US helps ease worldwide organic milk shortage

A flood of organic milk from recently converted organic dairies in the US is easing the supply shortage that has prevailed on the global market for more than a year, according to UK-based organic market consultancy, Organic Monitor. The surge resulted from farmers rushing to beat a June deadline that will enforce all dairies to use only 100 per cent organic feed and is a godsend to companies like Danone-owned Stonyfield Farm whose organic milk volumes are up 50 per cent on a year ago. Danone has also taken measures into its own hands by acquiring an Irish organic dairy that it will use to produce its Stony organic yoghurts, to be launched with the strapline 'Yoghurt on a Mission' in the UK in June.

The newfound surplus has resulted in a spate of new product development. WhiteWave Foods developed the first-ever omega-3 fortified organic milk: Horizon Organic Milk Plus DHA contains marine-sourced omega acids. Other new product developments include organic yoghurts, ice-creams, and cheeses.

While North American dairies find new uses for organic milk, European dairies continue to struggle to find adequate supply, Organic Monitor said. A number of European countries are experiencing organic milk shortages, the UK and German markets being the most adversely affected, with processors importing significant volume from neighbouring countries. The launch of organic dairy products by German discounters has been a factor behind demand surging since 2005.

Undersupply in the UK market prompted one leading British retailer to market 'transitional organic milk,' which is collected from dairy herds that have yet to complete their organic conversion period. Top supermarket Tesco committed last year to paying organic milk producers £400 per year to help the organic dairy sector keep up with rapidly growing consumer demand. It has recorded annual organic milk growth of almost 50 per cent. Whole Foods, which will open its inaugural organic superstore in London this month, is sourcing organic dairy products from mainland Europe because it was unable to find UK suppliers.

Some European milk processors and retailers are extending fixed contracts to dairy farmers to encourage them to convert, whilst others are offering to pay for inspection and certification costs.

With the American market no longer requiring imports, New Zealand and Australian producers could start meeting the shortfall in European production. The two countries are already established exporters of organic dairy products to Asia.

While imports may be necessary in the European organic dairy market, greater regional production is required in the long-term, especially as consumers become more sophisticated in their purchasing habits; domestic sourcing and food miles are becoming just as important as the organic production method. The organic food industry may have become global, but consumers are increasingly thinking local.

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