The Fonterra organic programme
There are strong signals from developed markets of a demand for organic milk products from New Zealand, already perceived as clean and green.

In 2004, Fonterra re-looked at its organic programme, seeking to make it more market-focused. The goal became to have 200 organic farmers with a business plan developed around how to make this pay both for the suppliers and Fonterra.

The goal has since evolved to 50,000-52,000 cows producing 14.5 million kilograms of milk solids. The company is now about one third of the way to meeting this target with 70 suppliers in the programme, 27 in conversion. Herd size ranges from 100-600 cows.

People have joined in increments, as their confidence in organics has increased. Recently there has been an upsurge in interest, with about a phonecall a day being fielded from farmers considering conversion. Fonterra organic advisor, Keitha Laming, attributes this to a growing emphasis on environmental sustainability issues; a realisation that organics could be leading the dairy industry in some areas; disillusionment about spiralling costs yet at best stable returns and the opportunity to add value.

“Milk is a commodity product so to improve your income you either have to expand or add value,” says Keitha. “For many small farmers, organics offers a way to keep farming, although large farming corporations are also becoming increasingly interested in organic farming.”

Most new prospects are introduced by other farmers or approach Fonterra after attending an organic field day.

Motivation often comes from a negative experience with an accepted farm practice, for example discovering that penicillin is no longer effective for treating mastitis, then trying an alternative and finding it works.

Commonly, farmers see animal health and weed control as key challenges when considering converting to organics and a number try tackling these organically before going the whole hog with conversion. Almost without exception, this has been successful, providing the confidence to go through conversion.

Fonterra subscribes to the New Zealand Food Safety Rules for Organic Production, to ensure organic milk products manufactured here allow export to any country. Bio-Gro and Agri-Quality New Zealand certify that these standards are met, on behalf of the government.

Markets and products
Demand in New Zealand is pretty much filled by small-scale organic companies, so the focus is on exports.

There is strong demand from affluent consumers in Europe, but with a long history of onshore organic production, this is a hard market to crack.
Organic products are produced in special runs at three factories; Hautapu, Morrinsville and Waitoa. These include whole and skim milk two organically certified cheeses, some butter and milk products including yoghurt.

Organic premiums
In 2004, Fonterra lifted the premiums for organic milk to;
• 20% above payout for fully certified milk (from 10%)
• 7% above payout during transition, usually lasting around three years.
The premiums are available only in the Waikato, Taranaki, the Bay of Plenty and Manawatu, with all organic manufacturing based in the Waikato.
While organic milk is welcomed from other parts of the country, it will not attract premiums as no extra value can be extracted for it from the market.

Fonterra supports organic farmers
Keitha Laming spends most of her days on farm, mostly with people who are considering organics or are in transition. Initially, she visits several times a year, considering what areas are compliant and where changes will need to be made. Once certification is achieved she calls about once a year.

A first step is looking at goals and objectives, and talking through where organics fits with what the farmer wants to achieve. Those who are really serious are given a hefty manual providing specific advice on what’s required, which becomes the farmer’s organics Bible.

Farmers opt to be audited by either Bio-Gro or Agri-Quality. Fonterra pays for the auditors to visit farms not just once a year but twice, with the visits regarded as “an arm around the shoulder” rather than a big stick.

The time it takes for a farm to be fully certified varies from immediately to several years, depending on how far through the decision-making process the owners are. Once people are in the programme, they rarely exit.

Meet the Vospers
John Vosper and Liz MacKay’s Matamata farm is in its first year of full organic certification.

They run 270 cows on 80 hectares, 40 hectares their own and 40 hectares leased.

When Liz first suggested going organic in 2002, they had been farming conventionally since 1992. Her inspiration was a Fonterra-run field day followed by a workshop on biological farming.

The couple had always been attracted to a healthy lifestyle on the land, plus organics offered a way of earning premiums which could keep them in business on a relatively small farm.

Disillusionment also played a part in the decision to convert.
“I seemed to be putting on more and more nitrogen products yet the pasture was not growing as well,” says John. “I’d spray it out and re-sow, but until urea was applied nothing would happen.”

This was despite regular soil tests indicating acceptable phosphate levels.
Also, animal health costs were spiralling.

The decision was made that there was no time to waste. The sooner they started conversion, the sooner they would start receiving premiums.

Changes made – the big picture
The shift to organics requires a “hands-on” farming style, plus a greater need for planning and organisation, and increased paperwork, says Keitha.
The key difference is that you are trying to increase outputs and profitability by enhancing natural processes on the farm, rather than by targeted inputs. Management becomes proactive rather than reactive, with a focus on prevention rather than cure.

Cow numbers do tend to drop, as farm management systems change. However, animal health costs go down significantly and per cow milk production tends not to change so long as pasture peaks and hollows are well managed.

The following are the major areas where organics requires a mind-shift as well as a change in farming practices.

Pasture mangement
The biggest challenge for organic dairy farmers is matching feed supply and demand. Having lost the privilege of boosting grass growth with quick-release fertiliser, they need to introduce longer-term solutions like good effluent management and utilisation, slow-release fertilisers and more varied and nutritious pasture species.

Organic farmers tend to gradually sow deep-rooting species like plantain and chicory plus a range of herbs into existing pastures which become more robust, without urea.

It pays to keep more of a feed buffer and when there is excess growth, to make supplements. The bringing in of supplements is not precluded, but organically registered supplements such as maize are not widely available. Palm kernel cannot be used because it has been fumigated.

Grazing off the property becomes more difficult, as cows can only be sent to organic farms.

These changes can mean a reduction in stock numbers and production, but also less costs.

The Vospers say they are now more vigilant about ensuring they have adequate pasture ahead of them, as there are no quick fixes. They make more hay and silage than they used to.

Soil
Soil health is the key to organics. The focus is on the organic and nutrient status of soil and especially, its structure. A soil that’s highly fertile on the basis of a soil test might be pugged, for example, so unable to grow pasture because of poor drainage and reduced aeration.

Biogro organic standards require organic matter to be tested. Tests are regularly repeated, to monitor that fertility is being maintained or enhanced.
A diverse range of fertilisers and soil additives can be used under organics, so long as they are of natural origin. With the wide range of product options available, keeping soil fertile is probably one of the easiest areas of conversion, Keitha observes.

On organic farms, effluent is regarded as a key resource rather than as waste. It is seen as being in the farmer’s best interest to spread effluent over as much of the land as possible, recycling potassium and nitrogen back into the soil.

John and Liz aim to encourage natural biological activity in the soil. They have counted earthworms on their property as an indicator of healthy soils, and found that the best populations where no fertiliser had been applied or effluent had been spread.

Effluent is spread using a sprinkler and hose. In the medium to long-term the Vospers are aiming to buy a wagon so it can be spread further afield to avoid over-application in some areas while others miss out.

Herd health
A preventative rather than treatment approach to herd health is taken under organics.

The option of running to the medicine cabinet to solve animal health problems is lost. Instead, animals must be kept healthy through good quality feed and minimised stress.

If cows are getting all the trace elements and vitamins they need from feed, they are less likely to become ill. Most trace elements can still be supplemented, either directly onto the soil or mixed with trough water.

Keitha recommends that there be an emphasis – starting in the transition period - on culling animals that are not performing, including those that regularly test with high somatic cell counts indicating vulnerability to mastitis.

Mastitis is a major challenge for many farmers converting to organics. Getting a really good prevention programme in place is what it takes to get on top of the problem, starting with going back to the basics like looking at the farm layout to see ensure cows aren’t walking too far and reducing environmental stresses by measures like track maintenance and planting trees for shade and shelter.
“Less stress brings higher immunity.”

Keitha encourages farmers to regularly check milking plant to ensure cows are being milked out properly and to maintain good hygiene in the shed.
If mastitis does occur, the infected quarter of the udder can be treated using approved methods then milked out into a bucket. Homeopathic remedies have enjoyed some really good success and Keitha estimates they have been tried by around 30% of dairy farmers.

Antibiotics could be used against mastitis during the transition period, but with double the standard withholding period. On an accredited farm, a cow should be treated by conventional means rather than letting her suffer but must then be culled or sold.

John admits he hit trouble with herd health, due now he thinks to being in too much of a hurry to make the switch to organics in the first couple of years of conversion. One mistake was deciding he could no longer dry cow the cows, which exacerbated an existing mastitis problem especially with Staphylococcus aureus which tends to over-winter in cows’ udders.

While he would have been permitted to continue using antibiotics in the first year he opted instead for alternative treatments which were very time consuming. Cows were drenched with apple cider vinegar, given herbal and homeopathy treatments and their udders rubbed with peppermint cream.
“I almost gave up.”

In retrospect, he reckons he should have treated mastitis-infected cows with penicillin and quarantined them, getting rid of the ‘buggiest’.
“Maybe I didn’t have the skill to handle the problem at that stage plus the cows didn’t have the healthy immune systems they have now.”
John’s become more aware of the differences in types of mastitis and appropriate treatments. To boost immunity, all cows are drenched with a seaweed extract from Paeroa mixed with apple cider vinegar. Other preventative measures include not running cows in mud and hygienic milking procedures including teat sprays.

Any cow that does become infected is stripped out into a bucket and cream rubbed into their udder, which adds some time onto milking but has been effective.

This year the couple are aiming to get tough on culling cows with repeated mastitis, although they admit this is always a tough call with it being a hard to decision to take out highly productive animals or favourites.

Clover content in the pasture has increased under organics, which while a bonus feed-wise sometimes leads to bloat in September. Affected cows are drenched with orange roughy oil - which acts both as a bloat oil and a supplement, providing vitaman A and healthy omega oils – and recover with four or five minutes of treatment.

Bloat outbreaks are now falling, perhaps for seasonal reasons but also, John surmises, because as soils have got better the balance of nutrients in pasture has improved.

Ways of reducing the risk of bloat include feeding hay before and after calving to keep fibre levels in the diet high. Supplementing with allowed minerals including selenium may also have helped.

Many minerals allowed under conventional farming are prohibited under organics. Pasture soil tests identify those that are needed such as copper, boron and selenium. Mineral supplements are collated with fish protein at low rates or a pre-mixed ‘supercharge’ product put in the trough for young stock.

As part of ensuring their cows are stress-free with strong immune systems, the Vorspers have planted a range of trees species for shelter, shade, animal health and nutrition. Species include chestnuts and oaks (the cows eat the nuts and acorns), feijoas (planted where the cows can help themselves), flax (a natural anthelmintic), fodder willow and other species.

Breeding and calving
Organics emphasises running an appropriate breed for the farm and management system. Although organic semen is available, this often refers to the way it has been stored rather than origin. Lease bulls can also be bought in. There is more concern about the origin of maternal animals.

Calving management can be an issue, as synchronising oestrus and inducing calving are not allowed. As a result, calving tends to be more spread.
Maintaining good cow condition leading up to mating and culling late calvers, are tools to achieve a tight calving pattern.
Most organic farmers find they need to calve about two weeks later, in tune with the feed curve.

The John and Liz were patting themselves on the back last year when they had only 7% empty cows. However, last year there had been quite a tail-end with calving which carried on into October. John fears that this problem will build, as late cows become ever later.

Rather than let calving dates spread even further, they will cull late calvers this year then look into ways of getting cows to cycle earlier.
“We’ve got limited options. We can’t use controlled inter-uterine devices (CIDRS) to stimulate ovulation in non-cycling heifers but have to look at ways of reducing their stress, such as feeding out silage to a herd.”

The Vospers now start calving on August 1 rather than July 20, to avoid calves being born during a ‘dead patch’ in pasture production.

The rewards
Fonterra has not analysed the on-farm profitability of organics, leaving this to individual farmers and their consultants. However, feedback suggests that returns have often increased by a considerably higher margin than the incentive offered.

More figures may become available, with Fonterra having applied for funding from organic umbrella group Organic Aotearoa NZ (OANZ) to run three monitor organic dairy farms throughout the North Island. Like Meat & Wool New Zealand’s monitor farm programme, this would throw the farm open for community discussion and analysis, including the books.

Under organics, the Vospers’ stocking rate has been reduced to three Jerseys per hectare; fairly low for the area. To ensure profitability, they have a strong focus on reducing pasture wastage, especially in spring.

Animal health costs have fallen from $60-$70/cow down to $12 including pregnancy testing.
One of the things farmers most enjoy about going organic is becoming part of a small and focused group, rather than lost in a massive cooperative. Organic dairy producers have their own annual conference and regular field days.

The Vospers have found that organics more challenging but also more rewarding than conventional dairying.

They have become increasingly interested in living a healthy lifestyle and eating chemical-free food, and now have their own orchard and vegetable garden.

Organic dairy farmers have formed a strong network, including product and service providers as well as consultants. The Organic Producers Group, which John chairs, has an on-line discussion group which the Vospers really enjoy as a way of keeping in touch with like-minded farmers.

“We get a lot more job satisfaction now that we are one out of 60, not 13,000. When we get together, because we are like-minded we get on well and have lots to talk about.”

John is very grateful to dairying organics pioneers, who with little or no financial incentive showed ways problems of conversion could be worked through. This had given increased knowledge and confidence to those who followed.

Organics Aotearoa New Zealand
The Organic Dairy Producers Group is a member of OANZ and has delegates attend quarterly meetings of the year-old organisation which brings all organic sectors under one umbrella. Recent initiatives have included a Smart Start consultancy service not unlike Fonterra’s organic programme, the appointment of three regional coordinators, and the provision of up to $20,000 to run regional advisory programmes.

The Dairy Producers Group has applied for funds to run discussion groups in certain regions, including dry (non-dairy) farmers who supply critical supplements and off-farm grazing.

Fonterra applied to the fund to set up three organic monitor farms where challenges and solutions could be identified and solutions discussed.
John sees a lot of potential for OANZ as a united voice of organic farmers, able to help with accessing overseas markets, supporting producers, backing research and perhaps helping to revive organic training courses.

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