ORGANIC MILK MARKET REPORT 2007 - FARMING PRESS RELEASE

This press release was posted on : 16th March 2007

CONTROLLED APPROACH TO ORGANIC CONVERSIONS IS ESSENTIAL SAYS ORGANIC MILK MARKET REPORT

The Organic Milk Suppliers Cooperative (OMSCo) has today launched its 2007 ‘Organic Milk Market Report’; the most in-depth analysis of the organic milk market available. It shows conclusively that, despite reports to the contrary, sales of organic milk are expected to grow by 20% for the year to March 2007. Although this has created an opportunity for more farmers to convert to organic production, the report warns that the industry must work together to ensure a controlled approach to conversions and avoid a return to the boom/bust situation of the early 2000s.

Huw Bowles, OMSCo’s Chief Operating Officer, comments, “Following a phenomenal increase in year-on-year sales of raw milk of 45% in 2005/06, the market has, as predicted, returned to underlying growth of around 20% per year. We are now well and truly facing the challenge of under supply. Organic conversions are necessary but it is essential to retain a realistic view of the level needed to meet market needs, if the industry is to avoid a return to disastrous over supply.

“Farmers also need to have a clear understanding of the potential returns to be made in organic production. The significant price differential between organic and non-organic milk means that converting is a very tempting option for cash strapped farmers, but it is essential to remember that organic farming does not offer a magic solution to low farm returns. Organic costs have risen steeply, there is increased price volatility and the regime does not suit all farm circumstances. Farmers need to be absolutely certain that conversion is the right decision for them.”

Over the last year, 85 million litres of milk from new conversions have been secured and will come on board during 2008. This will cover anticipated market growth and also allow for a small amount of new market developments. OMSCo predicts that an additional 85 million litres is required to meet market growth needs for 2009.

Bowles continues, “We recommend that anyone considering conversion speaks to their consultant to evaluate the feasibility of the move and isn’t swayed by short term incentives. Farmers need to focus on long term viability, understand the real market needs and ensure that they have a buyer before starting the conversion process.”

Over the last 12 months the industry has taken significant steps towards working in unison during this difficult period of under supply and the result has been a growing market largely supplied by increased UK production. The 2007 report tracks the changes over the last year and compares them to the 2006 predictions, reviews market developments and examines the issues and challenges facing the sector as it moves forward. It analyses how supply has grown over 2006 and forecasts the continued increases that are needed based on predicted growth in consumer demand.

OMSCo is the largest and longest established organic dairy cooperative, representing the majority of UK organic milk production and as such is in the ideal position to develop this report. Given the organisation’s exclusive focus on organic milk, it has taken the responsibility for the generic marketing of the product on behalf of the whole industry. It has also ensured that the supply chain, from producer to retailer, is provided with up to date transparent information on market trends. To receive a copy of the report log on to www.organicmilk.co.uk or call Emily Enright on 0117 922 7799.

Editor’s notes:

For a PDF copy of the report, more information, images or to set up an interview contact Emily Enright or Abby Richardson at Grayling PR on 0117 922 7799

OMSCo represents the majority of the UK organic milk pool and as such has a clear overview of the market requirements and supply situation.

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