OMSCo announces sales deal
OMSCo, a UK supplier of organic milk, has announced a new deal which doubles the amount of milk within its premium pool destined for dairy product sales to the US.
The co-operative’s chief operating officer Richard Hampton says that the deal is the culmination of five years of hard work by OMSCo and its farmer members to meet exacting technical requirements.
“Our strategy is to operate across a spread of markets, both at home and abroad, in both liquid and manufacturing,” explains Hampton. “Our US premium pool is just one area in which we’re creating products to unique specifications and certification standards. And it’s paying off; the value of exports into US markets in the form of our specialist dairy ingredients and Kingdom cheese is expected to be worth £25m over the next 12 months.”
“This is a very important step for the longer term development of the co-operative. Having five per cent of the UK’s entire organic milk output sitting in a premium US organic pool will put an even firmer floor in OMSCo’s market. The farmers involved earn an extra 5p per litre on their standard organic milk price, and the additional profit is shared by the wider OMSCo milk pool. It means all members see some benefit, regardless of whether or not they have direct involvement in the project.”
According to Hampton, diversity has given the co-operative more price stability in the face of volatile conventional markets and those developments have allowed it to access growth markets and generate premium returns and are difficult to replicate.
The announcement coincides with the release of OMSCo’s Organic Milk Market Report 2015. The report found that in addition to growth in added value exports, some areas of the domestic UK organic liquid milk market are performing well – notwithstanding a challenging retail environment.
“Organic milk has faced a tough on-shelf environment in the last year. Retail distribution has been cut, promotional activity has fallen and shelf price has increased rapidly, just at a time when conventional shelf prices have taken a tumble. Despite this, organic milk maintained flat volume sales, and value grew by 6.4%,” says Mr Hampton.
However, Hampton warns that overall volumes are predicted to remain flat in the domestic market. “Whilst branded and value-added sector sales are growing, this is being offset by a decline in supermarket private label sales, which are down 1.5% year on year,” he says. “For producers it means a market which is expected to show small overall volume growth, with any new demand met by expansion from existing producers. All in all, there’s little opportunity for conversion to organic production at this point.” he says.
