Organic planning is still vital
ORGANIC milk production prospects are rosy but producers must take full account of the costs of conversion when drawing up budgets.
Head of Axients organic consultancy team, Derek Gardner, told the conference that there was little prospect of conventional milk prices rising in the next few years.
"A strong Pound, world oversupply, forthcoming GATT/WTO negotiations and CAP reform mean producers must contend with milk prices remaining at 17-18p/litre at best."
However, organic dairying offered a route to profitability for some businesses, said Mr Gardner.
"It offers a way to add value to milk and customers want it, therefore it will be a commercial success."
But many businesses would require substantial investment to successfully produce milk organically and shouldnt anticipate large profits as soon as they achieve full organic status, warned Mr Gardner.
He gave an example of the cost to a 120-cow, 127ha (313 acre) wholly owned farm converting to organic. "This farm would need to spend £10,000 on building a midden for manure storage and composting and making its slurry system leakproof.
"Further spending of £8000 would be required to improve sheep fencing for winter clover management. Winter grass growth smothers clover, meaning sheep must be grazed on pasture to control grass."
Other costs included buying a mechanical weeder and improving ventilation in sheds to prevent mastitis and pneumonia, minimising requirements for drugs.
Mr Gardner estimated that the units peak borrowing requirement would move from £58,000 currently to £89,000 in three years time when it becomes organic.
However, profits would rise from £16,425 currently to £54,295 in three years time, he predicted. "This profit prediction is based on a price of 25p/litre for organic milk rather than the current 30p/litre as we will be fortunate if this price is sustained." *