Growth slows in Ontario's organic dairy industry

Tuesday, November 10, 2009

by SUSAN MANN

Organic dairy farms in Ontario are likely to remain small despite a trend to large organic dairy farms in the United States, say organic officials in the provincial industry.

In fact, organic dairy farming isn’t attracting a lot of interest here now “because the returns are simply not there,” says Lawrence Andres, owner of Harmony Organic.

Steve Cavell, CEO of Organic Meadow Co-operative, says the movement to larger farms isn’t likely to come here and he doesn’t see it happening in the United States anymore either. “It’s what the USDA bureaucrats would like to have happen. But now it’s the large operations in the United States that are wondering whether this is viable for them.”

In Ontario and Quebec, the average organic dairy farmer milks 45 cows, Cavell notes.

The conclusion that U.S. farmers will move to having larger operations was in a study by the United States Department of Agriculture’s Economic Research Service released this month. Study authors William D. McBride and Catherine Greene found the largest organic dairy farms, those milking more than 200 cows, accounted for more than one-third of organic milk production and are far more likely to generate returns above their capital and labour costs, “suggesting organic milk production will migrate toward larger operations.” But most U.S. organic dairy farms are small with 45 per cent milking fewer than 50 cows and 87 per cent milking fewer than 100 cows, it says in the U.S. study.

Cavell and Andres both say the global recession put the brakes on fast-paced growth in U.S. organic milk production earlier this decade. McBride and Greene found that from 2000 to 2005 the total number of certified organic milk cows on U.S. farms increased by an average of 25 per cent annually, making organic milk production among the fastest growing segments of agriculture there.

Andres says that since the recession hit, organic dairy farming in the United States has been “in a severe crisis.”

Cavell says organic milk sales there “actually went negative” in 2009.

Canada’s growth numbers paralleled the U.S. ones “but the difference is we’re still growing,” he says.

But Andres says there are definitely signs the recession is affecting the Canadian industry’s growth. Two years ago, total organic milk sales grew at a rate of 22 to 25 per cent annually. Now, that rate has dropped to 15 to 20 per cent.
 
Andres says the recession is affecting the industry because it has prompted some price-conscious organic dairy product consumers to switch to conventional milk to save money.

There are currently 77 organic dairy farmers in Ontario, up by eight from 69 a year ago. Cavell says the number of farmers getting into organic dairying has slowed because there’s currently a surplus of milk. “When there’s a surplus it’s a lot harder to attract new guys plus the Dairy Farmers of Ontario pro-rates the premium so it’s economically less attractive,” he explains.

The organic milk surplus in Ontario had worried Andres as early as the middle of 2008. He lobbied Dairy Farmers to put newly certified organic milk producers on a standby list if their supply isn’t needed to fill the organic pool. Dairy Farmers created the waiting list in May, 2009. BF