A new report co-authored by Kite Consulting and leading dairy consultants and market analysts has outlined the challenges and opportunities for the long-term future of UK organic dairy, as it sits on the cusp of a turning point, with the potential of better times ahead for suppliers.
“Organic dairy – battered, bruised, but back on the up?” reflects on what has been a torrid period for the sector over the last two years, with soaring costs and unsustainable farmgate prices combining with the cost-of-living crisis, to drive organic shoppers to either trade down or across from organic brands.
Co-authors John Allen of Kite Consulting, Rob Daykin of the Daykin Partnership and specialist agricultural journalist and market analyst Chris Walkland, provide a summary of where the UK sector sits now, considering demand, milk volumes and prices, also looking at how the picture differs compared to EU countries.
“The report recognises that many leading processors and retailers remain committed to what is an extremely important sector for the UK dairy industry, and we look to offer some solutions as to how organic might embrace some of the current challenges as it evolves for the future,” explained Mr Allen.
Published on the Kite Consulting website, the report also considers some of the fundamental structural issues that must be faced if the sector is to thrive, in particular the seasonality of supply.
Consumer demand for organic milk in this country is relatively static throughout the year, but currently, the UK organic milk market produces too much milk in the peak months, and not enough in the trough months.
The authors also consider some short-term options, should volumes fall short this Autumn, including diverting organic milk from other destinations. Certification bodies are encouraged to be flexible, in allowing the feeding of non-organic milk powders to calves ultimately destined for the conventional beef supply chain.
The report also considers the rise of regenerative agriculture, with key organic brands already developing regen milk pools.
“Organic farmers have farmed regeneratively for years, and therefore there is an opportunity here to address any reputational challenge regen has to organic dairy,” continued Mr Allen.
The question is asked as to who in the dairy organic world may fly the flag for organic, promoting its merits over and above the regenerative surge.
“We believe that there is a real opportunity for a processor or processors to take the lead in this space, and drive the merits of organic dairy. This also lends itself to building a more positive narrative that the consumer can both understand and get behind,” said Mr Allen.
“Embracing these opportunities will be key to deciding how far organic will climb, and to what degree the sector will return to its former glory.”
