Organic milk shortage hitting US grocery stores

As more Americans are opting to buy organic milk at the supermarket, demand is now outpacing supply leading to a nationwide shortage.

In 2014, Americans spent $35 billion on organic groceries—$5.1 billion of that belongs to dairy products alone which is double the figure from 10 years ago, according to data from the Nutrition Business Journal.

McDonald's is offering organic milk in some of its McCafe drinks and Wal-Marts with produce offer organic dairy in their aisles to appeal to more conscious consumers.

"When I first started two years ago, I felt like I ended up having to write off a lot of organic milk, and now, I really can't keep it in stock," Dana Bates-Norden a perishable goods buyer for Chicago's Dill Pickle Food Co-op in Chicago told Bloomberg. Bates-Norden says she has customers who call the store prior to expected dairy delivery days and ask for a few gallons to be put on hold. Dill Pickle isn't the only store with customers thirsty for more organic dairy.

Jim Hyland of Roundy's Supermarkets, a Milwaukee-based chain, told Bloomberg that some of the 149 stories in the Wisconsin and Illinois areas experienced an organic milk shortage last year despite more refrigerator aisle space being devoted to organic products.

"You've got customers that are more educated on the benefits of organic," Hyland told Bloomberg. And the organic trend isn't just a fad. Hyland cautioned, "It's only going to increase in demand."

While sales of organic milk are climbing—9.5 percent in the first 11 months of 2014—regular milk sales are still much larger: 43.49 billion pounds compared to 2.26 billion pounds. But even as demand for organic dairy continues to rise, farmers are wary of converting traditional farms to meet USDA organic standards.

To receive a government-verified organic stamp, milk must come from cows that have not been treated with hormones or antibiotics and the animals must be able graze in an organic pasture and eat only organic feed.

The process to convert a traditional dairy farm can take up to three years and increase costs by about $365,000 for a 500-cow dairy, according to Andrew Dykstra, president of the Chico, California-based Western Organic Dairy Producers Alliance. A figure that is prohibitively expensive for many traditional dairy farms.

As the largest cooperative of organic farms in the country, Organic Valley offers some money to dairies willing to make the conversion. This year the company may offer up to 75 percent of costs for farmers.

As farms start to convert, Bob Goldin, an executive vice president at the Chicago-based research firm Technomic Inc., said the ‘buy organic' trend is unlikely to subside as consumer opinion of what's healthy shifts in the marketplace.

"There's a heightened sensitivity among a growing number of consumers about those issues," Goldin told Bloomberg. "It's not necessarily a logical link, but that's what many consumers define as healthy. The definition of what's healthy is changing."