TAILIEUCHUNG - A Comparison of Conventional and Organic Milk Production Systems in the U.S.

Dalton et al. reported the average production costs and returns for 2004 from a sample of 30 organic dairy farms in Vermont and Maine. They reported a total cost for organic milk production of $ per cwt, before a deduction for unpaid operator labor and management, which was not significantly different from milk revenues. Thus organic milk production did not generate any return to unpaid labor and management nor did it produce a positive return to farm assets or equity. Even when income from non-dairy farming activities was added, the implicit return to unpaid labor and management. | A Comparison of Conventional and Organic Milk Production Systems in the . William D. McBride Catherine Greene Selected Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting Portland Oregon July 29-August 1 2007 Abstract Organic milk production is one of the fastest growing segments of organic agriculture in the . but little is known about the relative costs and returns of organic and conventional dairies. This study utilizes a nationwide survey of dairy operations for 2005 that includes a targeted sample of organic dairies. Treatment-effect sample-selection models were specified to isolate the impact of choosing the organic approach on various levels of milk production costs. Size and location of dairy operation were among the primary factors affecting choice of the organic approach and milk production costs. Organic dairies had production costs about 5 to 7 per cwt higher than conventional dairies and received an average milk price premium of per cwt. Results suggest that there may be incentives for small conventional dairies to covert to the organic approach but probably not for startup organic dairies unless they can enter at a much larger scale than the current industry norm. The authors are with the . Department of Agriculture Economic Research Service. The views expressed herein are those of the authors and do not necessarily reflect the views or polices of the . Department of Agriculture. Direct any correspondence to wmcbride@ 202 694-5577. A Comparison of Conventional and Organic Milk Production Systems in the . Organic milk production is one the fastest growing segments of organic agriculture in the . Between 2000 and 2005 the number of certified organic milk cows on . farms increased by an average of about 25 percent each year from 38 000 to more than 86 000 USDA Economic Research Service a . Many of these cows are on small dairy operations that have switched to the organic

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