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Profitability of Northeast Organic Dairy Farms

Robert Parsons

Summary

Organic dairy is one of the fastest growing ag sectors in New England and will accounts for nearly 20% of the dairy farms in Vermont and Maine by July 2007. In the first study in the US examining the profitibility and cost of organic production, researchers at the Universities of Vermont and Maine collected and analyzed the financial data from 44 farms. They found that average net farm revenue increased by 18% from 2004 to 2005. However, revenue was not able to cover a charge for owner labor/management. The farms averaged 58 cows per farm and 12,500 lbs of milk sold per farm. In comparison to conventional dairy farms, Organic farms averaged $4500 higher net farm income on 8 fewer cows. The organic dairy farms produced less milk per cow, received a higher milk price, and had a higher cost of production per cwt than their conventional neighbors. Yet their net return per cow was nearly twice that of the conventional dairy farms. The cost of production for organic farmers was significantly higher for purchased feed and labor. The study found that the organic farmers had selected organic primarily for economic reasons although ethical reasons was the number one reason for early adapters, The majority of farms use Holstein cows in a stall barn setup. The study found several demographical differences between organic and conventional dairy farms including age, education, and debt level. The continued shift to organic dairy production raises questions of its long term impact on regional dairy farm numbers and profitability.

Details

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