The production of organic milk has seen a significant decline, with deliveries down by 25 percent. This drop in production is attributed to a fragile consumer confidence stemming from the cost-of-living crisis. The Agriculture and Horticulture Development Board (AHDB) warns that organic milk producers may need to scale back on production as a result.
Organic farming adheres to strict standards that prohibit the routine use of antibiotics and wormers. It requires cows to be fed a natural and organic diet, primarily consisting of grass. However, due to pressures over costs, many farms have reverted to conventional farming methods. Returning to organic farming can take up to two or three years.
The decline in organic milk production can be largely attributed to the cost-of-living crisis and weakening consumer demand. Lockdowns and the Russia-Ukraine conflict have also had significant knock-on effects on the farming industry, leading to high energy costs and limited supplies of feed and fertilizers. Concerns have been raised by MPs regarding the impact of converting farmland for net zero National Grid pylons on food security.
In the 2023/24 milk year, 371.1 million liters of organic milk were produced, marking a 14 percent decline compared to the previous year. Furthermore, organic milk deliveries are down by 25 percent or 123 million liters per annum compared to the 2020/21 milk season.
David Swales, head of EA operations at AHDB, explains that many organic farmers have switched back to conventional production due to high costs and the limited availability of organic feed. The premium offered for organic products was not seen as sufficient to incentivize farmers to continue with organic production. However, there has been a recent return to growth in consumer demand for organic milk, with a 3.9 percent year-on-year increase. Major users of organic milk include retail and food service, with McDonald’s famously serving only organic milk.
Switching back to organic farming is a lengthy process, typically taking two to three years for a farm to regain organic status. This could result in shortages of organic milk until supplies are able to build back up. While consumer confidence is increasing, it remains fragile, and further economic shocks and uncertainty could impact the demand for organic milk.
The UK government has been advocating for land rewilding as a means to protect native plant and animal species and reduce the country’s carbon footprint. A report by the Tenancy Working Group suggests that markets for environmental outcomes will play a role in future farm revenue and cashflow. If the value of natural capital outcomes increases and tenants are unable to participate in these markets, landowners may choose to stop renting their land for agriculture and instead capitalize on natural capital.
According to a report by Knight Frank, there is a growing trend among business people, industrialists, and even A-list actors to purchase land for rewilding purposes. The agency predicts that buyers motivated by a green agenda will become an increasingly significant part of the market. As land is repurposed for environmental support, it may further impact agricultural practices and potentially contribute to the decline in organic milk production.
In conclusion, the decline in organic milk deliveries can be attributed to the cost-of-living crisis and weakened consumer demand. The switch from organic to conventional farming due to high costs and limited availability of organic feed has put pressure on profit margins for organic farmers. While there has been a recent increase in consumer demand for organic milk, the process of switching back to organic farming is time-consuming. Additionally, the push for land rewilding and the potential for landowners to capitalize on natural capital may further impact agricultural practices and contribute to the decline in organic milk production.
