An analysis of the structure and performance of organic dairy farms in the Northeast, U.S.A.

Due to the restructuring and trend toward consolidation that has been taking place in the dairy industry for the past several decades; the number of dairy farms in the U.S. has been steadily declining. Smaller dairy farms have been disappearing at a disproportionate rate. At the same time, demand for organic milk has been consistently rising. There is some evidence to suggest that organic dairy may be a viable economic alternative for dairy farmers, but there is little empirical evidence to verify such claims. This study analyzed the financial performance of U.S. organic dairy farms in comparison to conventional dairy farms in the Northeast, highlighted significant structural differences between profitable and unprofitable organic dairy farms, and examined the factors affecting dairy farm profitability in the Northeast. This study shows that organic dairy farms in the Northeast were profitable and that small organic dairy farms were more economically viable than small conventional dairy farms. It was found that farm size, organic milk price, production efficiency, extra income in addition to milk sales, operator's age and expectations regarding the future of the dairy enterprise, and production efficiency had a positive correlation with organic dairy farm profitability. Factors that had a negative influence on organic dairy farm profitability were variable costs per cow, the debt-to-asset ratio of the farm, the average age of the milking herd, family farm status, the hours per day the milking system was in operation, and the choice to dry off milk cows seasonally. The results suggest that transitioning to certified organic status is an economically viable alternative for small conventional dairy farms in the Northeast.M.S.Includes bibliographical references (p. 121-127)