The organisation said supplies could remain tight in the short term. But the number of farmers already undergoing the conversion process was close to the level required to meet the forecasted increase in national demand for 2008/2009.

OMSCo said an extra 60m litres will be required and 56m litres had already been secured. But a further 60m litres of demand is anticipated for the 2009/2010 milk year and the two-year conversion process for this will start in 2007.

Chief operating officer Huw Bowles said: "The market is working. Recent increases in farm-gate prices (OMSCo pays an average of 28p/litre) mean the current economies of organic production are sound.

As a result the national conversion requirement has almost been achieved for this year without the need for conversion payments or other artificial incentives.

Source: fwi.co.uk