New Zealand-based Fonterra, the world's largest dairy exporter, announced today it is increasing its certified organic payment to NZ$1.50 per kgMS from June 1.
The extra NZ$0.45 per kgMS will "contribute to the costs of maintaining organic certification," said Fonterra.
It will be paid in addition to the NZ$1.05 per kgMS certified organic milk premium already received by Fonterra's 73 organic dairy suppliers in New Zealand.
The pay increase is in line with Fonterra's refreshed growth strategy, said Craig Deadman, global business manager for organics, Fonterra.
"This strategy reflects the volumes our customers have indicated they need to satisfy increasing demand for organic dairy," said Deadman.
Demand growth is particularly high in China - Fonterra's single largest export market - Southeast Asia, and the US, he continued.
"Chinese consumers are quickly developing a strong liking for organic dairy and organic options are always welcomed."
Opportunities also lie in organic milk powders, which Asian consumers are increasingly demanding, he said.
"We have recently launched Anchor organic milk in China and it is already proving very popular with shoppers there."
All Fonterra farmers will ultimately "benefit from heightened returns" from its better-supplied organics business, he added.