1. Home
2. Conferences
3. 2007 National Extension Risk Management Education Conference

Profitability of Northeast Organic Dairy Farms

Robert Parsons

Summary

The 2nd year of the only study in the US that is examining the profitability of organic dairy farms found that profitability for calendar year 2005 had increased 18% over 2004. However, average profitability did not result in a positive Return on Equity. The 2005 study examined the returns from 44 organic dairy farms in Vermont and Maine. The farms averaged 58 dairy cows and marketed an average of 12,500 lbs. of milk per cow.

As compared to conventional dairy farms, the organic dairy farms had fewer cows, produced less milk but had a higher net income per cow. At the farm level, the organic dairy farms were 18% more profitable for milking fewer cows.

The study showed high variability between farms, with 33% showing a positive return on equity and a high standard deviation of net farm income. The farmers averaged 50 years of age, younger than their conventional neighbors, were higher educated, and had smaller herds. The farms all grazed their cows and few produced any grain crops. The majority of early adapters selected organic production primarily for ethical reasons while most recent adapters switched to organic for economic reasons.

Organic presents a viable alternative for smaller dairy farmers in the northeast but for how long remains a major marketing question.

Details

---