Making a profit from running an organic dairy operation can be difficult, a new study by researchers at the universities of Vermont and Maine shows.
WEST SWANTON, Vt. (AP) -- Making a profit from running an organic dairy operation can be difficult, a new study by researchers at the universities of Vermont and Maine shows.
Of 30 organic dairy farms whose financial performances in 2004 were studied, two-thirds failed to make a profit, the study found.
"Overall, we find that the average organic dairy operation was not profitable ... . The average rate of return on farm assets was minus 2.9 percent," the researchers reported.
The findings were surprising to some because dozens of conventional dairy farms have switched to organic production, enticed by promises of higher and more stable prices.
West Swanton farmer Earl Fournier said he was not surprised by the study's findings, although his operation has been improving. The profit on his 75 milk cows tripled from $9,000 to about $30,000 in 2004-2005.
"The numbers don't make you jump out of your chair, but I can say for certain I'm no worse off and the potential to be really better off is there," he said.
Demand among consumers for organic milk has been increasing 20 percent or more per year, although supply has not kept up.
Organic milk, Fournier calculated, would pay him at least $1.85 a gallon. In 2006, he will be paid at least $2.24 a gallon.
But feed costs are higher on an organic operation and the production is lower, often wiping out the premium that farmers earn, the study found.
"You've got to know what you're doing," said Glenn Rogers, one of the researchers on the study. He stressed that the study was just a one-year snapshot of the industry.
Source: Associated Press