Costs of Organic Milk Production on U.S. Dairy Farms

The impact of organic participation on milk production costs is evaluated using data from a nationwide survey of dairy operations. Organic dairies have estimated costs about $5 to $8 per cwt higher than conventional dairies. They also receive an average milk price premium of $6.69 per cwt in 2005. Production costs are estimated to be only $3 to $4 per cwt higher among pasture-based dairies. Results suggest that small conventional dairies may consider converting to the organic approach, but startup organic dairies are not likely unless they can enter at a much larger scale than the industry norm or can utilize pasture as a primary dairy feed source. Copyright 2009 Agricultural and Applied Economics Association