Monday, March 4, 2024

OCD takes hard look at organics business

Neal Wallace
Questions around the premium it pays vs the market returns.
Reading Time: < 1 minute

Open Country Dairy is reviewing its organic milk supply business, saying the market returns currently achieved are not sufficient to cover the premium it pays producers.

Company chair Laurie Margrain said in accordance with its supplier-agreement, Open Country Dairy (OCD) has given notice to its organic milk suppliers that in three and a half years it may cease collecting milk.

Until then, Margrain said, OCD will assess whether it can grow demand and market returns to cover the premium it pays producers.

“We have not given up,” he said.

He would not reveal how many organic farmer suppliers OCD has, but said it is not significant in terms of its total supplier base.

OCD South Otago organic supplier Stephen Crawford said the decision came as a shock, as he believed the sector has been performing well.

Crawford said it appears sales have been impacted by global economic weakness following the covid-19 pandemic.

The three and a half years are enough to try to grow returns, he says.

Organics are low-input, low-environmental-impact systems, which he said are what the country needs.

His dairy farm has an environmental footprint comparable to that of a sheep farm.

“The shame is this model isn’t working because it is where NZ needs to go and this is a model that supports that.”

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