Oversupply and lack of demand have caught up with the organic milk industry.

HP Hood recently told eight Maine organic dairy producers that their milk contracts would not be renewed. The Bangor Daily News reported that Hood also notified most of the remaining 14 organic milk producers under contract to the company that they must cut their production this year by 15 percent.

In recent months, as the economy collapsed, so have consumers’ shopping habits. “Due to a softening in organic milk sales triggered by the recent economic downturn, Hood has made this difficult decision,” says Lynn Bohan, spokesperson for HP Hood. “Increased transportation costs also factored into Hood’s decision, as the raw organic milk procured in outlying areas must be shipped to the company’s processing plants. Hood pays all costs associated with transportation — both farm pickup costs and cost for finished product to reach consumers.”

Organic producers told the Bangor Daily News that this action could be the death knell for their operations. Producer David James said that he is done farming if he doesn’t find a market for his milk.

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Source: Bangor Daily News