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By Dale M. Johnson, University of Maryland Extension
These are difficult times for dairy farmers. Milk supply outpaces demand resulting in stagnant milk prices. Costs are increasing. Large dairy farms are driving smaller dairy farms out of business. Farmers are receiving termination letters from their processors/co-ops. Discouragement is understandable.
However, organic dairy farmers who have a solid market for their milk are faring better than non-organic dairy farms. A comparison of 7 Maryland/Pennsylvania organic dairy farms to 18 non-organic MD/PA dairy farms for the years 2018-2020 reveals that those organic farms are making more than twice as much per cow per year ($852/cow) compared to the non-organic farms ($425/cow). Total income per cow is lower for the organic farms but expenses are also much lower resulting in the profit advantage. Every expense category is lower per cow for the organic farms.
A disadvantage for organic dairy farms is that milk production level per cow is less than half (90 cwt/cow) of the milk production level for non-organic dairy farms (207 cwt/cow). This disadvantage is partially offset by higher prices for organic milk ($33.80/cwt) compared to non-organic milk ($17.46/cwt)
It is useful to compare the expenses per cwt as organic farms have both advantages and disadvantages. A big disadvantage of organic farms is the cost of purchased feed per cwt ($10.40) compared to non-organic farms ($5.81). Organic forages and concentrates are expensive and organic farms should make every effort to maximize feed production on their pastures and cropped land to avoid high priced purchased organic feed.
On a net profit per farm basis, the organic farms had a much higher average of $75,777 in comparison to the non-organic farms that averaged $56,809. This is a huge advantage to the organic farms.
How does your organic farm compare to average of these 7 organic farms? It is useful to compare your farm line by line to these averages. Income categories that are more than 20% higher or expense categories that are more than 20% lower indicate strengths in your operation. Conversely, income categories that are more than 20% lower or expense categories that are more than 20% higher indicate weaknesses in your business and this is where you should focus your management and efforts.
If you would like to participate in this analysis to get a good financial summary and comparison for your farm, contact Dale Johnson at or 301-432-2767x325 or firstname.lastname@example.org. Dale personally visits Maryland and Pennsylvania farms but will do other farms through electronic communication. Your tax forms and some production records is all that it needed. This is an educational program and service of the University of Maryland Extension.
Posted: to Economics of Organic Dairy Production on Thu, Dec 9, 2021
Updated: Thu, Dec 9, 2021