World's largest dairy cuts organic production to focus on Asia

The world's biggest dairy manufacturer, New Zealand's Fonterra, has announced it's cutting back its organic produce operations and focusing on emerging Asian and Pacific markets.

The move adds fuel to a fire of Chinese influence in New Zealand markets, in particular those related to sustainable production. China has already surpassed the US as New Zealand's biggest trading partner outside Australasia for both exports and imports and its dairy exports have quadrupled from NZD450 (USD374 million) million to NZD1.9 billion (USD 1.58 billion) since the signing of a trade agreement.

Fonterra's business in China got a boost during the scandal of melamine-contaminated Chinese-made milk which killed at least six babies in 2008, turning more sophisticated consumers towards imported milk. According to Fonterra's China managing director Philip Turner last year, China is now far its biggest dairy customer and the company now supplies 5 percent of the Chinese market.

Fonterra's group director supplier and external relations Kelvin Wickham said the organic product range would focus on cheese, which provided the best returns, and on emerging Asian and Australian organics markets, where the returns and growth potential were stronger.