Organic milk efficiency spied after UK cooperative collapse

By Neil Merrett

- Last updated on GMT

Related tags: Organic farming, Inflation, Macroeconomics

Dairy cooperative OMSCo has stepped in to market the organic supply of national rival Dairy Farmers of Britain (DFB) earlier then planned after the group went into receivership last week.

The group says it will take responsibility for DFB’s organic farmers over the next few days, ahead of an original agreement to have come into place from 1 July this year, as OMSCo seeks to improve stability and efficiency across its supply chain. Upon his appointment earlier this year, OMSCo vice-chairman Sam Taylor said that despite concerns about consumer interest in higher-cost organic products, meeting potential market growth demands and ensuring a stable price remained the cooperative's main concerns. Price fears​ Across Europe, the issue of milk costs remains a hot topic as part of wider commitments by the European Commission to deregulate the bloc’s dairy market amidst, leading to protests from farmers claiming they cannot make a profit from their operations. Dairy Farmers of Britain (DFB), which accounted for 10 per cent of the UK’s milk supply and employed 2,200 people across the country, announced earlier this month that it was entering receivership after no longer being able to cover its production costs. Efficiency plans​ In concluding a deal for the DFB’s organic operations ahead of schedule, OMSCo is expecting to focus on providing efficiency savings to all suppliers as part of a commitment to improved profitability. “This agreement, which has been agreed and concluded very quickly, was motivated by a desire to deliver efficiencies on haulage and administration to the enlarged organic pool,”​ claims Taylor. Amidst current market uncertainty, fears over the organic industry’s ability to withstand the economic downturn in markets like the US are not thought to have spread across the Atlantic. Taylor told DairyReporter.com earlier this year that the economic downturn had not adversely hit the cooperative’s sales, but meant that ensuring milk price stability and supporting market growth were key objectives. ‘Recession proof’​ Last November, consumer analyst Mintel suggested that the US organic food and drink market was expected to slow alongside the economy on the back of shoppers’ concerns over cutting spending.

Mintel said that although the organic market had been widely regarded as somewhat resilient to tough economic times, it expected sales growth to continue slowing over the coming years.

However, from OMSCo’s point of view, UK consumer spending fears are not seen as a significant concern for the organic dairy industry.

Steady sales

Taylor claimed back in February that steady sales within the market showed a recognition amongst consumers that the premium price often paid for organic milk-derived products at retail level was generally still fairly low.

“With milk, your family can switch to organic for less than £1 per week, so it is not an obvious place to look to economise,”​ he stated as the time. “Above all, we must ensure the consumer continues to see organic dairy as great value for money.”

Related topics: Market Trends

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