Organic Milk Supply Surging

[Chris Amirault]

Today from Reuters (click for full article):

After years of being in short supply, organic milk is expected to flood the U.S. market as a regulation change and higher margins push more dairy farmers to produce it.

The dairy industry is expecting organic milk supply to surge by at least 40 percent this year from a previous annual growth rate of 20 percent, creating an excess of 25 million gallons, according to some estimates.

Meanwhile, consumer demand for organic milk will continue to grow at 25 percent annually, leading some industry experts to predict that a retail promotion war is imminent. [snip]

Greater quantities of organic powdered milk, yogurt, ice cream and cheeses are expected to hit store shelves as dairy processors divert their excess supply.

Looks like that simple formula I learning in intro economics isn't working perfectly here, to my lame brain. Though there will be more milk on the market, prices will stay the same, probably because that consumer demand is a whopping 25% per year. (Right?)

Are you drinking organic instead of inorganic milk? (I drink Rhody Fresh, myself -- click.) Would lower prices encourage you to drink more? Have the criticisms of Big Organic from writers like Michael Pollan swayed your thoughts on the matter of milk?

[Fat Guy]

I don't really understand how the regulation change is pushing supply. The regulation change says that 100% of feed for organic-milk-producing cows now has to be organic (as opposed to 80% before). How does that act to increase supply?

[Fat Guy]

Are you drinking organic instead of inorganic milk? (I drink Rhody Fresh, myself -- click.) Would lower prices encourage you to drink more? Have the criticisms of Big Organic from writers like Michael Pollan swayed your thoughts on the matter of milk?

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To me the actual "organic" designation is largely irrelevant. For one thing, I've never seen a compelling piece of evidence that says my health or the health of my family will be improved by drinking organic milk instead of conventional milk. (It's particularly annoying when pediatricians recommend organic milk "just in case," like that's a statement with any medical/scientific validity.) For another thing, as I've mentioned on other topics, I don't like the fact that most organic milk is ultrapasteurized, shipped long distances, not pastured all that much, pumped up with vitamin A & D just like regular milk, etc. For still another thing, it doesn't taste better to me -- actually in many cases it tastes worse than the cheapest brand of milk because the cheapest brand of milk (if you're in a dairy producing area, at least) is usually local and has very high turnover. Finally, I'll always choose a local small-scale mostly-natural supplier like Ronnybrook or Rhody Fresh -- both not organic brands because they don't meet various technical criteria -- over some officially designated "organic" milk from a mega-industrial-organic cooperative 3,000 miles away from my home. Would a 50 cent or $1 change in price per gallon matter to me? Probably not. We don't drink enough milk to care. Maybe when our kid is drinking two gallons of milk a week we'll care.

[Dave the Cook]

I don't really understand how the regulation change is pushing supply. The regulation change says that 100% of feed for organic-milk-producing cows now has to be organic (as opposed to 80% before). How does that act to increase supply?

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The Reuters piece doesn't do a good job of explaining what's actually going on. A NY Times article from 20 April (now behind the paywall) takes it a step further:

Arthur Harvey, the blueberry farmer, persuaded a federal court in 2005 that some regulations on organic milk were too lax, including those governing how a dairy farmer can convert to organic status.

As a result, hundreds of dairy farmers decided to switch last spring so they could complete the yearlong conversion before the more stringent ''Harvey'' rule takes effect in June.

Deeper, a secondary impetus is described:

(F)armers say that many among them are converting to organic farming, and Mr. Harvey's lawsuit is not the only reason. Rock-bottom prices for conventional milk have also pushed farmers to consider more lucrative alternatives . . . . .

Last April, for instance, conventional dairy farmers received a national average of $12.10 for 100 pounds of milk, compared with $15.20 in April 2005, according to the department. Organic dairy farmers, by contrast, were paid about $22 for 100 pounds of milk last spring.

We don't buy much milk -- about a half-gallon a week -- but there's no doubt in my mind that there are repercussions beyond just the supply of organic milk. A few weeks ago, for example, the Publix chain announced that henceforth, all of its milk would be free of rbST. Of course, relevant to Fat Guy's point that the health and flavor claims are sketchy at best, the Publix news release ends with the statement, "The FDA has stated that no significant difference has been shown between milk derived from rbST-treated and non-rbST-treated cows."

[KensethFan]

I never really bought into the "organic" thing. More of an excuse to make prices much higher than needed. How these people charge this much for milk (or any organic product) baffles me.

I get raw milk from an Amish farm here in the Midwest. I pay $2.00 for a gallon of milk. No pasteurization to kill all of those wonderful enzymes that aid in digestion and no homogenization (take all of the vitamins and minerals out and then attempt to add them back in properly). Just plain, raw milk. Tastes much better than any of the horrible, processed stuff you buy at the store. That's about as "organic" as you can get.

If figure if I have to buy the tasteless, barely digestible stuff from the store, I might as well get it on the cheap. The whole "organic" thing is just a rip off.

BTW: I know someone is going to go on and on about how wonderful pasteurization is and how "safe" it is. In all of the years (38) of my drinking raw farm milk I have never been sick from it. My family has never been sick from it. We buy eggs ($1.00 per dozen) from the farm too. Never got sick from those either.

[Allura]

Are you drinking organic instead of inorganic milk?

I switched to 1% for diet reasons and found that organic milk tends to simply be tastier. Makes up for the loss of fat a bit. Alternately, I've been picking up a not-quite-organic brand from NY called Mountainside Farms that is also pretty good.

[viva]

Local milk is top choice (regardless of organic vs. non). As local as possible, I should say... I (in NC) have been enjoying Homestead Creamery which is from VA.

Organic non-local is second choice. Like others have mentioned, the organic tends to compensate for the lower fat milk.

Non-organic non-local is last choice. For lower fat milk, these seem to be the most watery.