Guest Speaker – Rob Daykin

Guest Speaker – Rob Daykin

I’d like to start by saying what a real pleasure it is to be asked to be todays guest speaker on the Bulletin.  Ian was always a great support when I first started out, only a phone call away and never too busy to offer his advice.

"Navigating the Organic Dairy Landscape: Market Insights and Trends"

By Daykin Partnership market intelligence

At a time when sustainability and health awareness are driving consumer choices, the organic dairy industry is at a crucial crossroads. The UK organic dairy sector, a microcosm of global trends, is a fascinating case study of the industry's evolution, challenges, and opportunities.

The organic dairy sector in the UK is in a period of transition. Currently, production is down 13.5% (AHDB) year on year, with around 57,000 cows (Defra Stats) producing an average of around 6400 litres of milk per cow. This equates to a production pool of circa 364 million litres. Although consumer demand for organic products is expected to increase, the statisticians suggest that around 15% of consumers have traded down from organic products. This presents a challenge when it comes to balancing supply and demand, but there is also optimism as committed organic consumers, often referred to as "dark green' consumers, maintain their commitment.

Protein markets peaked in 2022 but have now stabilised. Factors such as trading conditions, currency fluctuations and freight costs have influenced these changes. Compound feed prices have fallen and are now below £500 for an 18% ration, a significant drop from over £620 in January. Prices for energy commodities, particularly grain, have fallen significantly and have contributed to a more stable feed market.

Exchange rates, freight costs and availability are the main factors influencing feed prices. Currently, the exchange rates of the pound against the dollar and the euro have returned to the levels seen at the beginning of the year. Freight rates have also fallen: the composite index shows a drop of 46% compared to the previous year. Even if availability fluctuates, the general stability in the market is a positive sign.

The year has been productive for grass growth, resulting in good silage stocks and effective grazing. This has certainly benefited the herds calving in the spring. However, there are still some challenges, particularly for the autumn calving herds, due to the varying forage quality. Despite these challenges, the feed market remains stable with a balanced milk supply and no immediate shortages are expected.

Whilst the organic milk market in the UK is facing some challenges, the outlook is positive. The commitment of key consumers and the stabilisation of feed markets are encouraging signs. Information and strategic adjustments are the key to success in managing these dynamic changes.