Economic pessimism dents consumers’ previously buoyant demand for organic produce and the dairy farmers are turning their backs on Britain’s organic milk market. There are figures show that there has been a reversal in the numbers of dairy farmers converting to organic farming from the conventional methods. It rises up to 80 percent in the price of organic feed for dairy herds, and it means hundreds of organic milk producers are running loss. Farms were undergoing conversion to organic and were capable of producing million liters of milk have abandoned the process and return to non-organic farming.
Non organic dairy farmers joining the organic movement are no longer an attractive option. The situation has prompted warnings of shortage and a mass exit by existing organic producers unless retailers agree to increase the farm gate price paid for milk, to ensure farmers can cover rapidly escalating costs. Organic farmers need an increase of at least 4p per liter to return to profitability however the retailers warn that they have little room for maneuver in Britain’s ultra competitive supermarket sector.
Richard Hampton the sales and marketing director of Omsco said: “The costs being incurred by organic producers are rising much faster than for conventional production.” The Britain’s largest organic milk cooperative, which accounts for about 70 percent of UK’s annual production of 450 million liters. The price that gets currently for organic milk is not high enough to cover the cost of production. There will have to be an increase in price that producers receive. Richard Hampton added: “There is a real danger that a supply shortage could take hold rather quickly if just 30 of our larger organic farms revert to non-organic production, we will lose 10 percent of our supplies.”
It expects sales growth of about five percent this year, compared to 30 percent in previous years. The charity pointed out that the lower figure would still outstrip the general grocery market, which expands at between one and two percent a year. The Soil Association said.