Table for the week...

From time-to-time I receive inquiries about the 'organic' milk market and its rapid expansion in sales.  Generally the interest is on the part of a milk producer looking to gain access to the reported high farm pay prices.  The data in this table puts the 'Organic' market and is market share of beverage milk in perspective.  Sales of organic product for January 2008 were 142 million pounds.  This is just 2.9 percent of the total milk sales for January.  This is 323 million pounds less than the sales of Flavored Milk and Buttermilk which capture 9.6 percent of total milk sales !  While it is alluring to think that there is a new hotly demanded beverage milk on the market, the truth is much different.  Yes, organic is showing high growth rates and any product which contributes to demand is welcome but keep in mind the growth rate is being calculated from a rather small base.  What is holding back the total sales of Organic milk?  Very high retail market price premiums of course.  These premiums will have to decline substantially for sales in this category to become a significant share of total beverage milk sales.  Of course if that happens milk check pay prices for organic will also decline.

{data from Federal Milk Marketing Areas and California: Dairy Market News Vol. 75 Report 10}