Organic dairy more economically beneficial than conventional dairy – US study

26-Nov-2012 - Last updated on 27-Nov-2012 at 12:28 GMT

The organic dairy industry has for a long time boasted of its nutritional superiority over conventionally-produce dairy products. Now, according to a US study, the organic dairy sector can also lay claim to being more economically beneficial.

According to the Union of Concerned Scientists (UCS) Food and Environment Program study, Cream of the Crop - The Economic Benefits of Organic Dairy Farms, organic dairy farms have a greater economic impact than conventional dairy farms.

The UCS Food and Environment Program collected financial data from organic and conventional dairy farms in Vermont and Minnesota, where the organic dairy farm sector is “prominent.”

The economic value of each state’s organic dairy farms was measured using several factors, including the value of organic milk production in the state, gross state product, and labour income.

Greater economic impacts

According to the study, Vermont’s 180 organic dairy farms has maintains 1009 jobs, contributes $76m in output and $34m in gross state product, and generates $21m in labour income.

While Minnesota-based organic dairy farms contribute $78 in output, $32m in gross state product, $21m in labour income, and sustain 660 jobs.

As well as collecting organic dairy farm data, researchers from the UCS Food and Environment Program also compared the relative economic impact of conventional and organic farms.

“We also compared the relative economic impacts of conventional and organic farms in these two states by asking which of the organic and conventional farm sectors provide greater economic impacts with their states when both experience the same hypothetical level of increased sales,” said the report.

In Vermont, an increase in organic dairy farm sales revenue resulted in a 3% increase in the state’s output, a 39% increase in labour income, and a 33% increase in gross state product relative to an equivalent conventional dairy farm sales revenue increase.

“We found that increased sales from organic dairy farms in Vermont and Minnesota lead to greater economic impacts in those states when compared with the results of an equivalent level of sales from conventional dairy farms,” said the report.

‘Get big or get out’

Under US Department of Agriculture (USDA) guidelines, organic dairy must come from cows that graze on pasture for the entire length of the growing season, eat organically grown feed, and are not treated with hormones or antibiotics.

Many studies have shown that organically-raised cows produce milk with more nutritious fatty acids. As a result of these claims, organic dairy products have “experienced significant growth in consumer demand over recent years.”

According to the UCS report, this increased demand has created an alternative for US farmers.

“The development of the organic dairy sector has provided an alternative for farmers who do not want to ‘get big or get out’. It helps maintain regionally based milk production by preventing smaller pasture-based dairies from going out of business; many small organic dairy farmers believe they would no longer have a farm had they not been able to convert,” the report added.

(*Register here for free access to the first ever online event devoted to Operational Efficiency in food and beverage processing on November 29, organized by our sister site FoodProductionDaily.com and William Reed Business Media.)

3 comments

Very Biased

Posted by Justin, 29 November 2012 - 22:10 GMT

You can never trust a news article to get the paper right. You have to actually read the paper yourself.
In this case, the economic "benefits" only happen with federal and state subsidies. If dairy farms were to go on their own, they'd break even or be in the red, as can be seen in Table 2 of the paper.
They cherry pick the Upper Midwest and Northeast regions because those are the regions that give them the result they want. They admit as much when they say their "results may not be applicable to organic dairy in the West" (p14 paragraph 1) Looking at their data tables, the it seems really convienient that they picked Vermont, since it's the only organic dairy region that turns a profit at all.
Finally the "economic analysis" is a red herring. The only reason organic produces "economic benefits" is because it's so much more labor intensive. More labor means more paychecks. What the paper doesn't talk about is the unseen economic benefits of conventional diary farming. That the money saved by not having a labor intensive process does other things for the economy. Also, they don't normalize prices, but assume the same growth rate. It's like prices don't matter at all! That's not ecnonomic thinking, it's a sales pitch.

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Long live organic!

Posted by Jennifer Christiano, 27 November 2012 - 05:19 GMT

Excellent article. This study supports what informed organic consumers have been saying for years - that one of the benefits of organic is the fact that organic farms provide honest, decent, sustainable rural jobs. "Get big or get out" was Earl Butz's 'solution' for getting rid of the politically independent and notoriously difficult to control American family farmer. It had nothing to do with providing a better or cheaper product to the people. Organics is a way to restore true family farming to the American landscape, while delivering a humane and worthwhile product to the American public. Long live organic!

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Where is the proof ?

Posted by Jerry, 26 November 2012 - 20:29 GMT

If Organic milk production is truly healthier then where is the proof of more nutritious fatty acids in the milk or milk products. I have yet to see any marketing of Organic dairy products that are TESTED for these HEALTHIER milk components. By the way, what are they?
If an animal only eats green grass during the growing season then how do they maintain this QUALITY during the non- grass growing season feeding DRY HAY?
It's one thing to say MILK is healthier but it's another thing to TEST it and Prove it.

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