Cost and Returns to Organic Dairy Farming

Cost and Returns to Organic Dairy Farming in Maine and Vermont for 2004
Timothy J. Dalton, Lisa A. Bragg, Rick Kersbergen, Robert Parsons, Glenn Rogers, Dennis Kauppila, Qingbin Wang
University of Maine
Department of Resource Economics and Policy Staff Paper #555

There is a vacuum of any rigorous, quantified studies on the costs of producing organic milk in the United States despite growth and interest in the farming activity. The situation is particularly acute in the Northeast and upper Midwest where there is a small but rapidly growing organic dairy sector. Organic milk production has been the fastest growing agricultural sector in New England, with Vermont experiencing growth from just 2 certified organic farms in 1993 to more than 70 today. Maine has seen similar growth, increasing from 25 farms in 1997 to 63 certified organic dairy farms today. This study reports average production costs and returns for 2004 from a sample of thirty organic dairy farms (thirteen from Vermont and seventeen from Maine). It is important to emphasize that these results are indicative of economic conditions in 2004 and do not reflect current production conditions1. Overall, we find that the average organic dairy operation was not profitable in 2004. The average rate of return on farm assets was -2.9%.

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