Rising prices and continued shortages of organic milk are creating a rare growth opportunity for dairy producers, but the market remains tight and delicately balanced.
According to industry estimates, demand for organic milk is expected to increase by about 1% to 2% year-on-year.
This indicates that retail demand is stable, but capacity constraints mean that overall volumes will need to be managed carefully, especially as the spring flush approaches.
The organic sector has been in a period of contraction in recent years as rising costs and weather fluctuations have squeezed profit margins.
Now, with prices soaring and supplies still below peak levels, all eyes are on how farmers can respond without destabilizing the market.
FourFarmers is urging producers to review their feeding strategies to ensure increased production is efficient and consistent with milk purchaser requirements.
“Feed has always been the foundation of organic milk production and that remains the case,” said Ben Trott, Organic Product Manager at Four Farmers.
Organic standards require at least 60% of dry matter intake to come from feed, putting significant pressure on feed quality and utilization. However, with recent unpredictable growing seasons, many farms are struggling to maintain consistency and feed value.
“Although there were some good grazing periods last year, especially in the fall, many farms are still feeling the effects of a tough growing season,” Mr Trott said.
“It is important to use feed effectively by supporting it with appropriate supplementary feeding, rather than making excessive demands on it and resulting in suffering.”
Rising milk prices have improved profit margins and given room to reevaluate the use of concentrates. In organic systems, up to 40% of dry matter can come from concentrate, but that portion must be carefully balanced to protect profitability.
“In organic systems, up to 40% of your dry matter can come from concentrate, and that part of the diet needs to be worked hard,” Trott said.
He added that some producers may have room to increase production as their contracts with processors allow. “The current strong position means producers are also ready to go further when the market allows.”
However, the risk of overproduction remains. With limited processing headroom, if demand cannot keep up, supply can increase rapidly and quickly put pressure on prices.
Feed variability is also a challenge. Organic producers do not have access to the same range of nutritional tools as conventional systems, including synthetic amino acids, making feed formulation and protein efficiency more important.
“That’s where expert advice really adds value,” Trott said, adding that feeds can be tailored to feed analysis, herd performance and system goals to support yield without compromising the feed base.
With the spring flush looming, producers are faced with the delicate balancing act of taking advantage of improved profitability while keeping production growth disciplined and in line with market capacity.
