Organic milk in need of premium hike
THE organic dairy industry needs an increase in premium over conventional milk if it is to grow, industry figures have said.
The recession saw a drop in sales of organic dairy products, with 2009 sales falling back 5.5 per cent on the previous year.
This year the sector has returned to growth, but the co-operative said a lack of organic farmers was keeping supplies tight and an increase in premium was needed to allow the sector to progress.
Speaking at an organic dairying conference organised by Hi Peak and Devenish at the Yeo Valley conference centre, Bristol, chief operating officer at Organic Milk Suppliers Co-operative Richard Hampton said: “We have seen a relative improvement in organic sales in the marketplace.
“If you look at lost ground it is clear the premium is not where it should be.”
Figures show like-for-like supply figures for April were 15 per cent down on last year and Mr Hampton said no new farmers were likely to enter the organic industry until 2015.
Mr Hampton added: “There is nothing coming through the pipeline for the next few years.”
He said a typical premium over conventional milk was about 6-8ppl but it needed to be between 8 and 10ppl. And he stressed the premium for organic over conventional milk had to be right before new entrants were encouraged to come into the sector.
But Mr Hampton was confident about the growth prospects for the industry.
He said: “Something like 10 per cent of the industry left last year and 10 per cent the year before. This year will not be anything like that.
“[Organic accounts for] only 3.5 per cent of production. You cannot tell me there is not room to grow this to seven or eight per cent.”
The Soil Association claimed there was a lack of support for dairy products during the recession and claimed this was the reason for the drop in sales.
Policy director Peter Melchett said: “It is not natural to see organic sales fall during a recession. It is because we do not have a lot of Government support and we have a lot of sales through supermarkets.
“I would have liked to have seen supermarkets do less to reduce organic products. Apart from Waitrose, all the others took organic off the shelves and we now know when they put the products back on the shelves they bought it.”