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France's Organic Milk Sector Grapples with Challenges

France 02.04.2024
Source: The DairyNews
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In 2023, France witnessed a notable decline in organic milk production for the first time, marking a pivotal moment for the industry. Total organic milk output reached 1.23 billion litres, representing a 4.5% decrease from the previous year.
France's Organic Milk Sector Grapples with Challenges
Despite this setback, organic milk's proportion of the overall cow's milk production remained relatively stable, hovering at 5.4%. The statistical service Insee remarks that the primary focus for the entire organic dairy sector in 2024 will be to reverse the persistent decline in consumption.

Expressing concern, the Federation of Dairy Farmers (FNPL) highlights that 5% of dairy farmers discontinued organic milk production last year, opting to revert to conventional milk production or exiting the dairy sector entirely. Notably, the number of those exiting surpassed new entrants into the organic dairy sector for the first time.

In certain regions, the situation appears even more dire, with Insee warning of potentially higher exit rates in 2024 as many farmers reach the conclusion of their 5-year conversion contracts.

Aside from farmer exits, those remaining in the organic dairy business often contend with diminishing yields due to unfavorable weather conditions or a lack of motivation to increase production. Moreover, consumer behavior plays a significant role, with decreased purchasing of organic food, including dairy, attributed to factors such as price disparities, cost-of-living concerns, or other personal preferences.

Despite narrowing price differentials compared to previous years, organic dairy product sales in mainstream channels like supermarkets experienced declines ranging from 10-18% in 2023 compared to 2022. Conversely, sales in specialized stores and direct-to-consumer channels saw varying trends, with some experiencing slight increases.

In response to recent farmer protests, the French government augmented support for organic agriculture by an additional €50 million, bringing the total allocation to €90 million. However, there are apprehensions within the producer organization regarding the equitable distribution of these funds to dairy farmers. Eligibility criteria, requiring a minimum 20% decrease in turnover from 2022 to 2023, raise concerns about accessibility for struggling producers.
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