Why is the organic milk sector finding itself in difficulty?

Maud Descamps, edited by Ugo Pascolo 6:42 am, October 08, 2021

The organic milk sector is not immune to the consequences of the health crisis: while production is increasing, consumption is falling, and prices have fallen by 23% in one year.

The industry is therefore trying to reorganize itself by putting pressure on producers in particular to limit volumes and lower prices.  

DECRYPTION

A sector in difficulty.

With high production and a drop in consumption since the start of the health crisis, organic tricolor milk is going through a bad patch.

However, the sector seemed promising: in 2017, milk professionals even set themselves the goal of doubling production in five years.

A bet succeeded before the hour, with volumes which jumped from 270 million liters in 2010 to 1.2 billion in 2021. This year alone, the collection of organic milk has increased by 12%.

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A 23% drop in price in one year 

A market which therefore seemed prosperous but which was disrupted, like so many others, by the arrival of the Covid-19. "We have a situation which combines two things: milk which enters in large quantities and a drop in consumption since early 2021", confirms at the microphone of Europe 1 Bruno Martel, administrator at Agrial dairy cooperation. “There has been less innovation around organic products,” he continues. In addition, labels are multiplying on the shelves and the French no longer systematically turn to organic, but also to local or eco-responsible producers. 

A complex situation which has forced large manufacturers to downgrade 20% of their organic production.

Concretely, this milk was sold as its conventional equivalent, and therefore cheaper.

Not to mention that manufacturers have had to cut back on their margins: the price of organic milk has fallen by 23% in one year.

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A sector that is trying to reorganize itself

To prevent this situation from happening again, manufacturers have therefore asked producers to reduce their volumes while putting pressure on prices. This is particularly the case for Amaury Beaudoin and his wife Hélène, who produce 450,000 liters of organic milk each year, half of which is sold to a large dairy in the food industry. A few weeks ago, the industrialist lowered the price of a liter of milk by a cent and reduced orders. A real shock for this producer of Oise who had worked with this dairy for 25 years.

Amaury Beaudoin has therefore "changed dairy" and revised its strategy.

It now only sells a third of its production to the food industry and the rest to local buyers.

"The future may be in short circuits", he says while hoping "the big [manufacturers] will sell organic milk better".

But by then, the entire industry is trying to reorganize itself to limit breakage, to the point of temporarily putting an end to conversions to organic.