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Long Term Profitability of Northeast Organic Dairy Farms

Robert Parsons

Summary

Converting to organic milk production has become a major management decision taken by dairy farmers to reduce exposure to fluctuating and low conventional milk prices. Organic dairy farming is most concentrated in the states of Vermont and Maine which have nearly 20% of their dairy farms in organic production. Our ongoing 4-year study of on the profitability of regional farms provides an insight into the actions taken by the most profitable farms. In 3 of the 4 years organic dairy farms were more profitable than similar size conventional dairy farms. The average farms showed a positive return on assets for 3 of the years and correlated with rising organic milk prices. In 2007 organic feed prices began a rapid increase, jumping 71% over a 3 year period. Analysis shows that the most profitable organic dairy farmers decreased their use of purchased grain without loss of milk production. Demographical data indicates that organic dairy farmers are younger and more educated than their conventional counterparts. The organic farmers also have smaller herds, less milk production per cow, make greater use of grazing, and nearly all do not raise grain. Over 80% of the farmers are highly satisfied with organic production and over 90% expect to be milking cows for more than 10 years. Despite declining profit levels in 2007 and 2008, over 85% of organic dairy farmers remain confident that organic will remain more profitable than conventional.

Details

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