Britain's biggest organic milk supplier will be closing the door to new producers as early as January, it says.

Richard Hampton, chief executive of the OMSCo co-operative, said that there was a risk of returning to the cycle of boom and bust if many more dairy farmers turned to organic milk.

It takes two years for farmers to convert their farms to an organic system, and Hampton is worried that a surge of entrants now could result in oversupply in 2008/09. But he admitted that supplies would remain short for 18 months.

It follows a warning from Sainsbury's boss Justin King that the supermarket would have to start stocking imported organic milk this Christmas because supply of British milk could not keep up with demand. And the news will be hard to swallow for Somerset dairy farmers, who reacted angrily to the sight of tankers delivering Dutch organic milk to a local yoghurt producer.

"If anyone had bothered to contact us, we could have explained the situation," said Hampton.

"We are in short supply at present, which is being plugged by imports until such a time as UK farms can supply it. No-one wants to import organic milk. But by spring next year we'll be at the point where we shut the doors to new producers. We need to avoid the previous situation where you get a flood of conversions and a tidal wave of milk."

He even suggested that some sort of management may be necessary to prevent too many new farmers coming into the sector and dragging prices down.

"The organic premium only just covers costs and is already one of the lowest premiums on any organic product," he claimed.

Organic milk sells at the farmgate for 28ppl compared with a conventional average of 16.8ppl.

Sales growth means an extra 60 million litres of milk must be found each year to meet demand.