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Thread: Producrion

  1. #1
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    Default Production

    How much more milk can the organic market absorb? If a major player started shipping over one million pounds of organic milk a day how much would the price of organic go down? This would represent less than one percent of their current marketing. If they pushed it to 10% it would more than double current organic production. Is there anything preventing them from doing this?

    AMS reports January 2017 total organic milk products sales at 228 million
    pounds, up 4.7% from the previous year.
    Last edited by Ed from ny; 03-12-2017 at 09:43 AM. Reason: Typo

  2. #2
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    Organic growth has been steady to wild the last 15 years. Sales growth has been 6-10% over this time. Organic milk is priced completely differently than conventional milk, the price is basically set buy the processor. The only way this works is through controlling production. Organic valley implemented a quota on producers starting in March to put the brakes on over production.

  3. #3
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    I am talking about a new player in organic that could have the potential to double current production levels in a short time 3 to 5 years. Would organic valley or any other organic coop be willing to continue limiting production and lose market share just so the new guy could sell their milk?

    In Jan organic sales were 228 million pounds if this company becomes a player and 10 percent of current production went organic would be well over 300 million pounds a month. Would have own processing and label.

  4. #4
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    That's an awfull big player Ed. Many many times bigger than the current largest. Large organic dairies have not been real well received in the marketplace, not sure why this one would be any different.

  5. #5
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    Not one dairy but a coop

  6. #6
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    A new Coop is going to have to compete for existing milk/producers. The odds of new organic producers coming online and doubling current production is exactly the same as the odds of that happening in the conventional market.

  7. #7
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    ??? This wouldn't be just any co-op it would have to be the biggest, DFA. 300 million per month would take between 125,000-250,000 cows. As there are only 9 odd million cows in the entire US, this seems highly unlikely.

    I'm not saying that one or more of the big coops won't start their own organic milk "brand", Dean Foods->Horizon->Whitewave->Danone already has. However, transitioning huge numbers of dairies to organic would most likely kill all premiums on price.

    Just as a side note, the amount of conglomeration in the dairy processing industry is crazy.

  8. #8
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    Default

    I think the people who would be pushing this don't care about the premiums​ for organic it is driven by ego and a need for control.

  9. #9

    Default

    Speaking of ego/need for control, what exactly is the status of Danone buying White Wave? I know CROPP was putting up a fuss to prevent it but haven't heard much lately. Has Danone/White Wave given anyone any assurances or anything?

  10. #10

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    Far as I know the Danone/Whitewave deal went through, please correct if wrong. Haven't seen much in the news for awhile. OV guys claim Horizon was never a profitable label for dean or white wave. June of 2017 Horizon will no longer be sourcing milk in MO. As for the situation proposed by OP, I see that as highly unlikely to happen. The Dean-OV "joint venture" will be interesting to watch. Personally I see any big entrants into the organic game being acquisitions or mergers.

  11. #11
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    Yes the deal is going forward. A couple US brands of organic yogurt had to be sold as part of the deal but it's moving forward
    DiederichFarm
    "You are only as good as your next success, not your last" Sir Jock Stirrup

  12. #12

    Default

    It is good that you have come up with this question. You are talking about the milk role in the organic market, such as to know the after effect of dairy. Let me explain to you for each question you have asked.

    Most of the decline in U.S. dairy consumption is due to the substantial drop
    in milk consumption during this period, and Americans now consume only about 75% of the number of dairy products recommended in the Federal dietary guidelines designed to promote health and prevent diseases.

    Probably the price would get reduced by about 10% to 20%. Which will have a major impact on the market and the economy.


    I think it can be prevented by supplying organic milk to the native people first and then to the other states and countries. Where the need first satisfied at the origin of the milk.

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