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Organic milk supplies drop as demand, costs overwhelm dairies

Industry watchers say this shortage is more worrisome because of the alarming jumps in the price of organic corn and other feed coupled with higher fuel costs.
BY MICHAEL HILL Published: February 17, 2012
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“Got milk?” is getting to be a difficult question when it comes to organic.

Because even as more consumers are willing to pay premium prices for organic milk, supermarkets are having trouble keeping it on the shelves as high feed and fuel prices have left some organic dairy farmers unable to keep up with demand.

“The market has surged faster than supply,” said George Siemon, CEO of Wisconsin-based Organic Valley, the nation's largest cooperative of organic farmers, “and at the same time we had high feed costs reduce supply, so we had a double hit here.”

Organic milk shortages are nothing new. As the milk — which federal regulations require be from cows fed organic feed and free from production-boosting synthetic hormones — rose in popularity during the past decade, there haven't always been enough farmers to meet demand (it can take three years to transition a conventional dairy farm to organic).

The shortages have been serious enough that major chains like Hannaford Supermarkets in the Northeast and Publix Super Markets in the South recently posted signs in the milk aisle advising shoppers of reduced supply. Industry watchers say this shortage is more worrisome because of the alarming jumps in the price of organic corn and other feed coupled with higher fuel costs.

“It's kind of like a treadmill thing,” said Siobhan Griffin, an upstate New York organic farmer whose cows chomp hay in a hilly pasture. “If you make less milk, you make less money, and then you can't afford to make more milk.”

After a recent dip during the recession, sales of organic milk — which can sell for twice as much or more as conventional milk — are strong again. Sales for organic whole milk were up 16 percent from January through November of last year compared with a year earlier, even as sales of conventional milk declined, according to federal agricultural statistics.

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