The Market for Organic Dairy Beginning Organic Farming Purdue University February 1, 2006 Corinne Alexander Joe Balagtas Purdue Agricultural Economics
What is Organic Milk? n Certified to comply with USDA National Organic Program n Animals under continuous organic management for 1 year n 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? n Feed and Forage n n Certified organic feed (no chemical fertilizers, pesticides, herbicides, etc. for 36 months) Access to organic pasture (30% DMI, 120 days? ? ? ) n Living Conditions n Access to outdoors, shade, direct sunlight n Medicine and Health Care Practices n n Prohibited: rb. ST, breeding hormones, antibiotics Allowed: organic vitamins and minerals, AI n Record Keeping n “sufficient to preserve the identity of all organically managed animals”
Hurdles to Organic Dairy Certification n Organic soil management n Steep learning curve n NOP only says what you can’t do n Sourcing organic feed n Record-keeping n annual certification review n Financial n Getting through the transition period n Buyer programs?
Organic Dairy Markets: The Stylized Facts n Organic markets have growth trajectory and potential n n Manufacturers have money Consumers have money n Demand is outpacing supply n Farm premiums for organic milk ($5/cwt) n Additional costs of production n Cost of organic feed n Negative returns to organic dairy farms in Northeast n Better outlook for Indiana?
Outlook for Organic Dairy: TBD n Questions unanswered as market develops. n How do premiums at retail translate to farm prices? n How will premiums respond to growth in organic production? n Barriers to entry n Availability/Prices for organic inputs n Feed, heifers n Prices for corollary outputs n Heifers, dairy beef, crops
Outlook for Organic Dairy, cont’d n What’s happening on the conventional market? n Recent strong milk prices ease the transition period n Location n CROPP: Midwest benefits from availability of feed & pasture n Where are the processors n Critical mass—enough milk to make a route
More Resources n Indiana Certified Organic, Cissy Bowman 8364 SSR 39 Clayton, IN 46118 317 -539 -4317 E-mail: cvof@iquest. net n CROPP/Organic Valley, Lowell Rheinheimer message: 888 -809 -9297 x 509 mobile: 651 -492 -2184 n NOP www. ams. usda. gov/nop/index. IE. htm n MOSES www. mosesorganic. org/factsheets/dairychecklist. pdf n ATTRA www. attra. ncat. org
More Resources n Northeast Organic Dairy Producer’s Alliance n http: //www. nodpa. com/ n "The Organic Decision: Transitioning to Organic Dairy Production Workbook" developed by Cornell Cooperative Extension specialists in consultation with NODPA n To order a copy, please call Faye Butts at 607254 -7412 or email to fsb 1@cornell. edu. The cost is $12 to cover printing and postage.
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