The Organic Milk Suppliers Cooperative (Omsco) will pay its 250 UK-based farmers a 5p/litre bonus on all litres produced above the level in the same period last year.
The added payments will start on 1 September and continue until the end of February 2017 and have been introduced to satisfy sustained export demand for UK organic dairy products around the world.
The incentive also takes into account the increased cost of winter feed.
With a current market average price for organic milk in the high 30s, members can expect a price for incremental litres in the mid-40p/litre range, with a small proportion of farmers on USDA contracts pushing closer to the 50p/litre mark.
This year’s bonus is a 2p/litre increase on last year’s incentive, in which the average bonus payment was £1,500 a member, with some farmers receiving significantly more.
Exports currently account for 20% of Omsco’s revenue, and the co-op predicts this could reach almost 30% in the coming year.
“The 2015 bonus resulted in a 12% increase in production, with 90% of members producing more milk than in the previous year,” said Omsco managing director Richard Hampton.
“The increase of 5p/litre for this year reflects the increased cost of winter feed and the continued strengthening of organic export markets in particular.
He stressed that Omsco wanted to remove volatility for its members.
“Export demand continues to be strong, and we are unable to meet demand in certain specialist markets where we have designed products to meet the needs of those customers,” he said. “It’s great we can offer these additional rewards to our members and give them confidence in the future of organic dairying.”
Omsco is the UK’s only farmer-owned and farmer-run, 100% organic dairy co-operative, and the second-largest of its type in the world. It accounts for 65% of UK organic milk supply.