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Profitability of New England Organic Dairy Farms 2004-2011

Robert Parsons and Dennis Kauppila

Summary

Organic dairy production is growing in the US as consumers have proved there is a niche market for specialty milk. In Vermont, organic dairy farms now account for 20% of all dairy farms. While organic dairy farms have a higher milk price, these farms tend to have lower milk production per cow and fewer cows per farm. Therefore the economics of organic dairy is mixed and confusing to assess. An ongoing economic dairy study at the University of Vermont has examined organic dairy economics for 8 years, the only study of this length in the US. Results indicate that organic has been more profitable 3 of the years, less profitable than for conventional for 3 years, and about even with conventional in 2 years. The organic dairy farms are also smaller, younger, and convinced they would not be in the dairy business if they had not gone organic. Economic analysis indicates that the organic dairy farms have higher feed costs per cwt. but very similar per cow as compared to conventional. Organic dairy farms also have lower fuel costs per cow and repairs and supplies but higher labor and custom hire costs. Over the 8 years of the study, organic dairy herds may not have been as profitable overall but did not experience the volatility experienced by conventional dairy farms.

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