Organic Milk Pay, Feed and Retail Price Update
for September 2015
By Ed Maltby, NODPA Executive Director
Added September 10, 2015. Total retail sales for organic fluid milk for June 2015 show no increase on June 2014 sales, but sales of non-fat products continue to drop while whole milk continues to increase. We have no data on total organic milk production so it’s not possible to estimate if this lack of growth in fluid sales is the result of consumer demand or lack of supply.
Retailers are being shorted as organic milk is being diverted to manufacturing use as demand for a consistent supply of organic ingredients increases dramatically with rising interest in non-fluid organic products. Organic processors also have many different plant-based beverages that compete in the dairy case for space. Processors shorting retailers on dairy products may mean increased facing/shelf space for those products and less for dairy beverages. We also have no data on organic imports and how many manufacturers are sourcing organic whey and milk powders, and at what price. Recent equivalency agreements have opened the door to increased imports from Europe, which will require more policing to ensure that none come from livestock treated with antibiotics, which is allowable under some European certifiers.
Currently there is no independent data for producers to evaluate what is happening in the market, what the future of the market may be and how many imports of cheaper organic cheese, whey and milk powder are undermining the pay price for US producers. With the organic dairy market becoming increasingly global, producers need more independent information on which to base their business decisions. There is a great opportunity to increase the amount of organic data available to producers by sharing what is already available in many different agencies at USDA and possibly making it more accessible through one organic portal on the web.
With this need in mind, Congress included $5 million in the last Farm Bill for the “The Organic Data Initiative” whereby the USDA is instructed to examine which data for organic milk (dairy products), livestock, grains, fruit/vegetable, etc. is not available to the USDA, and what could be gathered, how, the cost, etc. For dairy, it would be great to have all the information from the FMMO that addresses supply and manufacturing use, plus information from NASS that could be used to have a safety net program for organic dairy similar to what is provided for conventional dairies. Not having this data puts producers at a distinct disadvantage in negotiating a fair pay price.
Organic corn and soybean prices are dropping to 2008 levels as there is an increase in cheaper imports to satisfy the increased demand for feed, mostly from the rapidly expanding organic poultry market. The effect of the weather, especially in the drought areas, and uncertainty around the progress of harvest, plus the range of quality, protein levels, test weights, disease issues and yields makes it difficult to predict what the domestic supply will be. Lower prices and an increased dependence on imports are no incentive for conventional producers to transition. Organic dairies need a strong domestic supply of organic feed grains to provide the long term sustainability necessary to justify the investment in organic dairy infrastructure; domestic organic feed growers need a strong stable price that reflects their costs of inputs.