Dairy case managers may have another cause to celebrate this holiday season. Organic milk supplies are expected to finally improve — at least for a few months — beginning next spring.
That's because stricter U.S. Department of Agriculture regulations related to dairy cow conversion went into effect in June 2006. As a result, many organic dairy operations that were on the fence about expansion or transition hit the ground running during the first half of this year. All of those cows that got in under the deadline will start giving certified organic milk in early 2007.
“The change in requirements gave some farmers the push they needed to finally get into the market,” explained Holly Givens, communications director for the Organic Trade Association, noting that several producers she had spoken with recently expect increased supplies next spring.
According to OTA's 2006 Manufacturer Survey, the organic dairy category grew almost 24% last year. With sales totaling more than $2.1 billion, the segment is second only to organic fresh produce in size, and as retailers are aware, it has become an important gateway for new organic consumers.
But farm conversion is a difficult process that just became more challenging. Prior to June, individual cows or entire herds were usually converted to organic production by placing them on certified organic land and feeding them a mix of 80% organic feed for nine months, and 100% organic feed for the following three months.
Now, as one outcome of the controversial Harvey vs. Veneman lawsuit, regulations will require cows to be fed a 100% organic diet for the full transitional year, eliminating a significant financial break for farmers.
“The Harvey case had some real reverberations for the industry, and there was a big push, when the price of conventional milk was low, to encourage more farmers [to transition to organic] under the old clause,” explained George Siemon, organic farmer and chief executive officer of Organic Valley. “We will see, next April, May, June, a really unusual amount of milk coming in as a result of farmers trying to get in before those changing standards.”
Retailers and consumers aren't likely to see much fluctuation in price due to this one-time supply boost, since organic pay prices are fixed by long term contract, making them significantly more stable than commodity milk prices. And, with demand still increasing at a double-digit clip, it's unclear how long this temporary relief will last.
“This is going to be a one-time occurrence that will hopefully help us get back on track for a while in terms of supply,” Siemon said. “The new challenge is that it's now quite a bigger investment for farmers to go organic, and we still have to try to encourage them to do that.”