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What's happening with $35 to $40 organic milk

Shortages and competition for organic milk push up pay prices, change market strategies of the major marketers - Horizon and Organic Valley.

November 29, 2015

3 Min Read

Sales of non-fat products continue to drop while whole milk continues to increase, reports Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance. While retail fluid sales have declined, the retail price has increased, and there are still shortages on supermarket shelves.

The drop in sales can be attributed to a shortage of supply or milk being diverted to manufacturing as demand for organic dairy non-fluid products is increasing, he adds. Producers are continuing to move to different buyers as contracts end and pay price continues to increase in response to higher inputs and competition.


In the Northeast, farmgate prices between $35 to $40 per hundredweight are being reported – even higher with operations meeting the grass-based criteria of some buyers and at least two certifiers. In the Midwest the mailbox price can average $33 to $35.

Shifting to global demand
This fall, WhiteWave, parent company of Horizon, reported overall sales were up 17%, exceeding $1 billion for the first time in a single quarter. "Plant-based beverages" in this country and internationally are driving their profitability, according to the company.

Horizon sales were up 6% on 1% lower volumes due to higher prices and increased sales of butter and cheese. They also stated that their new Wallaby yogurt brand was the number one organic yogurt in the natural distribution channel (food co-ops, Whole Foods, Vitamin Cottage, etc.).

WhiteWave's popular plant-based foods and beverages brands in Europe include Alpro and Provamel. Its plant-based beverages in China are sold under the Silk  ZhiPuMoFang brand.

Organic Valley/CROPP and Britain's Organic Milk Suppliers Cooperative have strengthened their ties to "help develop markets for organic milk and dairy products." Each will become a member in the other's organization, while retaining independence.

The two already have a close working relationship, with OV marketing and distributing OMSCo's Kingdom Cheddar, the only European organic cheese available on the U.S. market. "OMSCo and CROPP are the two largest dedicated organic dairy pools in the world, with a combined organic milk supply of almost 1 billion litres," said Richard Hampton, OMSCo's managing director. "Our relationship has naturally evolved, and this alliance is the next step. This agreement will allow both cooperatives to market each other's bulk and branded products. And, by working together, OMSCo will be better prepared to satisfy the growing global appetite for organic dairy products."


The move was an important development for cooperation in organic agriculture on a global scale, added Eric Newman, Organic Valley's vice-president. "In meeting the ever-increasing consumer demand for organic dairy products all over the world, our two cooperatives are doing what we know best: we're co-operating." CROPP already has marketing relationships with organic dairy and beef cooperatives in Australasia.

Future farmgate impact?
These developments by the leading buyers of domestic organic milk illustrate the direction that organic dairy is moving, adds Maltby. Organic milk has become a worldwide commodity, mirroring the onventional dairy market.

"What that'll do for any future producer pay price, retail pricing and organic integrity is an open question, he admits. "But we've seen the effect of world pricing on the pay price for conventional dairy. As domestic supply is tight and producers transitioning or expanding are slow, the two major national brands are looking overseas and to other beverage products to expand their operations and profitably.

For more details on pay prices plus feed costs, check out the trend charts for the last seven years at the NODPA website,  or click on feed and pay price update.

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