“The level of excitement is very good to see at the present point in time when most dairy farmers have little to be excited about,” inaugural chairman Bill Quinn said.
The organic consultant has worked on the hub concept for the last three years.
He believes that within 18 months it will be gathering a milk supply of 2.5m kilograms of milksolids (MS) as dry shareholders gain organic certification.
There was also interest from a number of other organic farmers but they were not in a position to supply the new group for at least two years because they had existing arrangements with other companies.
The hub would not process milk but would act as a wholesaler to other companies, selling most of the milk it received next season to Green Valley Dairies.
The south Auckland processor, which was expanding its facilities, would in turn supply companies such as Lewis Road Creamery, which was expected to take about 10% of the hub’s milk.
That company’s founder, advertising executive Peter Cullinane, was also an independent director of the Organic Dairy Hub Co-operative.
Four farmer directors had been put in place but the hub’s constitution, drawn up by Buddle Findlay’s Alastair Hercus, required an independent director to be its chairman.
Among the farmers who have signed up to supply the hub are four of the five lower Northland organic milk producers who Fonterra said had to all supply it or none of them could because of transport constraints.
The fifth farmer from the region had indicated he would also supply the hub, Quinn said.
“We are very sound going forward.”
“Demand far exceeds supply for the next three years.”
Bill Quinn
Organic Dairy Hub
He told about 50 farmers who gathered for the hub launch that signing up was a big undertaking for them.
“You are buying into the co-op for the rest of your dairying life,” he said.
Processors were now confident of security of supply of organic milk for the future, which had been an issue for them in the past.
“Demand far exceeds supply for the next three years,” he said.
But he warned that a close relationship would be needed between farmers and processors to make sure consumer demand did not get ahead of supply.
As well as providing organic milk for Lewis Road Creamery the hub would supply a number of boutique cheesemakers through Green Valley Dairies.
Under its constitution the hub’s main activities would be marketing milk to maximise benefits to shareholders as well as supporting their onfarm activities.
It was not restricted to handling milk from dairy cows should it receive an approach from another group of farmers in the future.
Meanwhile, it was believed Fonterra was changing one of the clauses in its organic contract distributed to farmers last month.
That clause involved a discontinuation of the 45c/kg MS payment for organic certification in the year that farmers indicated would be their last supplying organic milk.
The so-called “runoff” clause was unpopular with farmers wanting the full $1.50kg MS organic premium for all the time their milk was handled by the co-op.
