Will rising US demand for organic milk spur more supply?

Across the US, organic milk supplies are low. Farmers traditionally counter rising costs for organic grain and hay used to feed their cows by passing the increase on to retailers. But during 2011 drought coupled with demand for corn for ethanol forced farmers to also cut back on feeding. Cows produced less milk as a result.

Industrywide, fewer farmers are switching to organic dairying too, deterred by higher costs from pasture- and specially-grown grain and hay for animals, which can erode profitability. (Some even went back to conventional methods in 2011.)

A farmers’ group, the Western Organic Dairy Producers Alliance, says that a 20% increase in the price paid by processors is needed to keep dairies in business. The Cooperative Regions of Organic Producers Pool, a major milk processor of the Organic Valley brand, has confessed to higher revenues on lower milk volumes. Aurora Organic Dairy and Stonyfield Farm have signaled similar shortfalls.

Nonetheless, consumers are asking, “Got (organic) milk?” The US Department of Agriculture reports a 17% jump in organic milk sales (mostly of the reduced fat kind) by volume during the first three quarters of 2011 compared to the same period last year. The Southeast has taken the brunt of a shortage that is felt nationwide.

Shoppers at Publix have found both fewer national brands and the supermarket’s own label, Publix GreenWise Market, to pick up. Target has seen its dairy case depleted, as has Wegmans, particularly its stock of Horizon Organic brand milk, which is produced by Dean Foods.

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Picture by Simon Law, used under a CC-Share Alike License.

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