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Where's my organic milk?


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#1 Rail Paul

Rail Paul

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Posted 31 December 2011 - 03:29 PM

The NY Times has an article today about the conundrum in organic milk sales. Costs for organic hay and supplies have gone up, while prices paid for organic milk haven't gone up. Publix markets in Florida, Tennessee, and elsewhere have found supplies are sporadic, for example.

The shortages have been most noticeable on the East Coast but most areas of the country have had short supplies at some point in recent months. Target says that it has had difficulty keeping organic milk on shelves nationwide. Wegmans, a chain with 79 stores from Massachusetts to Virginia, said it has had shortages of milk from Horizon, a major national brand.

And Publix, with about 1,050 stores in five Southeastern states, said shortages started in November in both its store brand, Publix GreenWise Market organic milk, and national brands like Horizon and Organic Valley.

“Supplies are sporadic,” said Kimberly Jaeger, a Publix spokeswoman. “We are working with our suppliers to secure as much organic milk as we can.”

Dairy industry executives predicted that the shortage along with plans by processors to increase the amount paid to farmers meant that retail prices would rise in the next several weeks by as much as 10 percent. Half a gallon of organic milk that typically sells for $3.99 today may go as high as $4.39. Some chains have already started to raise prices.

Organic milk sales are growing, even though the milk costs significantly more than the conventional kind. Sales of whole organic milk increased 17 percent from January through October, measured by volume, compared with the same period last year, according to the Agriculture Department. Reduced-fat organic milk sales rose by 15 percent. At the same time, total conventional milk sales decreased 2 percent.

While the shortage may be frustrating for consumers, it reveals a bitter truth for organic dairy farmers, who say they simply need to be paid more for their milk.

“If it doesn’t happen, the milk’s not going to be there,” said Tony Azevedo, an organic dairy farmer in Stevinson, Calif., and the president of the Western Organic Dairy Producers Alliance, a farmer group. “And you’re going to have more and more consumers that are going to be turned away.”

The alliance sent a letter to major milk processors like Organic Valley and Horizon this month, spelling out the economic difficulties facing organic dairy farmers. The letter cited the sharp rise in the cost of hay and grain fed to cattle, which is partly because of increasing demand for corn for ethanol.

It said that to make organic dairy farms profitable, processors would have to increase the amount paid to farmers by $5 for every 100 pounds of milk. That amounts to an increase of about 20 percent.

The alliance calculated that such an increase, if passed on to consumers, would lead to a retail price increase of about 22 cents a half gallon.

“We need at least $5 in order to stop the bleeding,” Mr. Azevedo said. “I’ve got farmers that can’t pay their bills. The wolf’s knocking at the door.”

Mr. Azevedo also said that retailers should do their part by lowering their markup on organic milk so that higher prices do not drive away consumers.


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