GB organic milk production: continued uplift in consumer demand could result in shortages of organic milk supplies

For the milk season so far (Apr-Oct), GB organic milk deliveries are estimated to have totalled 203.21 million litres, this is down by 9.3% compared to 2023/24 and down by a substantial 23.1% compared to 2022/23. In the week ending 02 November, deliveries averaged around 1.0m litres/day, back by 2.9% compared to the same period previous year.

In recent years high input costs and sluggish consumer demand for organic following the cost-of-living crisis dampened market sentiment and caused a contraction in the sector. In September and October, total GB milk production has returned to growth.  In the month of October alone, production has risen by 2.5% year-on-year in response to increasing milk prices and good weather. This momentum has been reflected in the GB organic milk production in the month of October, with decline in production coming down from the double digits seen at the beginning of the year to -4.8% in October compared to previous month.

Retail demand continues to firm

According to NIQ Panel on demand, in the 12 weeks ending 5 October 2024 the volume of cow’s milk (in litres) with organic claim increased 0.3% while that of organic yoghurt (in kgs) increased by a significant 9.8% year-on-year. Butter, spreads and margarines contributed to the increase by 43% while cheese bucked the trend (-36.4%). Volumes of total cow’s milk declined 2.6% during the period. These figures denote consumers are returning to the organic market unlike last year wherein volumes of retail sales for organic dairy declined. The cost of organic milk declined by 0.7% to £1.09 per litre while that of conventional milk declined 0.3% to £0.80 per litre.

Going forward

Though overall inflation has increased marginally to 2.2% in the 12 months up to July 2024 according to latest data from the Office of National Statistics, food inflation has remained stable at 1.5% during the period whilst wages have increased significantly. This will provide some boost to consumer confidence which should support demand. However, farmers confidence has been dampened by the recent agricultural budget and many farmers already left organic during the height of the cost-of-living crisis period. It will take some time for farms to convert to organic status. 

Security of demand will be dependent on the economic situation. Organic sales are vulnerable to price movements and any upside momentum in prices could dampen demand. With a somewhat gloomy budget predicting lacklustre economic growth in the UK and with potential downsides from the fallout of a Trump presidency on global trade economic recovery is far from certain. It will be important to tell the organic story and communicate the benefits of organic to draw consumers back and support demand. 

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