More than 30 organic dairy farmers have signed up to a new co-operative that aims to solve supply and demand problems for both farmers and processors.
An independent director of the Organic Dairy Hub Co-operative, Bill Quinn, said it had been set up to provide more security for organic dairy farmers, by linking them with organic processors.
Mr Quinn said it had been a tough few years for the sector, resulting in the number of organic dairy farms shrinking.
"The organic dairy sector in the last two years has dropped from 127 farms down to about 75.
"With the drop in milk volumes you have got to manage the sales, and so the current processors have put into powders and cheese - not into liquid milk for the local market, and not been able to meet new growth."
Mr Quinn claimed the reason for the reduction in organic dairy farms in the country is because processors, like Fonterra, put out mixed and negative messages about organic milk.
He said the co-op had projected that it would have millions of litres of organic milk available over the next three years.
This month Fonterra launched a new brand, Anchor Organic, which will be on the shelves later this month.