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Speaker 1: We've got more good news dairy Fontira, not just this

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Speaker 1: year's auctions two from two so far of course if

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Speaker 1: you follow that, but Fonterra is bringing its organics business

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Speaker 1: to the South Island. You get one hundred farms or

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Speaker 1: around one hundred farms already involved in the North Island

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Speaker 1: program now. John Stevenson is the Fonterra Cooperative Council chair

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Speaker 1: and as with us, John morning, Good morning Mike, organics

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Speaker 1: to the South. How big a deal is this?

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Speaker 2: I think it's a really good news story for our farmers.

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Speaker 2: Andy a co op down there, Mike. It's who there

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Speaker 2: is additional demand in the market and let's lead Fontira

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Speaker 2: to go looking for additional supply.

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Speaker 1: What sort of percentage of all the dairy farmers would go? Yep,

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Speaker 1: organics is for.

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Speaker 2: Me, it's certainly a challenge. It's not for everyone. So

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Speaker 2: I think, you know, without being as close to it

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Speaker 2: as Fonterra management as I think we're well less than

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Speaker 2: one percent of milk. It comes with a premium, but

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Speaker 2: also some pretty strict rules around what you can and

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Speaker 2: can't do on You will work.

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Speaker 1: Me through that. What are the hurdles versus what are

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Speaker 1: the returns over just doing it regularly.

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Speaker 2: So since twenty sixteen seventeen, the Fonterier organic milk price,

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Speaker 2: which is reflective of market demand and separate from Fonterra's

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Speaker 2: milk price, it's average about two backs premium over the

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Speaker 2: Fonterira farmgate milk price. At the moment it's it's over three.

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Speaker 2: But you know, there are some limitations around strict limitations

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Speaker 2: around what felizer you can use, no use of antibodics,

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Speaker 2: weed controls a lot more difficult, So it's certainly you know,

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Speaker 2: those things impact your efficiency, but they come at a

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Speaker 2: premium as well.

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Speaker 1: What about the size of the markets? Are there a

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Speaker 1: lot of markets globally for it, and are they growing?

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Speaker 2: That's certainly what's what I understand has lead Fonterra to

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Speaker 2: this decision. And a lot of the milk goes to Europe.

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Speaker 2: In the States, they have pretty strict requirements, and you

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Speaker 2: know that those markets are growing. I think the key

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Speaker 2: will be to for Fonterra to grow at at a

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Speaker 2: rate where that demand doesn't get swamp. So you know

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Speaker 2: they'll be careful around it. But it's a really good

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Speaker 2: news story.

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Speaker 1: Interesting, speaking of good news, how about two from two

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Speaker 1: from the Ox and so far you.

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Speaker 2: Certainly a bit of relief has swept across dairy farmers

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Speaker 2: across the country with it, Mike, still a long way

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Speaker 2: to go, but really good to see that trend of

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Speaker 2: negative options reverse.

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Speaker 1: Exactly will these two move the farm gay price? Do

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Speaker 1: you reckon?

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Speaker 2: There's still a pretty wide range in terms of what

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Speaker 2: Fonterra is forecasting, So I mean that's a bored decision.

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Speaker 2: I wouldn't expect it to have a huge impact given

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Speaker 2: the length of time we've got left in the season.

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Speaker 2: But in terms of sentiment, let's let's certainly picked up

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Speaker 2: amongst dairy farmers, you know, nine negative options, certainly a

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Speaker 2: bit of a gut punch.

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Speaker 1: And we've got exactly assumingly all right, good to catch up.

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Speaker 1: Appreciate it very much, John Stevenson, who's the Fontier Cooperative

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Speaker 1: Council chair.

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