Price rises on organic milk after infant deal

Australian Consolidated Milk has increased the price it will pay for organic milk next season, becoming one of three processors to ink a deal with organic infant-formula business Bellamy’s Australia.

Fonterra Australia will now source organic milk from Tasmania, supporting production of baby formula at Fonterra’s Darnum site in Victoria, while Bega Cheese’s Tatura Milk Industries has amended its existing spray-drying and canning agreement with Bellamy’s to include the production of fresh organic milk.

ACM has signed a multi-year deal with Bellamy’s providing it with a “secure end customer” for its organic milk. ACM, which is building a new factory in northern Victoria, this week lifted its organic farmgate milk price by 55c/kg of milk solids to $8.55/kg of MS.

It has also lifted its organic price through spring.

ACM general manager Peter Jones said plant construction at Girgarre was well underway.

“The stainless steel is being assembled off-site and so as soon as the building is complete (it) will come in very quickly,” he said.

“Milk will be flowing through the site well before the end of the calendar year.

“ACM now has the milk supply, the processing and the customers to link the supply chain for organic milk from the paddock to the consumer, and a product mix that means we can capture the value of every drop of organic milk.”

Fonterra Australia milk supply general manager Matt Watt said the deal with Bellamy’s was an opportunity to provide them with more locally sourced ingredients as it currently imported a significant amount of ingredients for its products.

Fonterra has sought interest in organic milk production in Tasmania but Mr Watt last week said he wasn’t able to put a figure on the volume that would be required.

“We understand some farmers have already started the process,” he said of converting from conventional to organic production.

“But yes, it is a three-year process and we understand they will need the support, resources and know-how … on that journey.”

Mr Watt said they were also “finalising” the price for organic milk but said he knew it needed to be competitive in the market and organic production had a higher cost structure.

The organic milk will be processed at Fonterra’s Spreyton plant in Tasmania, then sent to Darnum for further processing into nutritionals.

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