Has Organic Milk a Lesson for Organic Eggs?

01/03/2019

USDA statistics show an essentially static growth in flocks certified as Organic. For the past seven months the combined flock has increased by 100,000 hens to 15.7 million representing 9.5 percent of the shell-egg producing flock of 165 million. The USDA-AMS documented organic production attaining 230,000 cases per week in November 2018. The complement of hens at an average rate of lay equivalent to 75.5 percent would in fact produce 230,000 cases per week although there are anecdotal reports of organic eggs marketed as “cage-free” (and reputedly the reverse on occasions!) depending on regional demand. The 58 cents per dozen average retail differential between certified organic and cage free during the second and third weeks of December hardly covers the 55 cents per dozen difference in production cost resulting from a nominal premium of $300 per ton for organic feed. Generally sales of organic eggs are stimulated by a differential in shelf price of $1.00 to $1.20 per dozen over cage free.

 

In reviewing the growth in sales of organic foods in the U.S. the Organic Trade Association, cited by Nielsen claims $40 billion sales in 2017 representing approximately 5.4 percent of all food sold in stores, amounting to $730 million. Organic products showed a nine percent increase over 2016 in dollar value and eight percent in unit volume. Eggs and dairy collectively accounted for $4 billion in sales with a USDA estimate for dairy of $2.6 billion and by calculation, $1.4 for organic eggs, assuming $4 per dozen at retail. Organic milk sales fell by 2.3 percent in 2017 contrary to the national trend for organic food products. The average unit price for cow’s milk is $2.60 per gallon compared to $4.80 per gallon for certified organic milk. Both conventional and organic milk face competition from plant-based products selling at a 25 percent lower cost than to conventional milk.

 

Sales volume for a food product is limited by the price that customers are willing to pay. Wide differentials in price suppress demand unless consumers can equate perceived or real attributes with any price differential. The USDA Organic seal imposes substantial costs in sourcing certified ingredients and complying with overly restrictive National Organic Program regulations on feeding, housing and management. These impositions are reflected in cost of production and ultimately selling price. If the organic egg sector is to grow, either price must come down or a wider demographic must be persuaded to appreciate the claimed benefits associated with organic status. Organic milk is in a downward spiral contrary to the trend in organic food. Organic eggs show static growth. Changes in regulations and promotion of organic certification is required to stimulate market growth in the segment or this is as good as it gets.














































































































































































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