Organic milk premiums plummet

Wednesday, September 2, 2009

by SUSAN MANN

An organic dairy farmer is questioning the reasons motivating the Dairy Farmers of Ontario decision to reduce organic milk premiums.

The provincial marketing organization reaffirmed its decision at the August board meeting to cut premiums on the cheese and skim milk powder classes.

The decision means farmers’ blend price will be down one cent a litre starting this fall and premiums are chopped to 16 cents a litre from 28 cents a litre, effective Aug. 1 for Class 3 (cheese) and Sept. 1 for Class 4 (skim milk powder). The premium of 28 cents a litre for the organic fluid milk class remains the same.

The blend price reduction is the initial impact of the premium cut. But the cut is designed to boost skim milk powder sales. Once sales increase, the DFO anticipates the reduced blend price will rise, says Bill Mitchell, DFO’s assistant communications director.

Skim milk powder sales were declining because “of price pressure on it,” he says.

Lawrence Andres, owner of Harmony Organic, opposes the premium decrease because he’s not convinced there will be increased skim milk powder and cheese milk sales. Instead, farmers will just be taking a financial hit, he says.

Currently there is a surplus of organic milk with only 65 to 75 per cent of production being marketed as organic and the rest going into the conventional milk pool. The premium is only paid on the portion of milk that goes into the organic pool.

Most organic milk is used for fluid milk, Mitchell says.

There are 74 organic dairy farmers in Ontario. BF