A FALL in consumer demand caused by the cost-of-living crisis has seen GB organic milk production fall 9.7% in May 2024 compared to the same time in 2023, with total production for the 2023/24 milk year down 14% on previous year figures.

In turn, many of those organic farmers have reverted to conventional production due to high costs and low availability of organic feed, which put pressure on profit margins. While organic production does command a premium, some farmers felt the premium offered was not sufficient to encourage them to maintain production.

organic yogurt, cheese and butter were all in growth, with the latter two outperforming their total categoriesorganic yogurt, cheese and butter were all in growth, with the latter two outperforming their total categories (Image: Web)

The figures from AHDB show that organic dairy products make up a small proportion of overall category sales. The yoghurt category has the highest proportion of organic product sales at 8% in volume terms, and this proportion falls to 3% for milk, 1% for butter, and less than 1% for cheese (source: NIQ Homescan, 12 w/e May 18 2024, Total GB).

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Volumes of retail sales for organic were in double-digit decline last year but the latest figures from Nielsen, which tracks shopper purchases, may indicate the tide has started to turn. For the 12-week period ended May 18, sales of organic milk increased by nearly 4%, in contrast to a slight decline for the total cow’s milk category.

Improved demand for organic dairy products is good news for organic dairy farmers as it provides upward pressure to prices. However, consumer confidence, while increasing, is fragile and further economic shocks and uncertainty could put a dampener on the return of demand.

AHDB points out that for farmers considering switching from conventional production to organic, it is important to understand the market they are moving into, and how consumer demand impacts across the economic cycle – and while the recent retail results positive, they are for a short 12-week period only.