The organic pricing model will be based on a “weighted average” of the price of farm milk in a number of European countries, including the Netherlands, Germany, Denmark and the United Kingdom.
Around 140 organic dairy farmers look set to benefit from the decision, FrieslandCampina revealed.
The model is subject to approval by the firm’s FrieslandCampina Dairy Co-operative Members’ Council. The council’s decision will be announced in January 2013.
FrieslandCampina spokesman Jan-Willem ter Avest told DairyReporter.com that the decision to introduce an independent organic milk price reflects growing demand for organic dairy products in north-west Europe.
Organic segment expansion
“The organic milk price FrieslandCampina introduced is independent of the prevailing milk price. It is in our opinion a competitive price for organic milk that would give our organic member farmers continuity and security, as well as contributing to FrieslandCampina’s goal to expand in the organic segment,” FrieslandCampina spokesman Jan-Willem ter Avest told DairyReporter.com.
“Yes it does [reflect growing demand for organic dairy products]. Besides that it will also make the price for organic milk comparable with that of non-organic milk,” ter Avest added.
On top of the guaranteed price, every organic dairy farmer member will receive a performance payment and an amount of fixed member bonds. The performance premium and the amount of fixed member bonds, which will be paid annually, will depend on the financial results achieved by FrieslandCampina.
Organic dairy farmers who graze their herds outdoors will also receive a meadow milk premium of 50 cents per 100kg - like their non-organic counterparts,
The proposed pricing model was devised by a working party, which included four organic member farmers.
If adopted by the FrieslandCampina Dairy Co-operative Members’ Council, the initial guaranteed price for organic milk will be announced on 7 January 2013.
The new system will run initially for a three year period if approved.