Corinne Alexander Joe Balagtas Purdue Agricultural Economics

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Presentation transcript:

Corinne Alexander Joe Balagtas Purdue Agricultural Economics The Market for Organic Dairy Beginning Organic Farming Purdue University February 1, 2006 Corinne Alexander Joe Balagtas Purdue Agricultural Economics

What is Organic Milk? Certified to comply with USDA National Organic Program Animals under continuous organic management for 1 year Replacement animals on organic management from the last third of gestation, or for 1 year before milking

What does “Organic Management” mean for dairy operations? Feed and Forage Certified organic feed (no chemical fertilizers, pesticides, herbicides, etc. for 36 months) Access to organic pasture (30% DMI, 120 days???) Living Conditions Access to outdoors, shade, direct sunlight Medicine and Health Care Practices Prohibited: rbST, breeding hormones, antibiotics Allowed: organic vitamins and minerals, AI Record Keeping “sufficient to preserve the identity of all organically managed animals”

Hurdles to Organic Dairy Certification Organic soil management Steep learning curve NOP only says what you can’t do Sourcing organic feed Record-keeping annual certification review Financial Getting through the transition period Buyer programs?

Organic Dairy Markets: The Stylized Facts Organic markets have growth trajectory and potential Manufacturers have money Consumers have money Demand is outpacing supply Farm premiums for organic milk ($5/cwt) Additional costs of production Cost of organic feed Negative returns to organic dairy farms in Northeast Better outlook for Indiana?

Outlook for Organic Dairy: TBD Questions unanswered as market develops. How do premiums at retail translate to farm prices? How will premiums respond to growth in organic production? Barriers to entry Availability/Prices for organic inputs Feed, heifers Prices for corollary outputs Heifers, dairy beef, crops

Outlook for Organic Dairy, cont’d What’s happening on the conventional market? Recent strong milk prices ease the transition period Location CROPP: Midwest benefits from availability of feed & pasture Where are the processors Critical mass—enough milk to make a route

More Resources Indiana Certified Organic, Cissy Bowman 8364 SSR 39 Clayton, IN 46118 317-539-4317 E-mail: cvof@iquest.net CROPP/Organic Valley, Lowell Rheinheimer message: 888-809-9297 x509 mobile: 651-492-2184 NOP www.ams.usda.gov/nop/indexIE.htm MOSES www.mosesorganic.org/factsheets/dairychecklist.pdf ATTRA www.attra.ncat.org

More Resources Northeast Organic Dairy Producer’s Alliance http://www.nodpa.com/ "The Organic Decision: Transitioning to Organic Dairy Production Workbook" developed by Cornell Cooperative Extension specialists in consultation with NODPA To order a copy, please call Faye Butts at 607-254-7412 or email to fsb1@cornell.edu. The cost is $12 to cover printing and postage.