cows in field

Detailed Economic Analysis of Organic Dairies

Added April 2, 2010. The 2008 results of an on-going financial analysis of Vermont’s organic dairy sector by UVM and NOFA-VT have recently been published and, below, Bob Parsons gives us a very brief preview of his upcoming article in the May NODPA News, which will be published around May 7, 2010.

The landscape of organic production has changed considerably since 2008 and Bob’s analysis is based on actual data collected from organic dairy producers so it provides great insights into the economic drivers for organic dairy profitability. He might even be tempted to project forward for 2009!

The results indicate that net farm revenue (before charged for unpaid family labor) increased a bit in 2008 but did not hit 2006 profitable levels. Despite rising feed costs, organic farmers fed less purchased grain but maintained production levels. While challenges kept farmers on their feet in 2008, the challenges for 2009 were greater with increased charges for hauling, still high feed costs, and marketing quotas.

When the study began in 2004, results indicated that organic dairy farmers were not receiving a milk price sufficient to meet family living needs. Since then, we have seen the organic milk price move from $22.97 to $30.85 (including premiums and bonuses).

For 2008, farmers netted an average of $6.94 per cwt, used $5.38 per cwt for family living, and had $1.56/cwt left for reinvestment and left over profit. In May, we will look at the data in greater detail.

Vermont Organic Dairy Milk Production 2004-2008