Higher cost outstrips price advantage for organic dairies
By Dairy Herd staff
| Friday, November 06, 2009
Organic dairies, with their higher cost of production, have suffered through the current economic recession.
A newly released study from the USDA’s Economic Research Service, based on 2005 data, shows that organic dairies paid $6.37 per hundredweight more than conventional dairies in operating and capital costs. Total economic costs of organic dairies in 2005 were $7.65 per hundredweight higher than conventional dairies. Often, the higher cost offsets any premiums the organic dairies may receive for their milk.
Read the report summary here.Another report from the USDA noted that organic milk producers have suffered much the same fate as conventional milk producers in the current economy, facing falling milk prices and higher feed and energy costs. “At current estimates of production costs, organic dairy farmers in Vermont and New York are losing about $4/cwt and $5/cwt, respectively,” the USDA report said. The average loss for Wisconsin organic dairy farmers was reported at $3 per hundredweight.
Those losses are occurring, despite much higher pay prices for organically produced milk than conventionally produced milk. As of April, pay prices for organic milk by the three largest processing plants in the Northeast averaged about $27.43 per hundredweight, the USDA reported. In Wisconsin, the average milk price paid to farmers by the two largest organic processors was $24.63 per hundredweight.
Read more about that here.
