Is the price of organic milk threatened by volume growth?

Although the increase in organic milk volumes is beginning to slow down, the sector must nevertheless deal with a surplus that is sometimes difficult to exploit, as sales are increasing less quickly than production. Nevertheless, the prices paid to producers are not, for the moment, impacted, according to the latest Idele Trends.

With a year-on-year increase of +6.5% in January 2021 and +10% in February, organic milk production seems to be slowing down compared to previous years with +17% and +19% in the first two months of 2020 compared to 2019. Nevertheless, the growth continues and 'the sector even has to deal with volumes of milk that it is struggling to valorise', indicates the Institut de l'élevage (Idele) in its April Trends.

Although sales of organic dairy products are increasing, it is at a slower rate than production. "Production has had to be readjusted, sometimes downwards for certain products, and the downgrading rate has increased," states Idele.

Challenge: maintaining prices paid to producers

To date, farmers' remuneration does not seem to have suffered, with a price comparable to that of last year in January and February, according to FranceAgriMer, i.e. €477 and then €473/1,000 l at standard 38/32.

For 2021, Idele predicts a growth in collection of around +6% to +8%, as 'the arrival of new deliverers should indeed slow down as the wave of conversion initiated in 2015/2016 and the arrival on the market of these new producers since the end of 2017 is coming to an end'. At the same time, existing suppliers are being encouraged to limit their deliveries in return for maintaining prices at 2020 levels and, in some cases, financial support for producers.

"In the context of an imbalance between a still strong growth in collection and a more moderate growth in consumption, the willingness of dairies to control volumes seems to extend to a wider period (editor's note: than the usual spring period) this year, in the hope of a recovery of the strong dynamics of the demand for organic dairy products," Idele also indicates.

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