The current financial downturn hasn’t spared Wisconsin’s organic farmers, but in general they have been able to ride it out, says a new report about the state’s organic sector.

The “Organic Agriculture in Wisconsin: 2009 Status Report” was prepared by the Wisconsin Department of Agriculture, Trade and Consumer Protection and the University of Wisconsin-Madison Center for Integrated Agricultural Systems.

According to the report, the global recession has hurt organic product sales. Surveys show that sales of organic foods likely declined by 0.3 percent in 2009 after increasing about 20 percent annually since the early 1990s.

Last year’s decline in conventional milk markets has crimped the organic dairy industry, the source of about two-thirds of Wisconsin’s $86 million in annual organic commodity sales. Plunging farm gate milk prices led to lower prices in the dairy case, luring customers from organic products, says McGeorge, an executive with Organic Valley.

Weak sales caused organic milk processors to reduce the prices they paid to farmers, and some set quotas limiting the amount of organic milk they would buy. Still, in general, established organic producers have fared better than those selling milk through conventional channels, notes Tom Kriegl, an economist at the UW-Madison Center for Dairy Profitability.

“(T)he combined impact of price reductions and quotas in 2009 was similar to reducing their milk price from about $25 to $22 (per hundredweight), which was far less than the decline of nonorganic prices,” Kriegl says.

But the year was disastrous for farmers making the switch to organic dairying, he adds. During the transition producers must meet organic standards but can’t sell milk in organic markets. In 2009 they “experienced the worst of all worlds: high production costs and dismal conventional prices,” Kriegl adds.

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Source: University of Wisconsin