, the expansion of the organics programme raises essential questions around supply chain certification, conversion costs, and balancing conventional versus organic volumes — areas where Fonterra will need to manage farmer incentives and market access carefully.
Henderson summed it up: “These exceptional results directly reflect the care and effort our farmers invest in their land, animals and milk production. We’re eager to keep building on their hard work and achievements in the coming season.”
