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The dwindling numbers of organic cows in the UK is threatening to limit supermarket supplies of milk this year, as shoppers’ appetite for more expensive dairy returns, experts warn.
Organic milk production has plummeted in recent years as record inflation forced many dairy farmers to switch to conventional milk in the hope of earning higher profits.
But this year, consumer demand for organic milk has rebounded following a sharp slump in sales during the cost of living crisis.
“Once organic farms have switched to conventional, it is a fairly long process to switch back,” said Susie Stannard, lead analyst for dairy at the Agriculture and Horticulture Development Board, an advisory board to British farmers.
“This could result in some shortages of organic milk until supplies build back up,” she added. Demand for organic milk grew 3.9 per cent in the year to March, according to Nielsen data.
The number of organic dairy farms fell from 400 in 2021 to just over 300 this year, according to official statistics. Building back supply will take time, as it takes two to three years for a farm to convert its crops to achieve organic status.
“You can’t just turn the tap back on and off,” said John Allen, founder of Kite Consulting, a consultancy for the dairy sector. He expects a shortfall of supply this September and October after a spring surplus of organic milk runs out.
Organic milk is more expensive to produce than conventional milk, with the cost of production at 50 pence per litre compared with 40 pence per litre for conventional, according to Kite.
When the cost of fuel, fertiliser and feed began to rise from 2021, some dairy processors, who buy milk from farmers and process it for sale to retailers, increased the price they paid farmers to ensure a steady supply.
Others, however, continued to pay the same rate, prompting farms to reduce their herd numbers or leave the organic sector altogether.
“While organic production does command a premium, some farmers felt the premium offered was not sufficient to encourage them to maintain production,” said Stannard.
The subsequent milk shortfall coincided with a slump in demand for organic food as inflation-hit shoppers sought to cut back their grocery spend.
Inflation rose to a 41-year peak of 11.1 per cent in October 2022. In April of this year, it stood at 2.3 per cent.
According to the organic certification body, the Soil Association, organic food and drink supermarket sales volumes fell 6.7 per cent in 2023. Demand has recovered slightly this year, with organic sales outpacing non-organic in the 12 weeks to April.
However, consumer confidence was still fragile and more economic shocks and uncertainty could put a dampener on the return of demand, said AHDB’s Stannard.