Room for organic milk production to expand

Wednesday, May 2, 2012

With 100,000 litres a month coming in from Quebec, there is an opportunity for Ontario producers to fill the gap. But the organic market operates in fits and starts and matching demand to supply is tricky

by DON STONEMAN

Brothers Josh and Rudy Biemond of Iroquois took over their father's farm on April 1, 2011. They are milking 35 cows and producing organic milk for the Guelph-based Organic Meadow Coop, and raising two young families doing it.

The income is good. Because they produce high fat milk, the Biemonds get $84.84 per hectolitre for their milk sold into the conventional market. But because they are also organic producers, there is a 23 per cent premium over the regular price for their milk. That bonus is tempered by a utilization factor, since not all organic milk is sold into organic markets all of the time. Last year, their returns averaged just under $1 for every litre of milk they sold off the farm. They are growing all of their own feed, so costs are relatively low.

The market for Ontario organic milk operates in fits and starts. It's tough to match production to the market. Right now, there is more demand for organic milk than there is production.

Rob Wallbridge, eastern Ontario field services representative for Organic Meadow, says that since last fall about 100,000 litres of organic milk produced in Quebec enter Ontario every month to meet growing demand.

It's the reverse of the situation three years ago when there was a glut of organic milk in Ontario. Many producers came on stream all at once and the market couldn't absorb it all. "We saw a big surge in the number of producers and supply of milk three years ago," Wallbridge says. "The market doesn't grow that quickly." Now the market has outgrown that flush of production.

The Biemonds crop 400 acres organically, feed half to the cattle and sell half as cash crops.

Farmers who must buy their organic grain to feed cows will feel the pinch, Biemond says.

Conventional corn priced at $250 a tonne is cheap compared to organic corn at $450. "It's not an easy go," he says. They produced organic feed before they produced organic milk.

Biemond says their farm converted to organic in 1989 and shipped into the conventional market until they started getting an organic premium in 1999. "We shipped organic milk into the conventional market for 10 years before we got paid for it," Biemond says. They are milking in a freestall barn with cows on a manure pack.

They are both raising young families. Josh, age 27, has four children. Rudy, 33, has three children. It's not every small farm business that can support two families, Josh Biemond says.

Wallbridge's job is to offer extension services to co-operative members in eastern Ontario and Quebec – and to expand. "We are trying to work with producers who are interested in filling the market," Wallbridge says.

Like other dairy farmers, organic producers want to expand, and they face the same challenges in getting quota as do conventional farmers, he says.

Last year, Dairy Farmers of Ontario (DFO) had incentive days for organic producers, encouraging them to fill the organic market. But, because Ontario is part of the P5 (eastern provinces) pricing and market-sharing agreement, DFO felt they had to let in milk from Quebec, and the incentive day program was ended, Wallbridge says.

If there were a big boost in milk production and less than 100 per cent of the organic milk produced was used in that market, the bonus for organic producers would fall, based upon utilization.

Shelly Juurlink, member relations manager for Organic Meadow, says matching supply to demand is "tricky." Some companies "dabble" in an organic product for a while, artificially increasing demand, then quit when they find they can't sell it, so there is a surplus.  

Organic Meadow is looking for new members. Importing milk from Quebec "has been good for us. It allows us to keep a good premium for farmers." But Juurlink warns that it isn't sustainable in the long term and production must increase.

Organic Meadow has about 100 family farm members producing milk, eggs and grain. About 68 of those farms produce organic milk.

Bill Mitchell, DFO's assistant director of communications, says that last year 79 farms in Ontario produced 25 million litres of organic milk. Of that milk, 90 per cent was sold into the organic market.

There were incentive days available to producers last fall, when producers with the ability to produce extra milk for the market could do so and make up for those who couldn't, but those incentives were for all producers, not just organic and had nothing to do with the P5 arrangement, he says.

Importation of about 100,000 litres monthly would be four per cent of the province's organic needs in a year, Mitchell estimates. Not all of the organic milk produced is utilized because some of the processing plants are not receiving milk seven days a week, he says. The rest goes into the conventional milk channel.

For farmers thinking about switching to organic production "there is a conversion curve," he warns.
Juurlink says the co-op helps farmers to make that conversion by supplying technical advice. BF