OMSCO STATEMENT IN RESPONSE TO SAINSBURYS INTENTION TO SELL IN-CONVERSION MILK

02 March 2006

The Organic Milk Suppliers Cooperative (OMSCo) is warning that Sainsbury’s strategy to sell in-conversion milk will not be a long term solution that should be adopted by the industry. It will confuse consumers and potentially undermine the total organic proposition.

The risk being taken with the reputation of organic food is disproportionate, especially given that the proposed recruitment represents a tiny number of farms and the 4 million litres of organic milk that will be generated per year does not meet anywhere near the projected volumes needed. OMSCo believes that this is in danger of being a mere public relations exercise and is not in the interest of sustainable organic dairy farmers.

OMSCo is working in partnership with dairies and retailers to build a sustainable future for British organic dairy farmers. Its approach to securing long term stability for the organic dairy industry is lower cost and lower risk, which is why it is widely endorsed by major liquid dairies, organic yogurt and organic cheese manufacturers.

Richard Hampton, OMSCo Sales and Marketing Director, comments “Market expansion needs to be carefully managed in order to avoid a boom/bust situation and it is of the utmost importance that we do not go down the route of fragmenting the market. Whatever conversions take place should be through the cooperative movement. OMSCo's recruitment initiative will guarantee customers specified volume whilst retaining the collection of this milk within the wider pool. This ensures maximum economies of scale, which are so important in such a small sector, and therefore the maximum return to farmers.

“This proposed strategy from Sainsbury’s delivers nothing that OMSCo’s strategy cannot deliver and in addition OMSCo will not pass the cost on to the consumer. It is also important to note that ‘In conversion' milk is a confusing consumer proposition and it risks damaging the organic offer, not only in Sainsbury’s but in the wider market. “

OMSCo represents around 60% of the UK's organic farmers and has pushed for the improvement in farm returns over recent months, which is now delivering the substantial increases in farm production so urgently needed by customers. OMSCo is unique in having invested the time and energy in understanding the overall market supply and demand situation. Its recently launched Organic Milk Market Report highlights the long term conversion requirements, and proposes short and long term solutions to ensure stable supplies and sustainable returns can be maintained.

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Editors Notes
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