milk

Fonterra Calls It Precious. Buyers Are Paying Like It.

In March Fonterra forecast a record organic milk price. The final number beat it. Put it next to conventional milk and the gap between the two roughly doubled in a single season, while the ordinary price went backwards.

Strong global demand for organic dairy has delivered a record milk price for Fonterra’s organic farmers

In March, Fonterra forecast a record price for its organic milk: $13.35 per kilo of milk solids. I wrote about it at the time.

The forecast was too low.

The final organic price for the 2025-26 season came in at $14.13/kg MS, Farmers Weekly reported on 6 October.

The previous record was $12.35, set the season before.

On its own, that's a nice day for the people running about a hundred organic farms. It gets interesting when you put ordinary milk beside it.

The gap doubled

Fonterra's final price for conventional milk in the same 2025-26 season was $9.69/kg MS, according to its farmgate milk price table.

So organic milk earned $4.44 more per kilo of milk solids. That's about 46 percent more.

A season earlier, organic paid $12.35 and conventional paid $10.16. The gap was $2.19.

In one season the organic price went up $1.78 while the conventional price fell 47 cents. The gap between them roughly doubled.

The ordinary price went backwards. The organic one set a record.

"A precious commodity"

That's Fonterra's phrase, not mine.

Organic milk makes up less than 1 percent of the milk Fonterra produces, and its own organic farming page describes it as a precious commodity.

The programme has run since 2002. It currently has more than 100 certified organic farms, all in the North Island.

The demand is global, by Fonterra's own account. It says its organic programme requires USDA and Taiwan organic certification, which points at where a lot of it goes. When I looked at why New Zealand doesn't eat its own organic food, this was the pattern: the best of it is built for someone else's shelf.

Fonterra's head of milk supply, Lisa Payne, told Farmers Weekly the record reflects how strongly customers value dairy from organic farming. She also said, "There's room to grow our organic supply to help keep up with global demand."

Which is a polite way of saying they can't get enough of it.

Next season looks the same, only more so

Fonterra's forecast for organic milk in 2026-27 is $13.30 to $15.30/kg MS, with a midpoint of $14.30. Another record.

Its forecast range for conventional milk this season, as of 21 September, is $8.50 to $10.50.

Even the bottom of the organic range sits $2.80 above the top of the conventional one.

What it means at the shelf

Honestly, this is a farmgate price. It is what Fonterra pays the farmer. Nothing in the announcement says what a bottle of organic milk will cost you at the supermarket, and I'm not going to guess.

What it does tell you is who else wants the thing in your fridge. The biggest milk buyer in the country is paying close to half as much again for organic milk as for ordinary milk, because its own customers will pay for it. It paid more this year than last. It expects to pay more again next year.

The less-than-1 percent is getting the better deal. That rarely happens in dairy.

Fonterra plans to start processing organic milk in the South Island from the 2028-29 season.