2.14.2008 9:43 AM

Organic Milk Price Increase

High Feed Costs Lead to Reduction in Organic Milk Supply

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Photo: Paul Burns / Getty Images

By Annie Bell Muzaurieta

Organic milk prices may rise, according to the Dallas Morning News.

George Siemon, CEO of Organic Valley, a Wisconsin-based farmers' cooperative, told the paper that higher organic grain costs have led to farmers feeding cows less, which, in turn, causes them to produce less milk. Farmers are also less inclined to switch to organic farming, according to the article, which reduces the milk supply even more.

Regular milk prices have increased as well due to the ethanol boom, which caused corn prices to rise.

Organic milk prices went down last year as a result of oversupply. The article says several factors contributed to the oversupply: A change in federal law that took effect July 1 made it more expensive to convert from conventional farming to organic, leading some farmers to complete their transition by late June. In addition, some companies aggressively recruited new farmers to become organic.

Mr. Siemon, at Organic Valley, said prices could be 5 to 10 percent higher by the end of this year.

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