USDA recently released a report on organic dairy farming involving a study of the practice in the 24 states that represent almost all the organic dairies in the U.S. Unfortunately, all the data is from 2005, which is sort of like evaluating your stock market-based retirement plan today using the totals from four years ago. Lotta water under the bridge in four year–both on Wall Street and down on the farm. In fact, I’m not sure that any of the economic data is worth much, but it’s all we have, so…
USDA compared both large and small organic dairies, and organic vs. conventional dairy farms. Large organic dairies represented a small fraction of the total, but in 2005 produced about one-third of the organic milk, a proportion it only expects to increase. This is bad news indeed to those opposed to “factory farming”. To date, efforts to exclude large organic farms from the organic milk industry have failed, and will probably continue to fail. (My opinion, not necessarily USDA’s.)
The most telling statistic: The total cost of producing organic milk was $7.69 per hundredweight higher than for conventional milk production. This was about $1.00 per cwt more than the average premium for organic milk. While many farmers have switched from conventional to organic production in anticipation of higher net income, USDA’s data, while badly dated, suggests that on average these hopes are not being realized. Updating to 2009–and this is conjecture–I would assume that since the price difference between organic and “regular” milk has narrowed in some regions, the economics of organic milk production aren’t any rosier now than when USDA collected its data. This certainly doesn’t mean that “going organic” is a poor decision for all farmers, but that it’s not the magic bullet to dairy prosperity.