Cost crises compounds organic milk lull

By Neil Merrett

- Last updated on GMT

Organic milk production in the EU market could become increasingly
constrained during 2008, as rising feed costs are forcing some
farmers to quit the market, says an industry expert.

Huw Bowles, finance and operations director for the UK-based Organic Milk Cooperative (OMSCo), told DairyReporter.com that rising commodity costs were resulting in reduced production of liquid organic milk as farmers opt out of the segment. "The increased feed costs are leading some organic farmers and even those considering converting to organic milk production to question the economic sense of such a transfer,"​ he said. Increased import calls ​ The comments follow on from a report by the UK's Milk Development Council (MDC) that some industyr players are calling for imports of organic milk from other European producers to be stepped up in order to bolster supply amidst growing demand for organic dairy goods. The MDC added that new requirements for organic feed that now prohibit the use of any non-organic products are expected to further compound feed prices, which could potentially reach £400 per tonne during this year. Such a figure is double the price paid two years ago, which may require either increased cost for both manufacturers and consumers or higher export output, according to the report. Milk availability ​ Bowles said that it was difficult to say what benefits increased imports would have on organic milk supply levels, which have been in short supply for the last 18 months. He added that this issue of supply had led to a slow down in growing demand for organic over recent years and that the benefits of increasing supply was uncertain. "While there are no problems selling the current organic milk supply, the need to step up imports is yet to be seen,"​ Bowles said. Bowles claimed that the availability of imports, which are used in the UK almost entirely in processed dairy goods, was also questionable due to increasing demand for the product on the continent. However, despite the current uncertainty over organic milk production, the OMSCo expects to begin benefiting from an organic conversion drive in UK farms made in 2006, potentially increasing national production by 90m litres. "While the full 90m litres will unlikely be fully available for 2008, there will be some increase in supply,"​ said Bowles.

Related topics: Markets, Fresh Milk

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