Dairy Event 2011: Tough times for organic milk

Organic milk producers face the toughest period for many years, as farmgate premiums over conventional continue to shrink and UK sales decline.

Total UK organic milk sales fell 12% in the last quarter as the “big five” supermarkets increasingly concentrated on aggressive discounting of conventional milk and reduced shelf space for organic, Richard Hampton from the Organic Milk Suppliers Cooperative said.

Recent improvements in the conventional price had also narrowed the organic premium, to 4-6p/litre, depending on production profile, and premiums could drift lower unless retailer attitudes changed, he said.

“We need to get the retailers to focus on organic as something that is an asset, not a liability.”

With no new converters coming into organic, OMSCO said total organic milk supply fell 3.6% to 453m litres in 2010/11.

Some 35m litres-worth of exits from the sector was only partly offset by an 18m litre increase in production by existing farmers.

“Organic premiums must be restored to the 7-9p/litre level if there is to be a long-term sustainable supply,” Mr Hampton noted. However the export trade remained strong, and was predicted to grow 15% in 2011/12.

For more on our Dairy Event 2011 coverage see our dedicated event area.

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