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The dwindling numbers of organic cows in the UK are threatening to limit supermarket supplies of milk this year, as shoppers’ appetite for more expensive dairy returns, experts warn. Organic milk production has dropped in recent years as many dairy farmers switched to conventional milk due to record inflation. However, consumer demand for organic milk has increased this year following a sharp decline in sales during the cost of living crisis. The number of organic dairy farms in the UK has decreased from 400 in 2021 to just over 300 this year, according to official statistics. It takes two to three years for a farm to convert its crops to achieve organic status, so rebuilding supply will take time.
According to Nielsen data, demand for organic milk increased by 3.9% in the year to March, while the cost of organic production is 50 pence per litre compared to 40 pence per litre for conventional milk. However, some dairy processors did not increase the price they paid farmers when production costs began to rise in 2021, prompting some farms to reduce their herd numbers or leave the organic sector altogether. John Allen, founder of Kite Consulting, expects a shortage of supply in September and October after a surplus of organic milk runs out in the spring.
The subsequent milk shortfall coincided with a decline in demand for organic food as inflation-hit shoppers sought to reduce their grocery spend. Inflation rose to an 11.1% peak in October 2022 and stood at 2.3% in April of this year. According to the Soil Association, organic food and drink supermarket sales volumes fell by 6.7% in 2023, but demand has recovered slightly this year. However, consumer confidence remains fragile, and further economic shocks and uncertainty could impact the return of demand, as stated by AHDB’s lead analyst for dairy, Susie Stannard.
Organic milk is more expensive to produce than conventional milk, and the cost of fuel, fertiliser, and feed began rising in 2021, leading some dairy processors to increase the price they paid farmers to maintain a steady supply. Despite the premium that organic production commands, some farmers felt that the premium offered was not enough to incentivize them to continue production, according to Stannard. This has resulted in a shortfall of supply for organic milk in the coming months, as farms take time to switch back to organic production after switching to conventional milk.
A number of organic dairy farms have turned to conventional milk production in recent years due to record inflation, but consumer demand for organic milk has surged this year following a sharp drop in sales during the cost of living crisis. The number of organic dairy farms in the UK has declined from 400 in 2021 to just over 300 this year. It takes two to three years for a farm to convert its crops to achieve organic status, so rebuilding supply will take time. Demand for organic milk grew by 3.9% in the year to March, and the cost of organic production is 50 pence per litre compared to 40 pence per litre for conventional milk. Some dairy processors did not increase the price they paid farmers when production costs began to rise in 2021, prompting some farms to reduce their herd numbers or leave the organic sector altogether.
Inflation reached an 11.1% peak in October 2022 and stood at 2.3% in April of this year, leading to a decline in demand for organic food as shoppers looked to cut back on their grocery spending. According to the Soil Association, organic food and drink supermarket sales volumes fell by 6.7% in 2023, but demand has started to recover slightly this year. Consumer confidence remains fragile, and further economic shocks and uncertainty could impact the return of demand. AHDB’s Stannard warns that more economic uncertainty could put a damper on the recovery of demand. Despite the challenges faced by organic dairy farms, the industry is working towards rebuilding supply to meet the growing demand for organic milk.
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