It’s a strange time for dairy right now. Norway’s butter shortage may seem remote from all the way over here, but on this side of the pond we’re facing somewhat similar concerns. The New York Times is reporting a nationwide shortage in organic milk – and that’s a problem now more than ever, because the demand for organic milk is growing every day.
According to the Times, the organic milk shortage comes down to rising commodity costs. The price of feeding dairy cows the organic grain and hay they need to maintain that organic label is rising – for some, that cost has become prohibitively high. That means that fewer farmers are making the switch from conventional to organic dairy farming, while those that have already gone organic are keeping (and thereby feeding) fewer dairy cows. Some are simply switching back to conventional methods altogether. The end result: less organic milk on the market.
As often happens with such shortages and commodity cost rises, the cost of organic milk is also rising. “The [Western Organic Dairy Producers Alliance] sent a letter to major milk processors like Organic Valley and Horizon this month, spelling out the economic difficulties facing organic dairy farmers,” reads the Times report. “The letter cited the sharp rise in the cost of hay and grain fed to cattle, which is partly because of increasing demand for corn for ethanol.” The letter also noted the financial difficulties that dairy farmers face when converting from conventional to organic, and pointed out that organic dairy farmers must see a pay increase of at least $5 per 100 lbs of milk to remain profitable.
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That’s a 20 percent increase, and one that must be transferred to consumers in the cost of milk, a transfer that many are already starting to see. But when one considers that the cost of conventional milk has also been rising steadily over the past year – what was once only $3 a gallon is now much closer to $4 across most markets – it’s not so outrageous to suggest that organic milk producers would expect the same.
Plus, despite it all, demand is growing. The Times reports a 17 percent increase in whole organic milk purchases between January and October of 2011, plus a 15 percent increase in the purchase of reduced-fat organic milk. Paired with the shortages, it has dairy farmers worried that consumers will switch back to conventional milk out of frustration with empty shelves. But if consumers can weather the inevitable price increase, that (along with the heightened demand) may provide dairy farmers the capital they need to grow their businesses and ensure that grocery store shelves never run dry again.