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Fonterra throws a lifeline to organic milk suppliers caught in receivership

Tuesday 16th March 2010

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Milk suppliers to New Zealand Organic Dairy Farmers’ Co-operative, which was placed in receivership on Friday, have been offered a lifeline by Fonterra Cooperative Group.

The 27 suppliers to the Okato cheese-making factory in Taranaki had been offered $7 a kilo of milk solids by the Organic Co-op, but a failure to sell its produce saw it owing $15 million. Fonterra’s 10,500 suppliers are expected to earn $6.05/kg milk solids this season.

Fonterra’s general manager milk supply Tim Deane said while protecting the interests of its own farmer shareholders, NZODFC suppliers joining the co-operative will be treated the same as any new suppliers. This requires the holding of Fonterra shares, or a progressive purchase of shares on a growth contract to match milk production at one share per kilo of milk solids.

NZODFC suppliers accepted for Fonterra supply would initially be offered contracts for the remaining weeks of the 2009/10 season, with no organic milk premium.

For the 2010/11 season, new suppliers can either purchase shares outright or on a one third split basis over two seasons. Organic share-backed milk would attract Fonterra’s prevailing organic premium providing it met the company’s organic supply criteria.

Deane said he expects Fonterra to collect milk from the Northland, Waikato, Bay of Plenty, Taranaki and Manawatu NZODFC suppliers from this week.

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