Organic sector faces crisis unless milk prices rise significantly

The UK organic livestock sector is on the verge of stagnation or even decline unless prices rise, says Chris Laycock of Kite Consulting.

Organic food prices must rise significantly and quickly if the sector is to head-off a looming domestic supply problem, with dairy farmers needing around 40p/litre to guarantee the sector's stability.

Fuelling the necessary increases is the ending of the derogation at the end of 2007 that allowed some non-organic animal feed to be used for cattle and sheep. This has pushed up feed prices sharply.

Two years ago feed prices were £180/t. These have risen to well over £300/t in the latter part of 2007 due to rising demand for organic products and shortages of feeds.

The ending of the derogation could drive prices towards a projected £350-400/t for 2008 - but even with those increases some raw materials will still be in short supply or unavailable. Currently the sector is starved of organic proteins, and diets and milk output, will be affected.


The result is that few new farmers are converting to organic, and several that are currently organic are starting to revert back to conventional production because of the feed cost and profitability issue.