Organic dairy farmers hoping to minimise losses as Organic Dairy Farmers of Australia collapses

It was the country's largest organic dairy company and was jointly owned by farms across Tasmania and Victoria, but it was placed into receivership last Friday.

Lileah dairy farmer Gary Watson said he is one of six organic dairy farmers in Tasmania which produced for the ODFA, and he is personally owed about $250,000.

"That's just four weeks of April and two weeks of May that we're not going to get paid for by the looks of it," Mr Watson said.

This season was Mr Watson's first full year of producing organic dairy products after eight years of transitioning his farm of about 450 cattle to meet organic standards.

Mr Watson said he had expressed concerns about the management of ODFA in recent years, and in 2019 attempted to terminate his contract.

"We're farmers, we've gotta deal with those sort of challenges. It just makes things really tough," he said.

Another farmer, who asked to remain anonymous and will be referred to by the pseudonym Geoff, said he was out of pocket about $100,000, but still believed the losses could be recouped.

Both farmers had been able to sell their products to other players in the market including Cadbury and Fonterra, who were both purchasing milk at conventional - as opposed to organic - prices.

Geoff said that represented about a 45 per cent drop.

"This year has been a pretty good year price wise - well it was until this happened," Geoff said.

"It puts a damper on what has been otherwise a pretty good season."

Geoff said "the writing was on the wall" and he had begun to talk to other buyers prior to ODFA being placed into receivership.

Fonterra farm source director Matt Watt said the company had fast-tracked an organic product strategy to accommodate the addition of the ODFA producers.

Mr Watt said Fonterra was expecting to take on the majority of their products at conventional prices to ensure no milk was dumped, and from July 1 will be operating an organic specific facility at Spreyton, Tas.

"The first priority is to get the milk picked up and paid for. Then off the back of this we're really confident with the opportunity this will create for the farmers that will mean they can continue to produce high quality organic milk," Mr Watt said.

He said Fonterra will primarily use organic dairy for nutritional infant formula production.