Fonterra and Bellamy’s partner to set up organic milk pool in Tasmania

Fonterra Australia and Bellamy’s Organic have signed a long-term agreement for the supply of organic milk in Tasmania.

Fonterra Australia is set to work with dairy farmers in Tasmania to set up an organic milk pool as part of the arrangement.

The organic milk will then be used by Bellamy to produce organic nutritional powders in order to address growing demand in both the Australian and overseas markets.

The agreement accounts for the cost of converting the produce into organic milk and is expected to help Bellamy’s to secure a supply of organic and fresh milk from Tasmanian farmers.

Bellamy’s is slated to acquire 20 million litres of milk from the pool per year and also has the first right to secure additional volume if required.

The company will invest an initial sum of A$5.5m ($4.1m) to support the development of the pool.

Bellamy’s investment will assist in the installation of the assets required to handle and process the milk.

The demand for nutritional milk powders is growing across emerging economies due to increasing urbanisation and incomes, with the value of this category estimated to be worth $50m globally.

The demand for organic dairy is expected to increase by 33% in the period between 2017-22.

Fonterra Australia managing director René Dedoncker said that the agreement is a win-win result, not only for both companies but also for the farmers of Tasmania.

The partnership between the two firms has been in place since 2015.

Dedoncker added: “Bellamy’s Organic is a rapidly growing organic nutritionals brand and is an important customer of ours, and today’s announcement is another example of how we’re playing to our strengths in cheese, whey and nutritionals.”

Fonterra’s Spreyton plant in Tasmania will be responsible for processing the organic milk before it is sent to Darnum in Gippsland, Victoria, for further processing into nutritional powders.