Southern Europe is suffering from shortages of organic milk and this is hindering growth in the organic dairy products market. Research by Organic Monitor shows that although market revenues expanded by 37.6% in 2001, higher growth would have occurred if there were higher volumes of organic milk production in the region.

The new strategic report by industry consultants, Organic Monitor (www.organicmonitor.com), examines the organic dairy sector in Italy, Spain and Greece. These three countries have 1.4 million hectares of organic farmland, accounting for 38.8% of organic farmland in the EU. However most of this organic farmland is used to grow organic fresh produce like fruit & vegetables, olive oil and wine. There is a dearth of organic milk production in the region and this is responsible for the underdeveloped state of the organic dairy industry.

All three markets have highly import dependent organic dairy markets due to low interest in organic production methods by dairy farmers. The Greek market is the most import reliant due to the country being the last to implement EU regulations on organic livestock production. It is the smallest market in the region and accounted for a mere 1.4% of Southern European organic dairy revenues in 2001.

Italy has the largest market for organic dairy products, valued at €122m in 2001. The market has been reporting high growth since 2000 due to Italian dairies stepping up production levels to meet growing interest from the major retailers. Consumer demand has been outpacing domestic production in Italy with significant quantities of all organic dairy products being imported since the mid 1990s. Up to half of the organic milk used by Italian dairies for processing was imported in 2000.

The report shows that although Italy accounts for the largest revenues in Southern Europe, the highest growth is to be observed in Greece and Spain in the coming years. The continuing increase in dairy farmers converting to organic agriculture in these countries will boost organic dairy production. The Greek market is to show compound annual growth rate of 51.9% over the forecast period. The exceptionally high growth is mainly due to market growth starting from a very small base.