Looks like the organics opportunity door is closing fast for...

Looks like the organics opportunity door is closing fast for AHF...ODFC (Organic Dairy Farms Cooperative) in bed with Wattle Health and now this article.

Also Longtable (ASX: 'LON') has acquired St. David's Dairy in Melbourne which closes another organic retail channel door on them.

[EXTRACT]
Bellamy's pens three organic milk deals

• https://www.copyright link/content/dam/images/h/0/w/s/x/q/image.related.afrArticleLead.620x350.h11nt3.png/1529571015273.jpg

Baby formula maker Bellamy's has reached three deals in order to secure more local organic milk for its products.Shutterstock

• by Carrie LaFrenz

Bellamy's Australia has taken greater control of its supply chain and cost structure after signing three new organic milk deals.

The Tasmanian maker of baby formula and snacks said it has increased the volume of Australian organic milk used in the production of its infant formula products after reaching three new arrangements. It has been criticised in the past for not using more local dairy producers, with Bellamy's citing the inadequate supply of local organic milk to produce its products.

The new deals include an amended agreement with Fonterra Australia to begin development and conversion of a Tasmanian organic milk pool to support infant formula production at Fonterra's Darnum site. There is also a new multi-year agreement to secure access to Australian-sourced organic fresh milk with an affiliate of Australian Consolidated Milk (ACM), and an amended agreement with Tatura Milk Industries to incorporate fresh organic milk into production, leveraging TMI's organic dairy supply base.
The stock rose 6.5 per cent, or $1.09, to $18 on Thursday – more than doubling from a year ago.

Bellamy's said it was committed to supporting the conversion of conventional Australian dairy farms to organic farms. It said existing minimum manufacturing commitments with TMI and Fonterra remain unchanged.


The Fonterra organic milk pool agreement signed will facilitate the development of an organic milk pool in Tasmania by partnering with local farmers to convert existing conventional Tasmanian farms to organic, the company said. If successful, this will provide Bellamy's with an additional secure, organic fresh milk supply from Tasmania.

Bellamy's has signed up to take the first 20 million litres of milk from the organic milk pool annually – which equates to 2,000 tonnes of baby formula, or about 10 per cent of current production.
It will support the development of the pool with an initial $5.5 million investment to assist the installation of processing assets to facilitate organic milk handling and processing.

Growing urbanisation and rising incomes continue to fuel the growth of nutritional milk powders across emerging markets, with the category valued at more than $US50 billion.

"Tasmania offers the right conditions to develop a world-class organic dairy ecosystem. With its high rainfall and developing irrigation scheme, coupled with our agile site at Spreyton, we believe that Tasmania is an excellent location to grow a high-quality organic milk pool," said Fonterra Australia boss René Dedoncker.

Bellamy's and ACM's new multiyear agreement gives ACM a secure end customer for its organic milk, which allows it to continue to invest in converting farmers.

Chief executive Andrew Cohen said this marked an exciting step forward for Bellamy's and the Australian organic dairy industry.

"We hope to improve outcomes for Australian dairy farmers, support the Tasmanian dairy industry, and at the same time take greater control of our supply chain and cost structure.

"We believe the rising demand for our brand and high-quality, premium organic infant formula in Australia, China and emerging Asia can become an important and value-added platform for Australian farmers."

Citi analyst Sam Teeger reiterated a 'buy' on the stock, saying the deals will help Bellamy's market its product as Australian-made, which is important in the eye of the Chinese consumer.

Six months after filing its application, Bellamy's is still waiting to hear from Beijing regarding its CFDA application, which all brands must have to sell Chinese-labelled product in China.

Sources said with potential to increase the production and strong revenue being generated, it is likely that Bellamy's will add to its Camperdown canning facility by adding another canning line, allowing for more control of its production.

Bellamy's has been in turnaround mode and appears finally on stable ground after a turbulent 24 months, which consisted of the turfing out of former CEO Laura McBain, the dismissal of most of the board, several downgrades to earnings and a share price plunge while teetering on bankruptcy.
[END]

Source: www.copyright link/business/retail/fmcg/bellamys-pens-three-organic-milk-deals-20180621-h11nt3