Managing for Profit

Running the numbers on organic farming

With wider margins, organic farms make more money on a per-unit basis, according to Dale Nordquist from the University of Minnesota.  Data from actual farms indicate that, as one might expect, organic farms produce more profit per acre, or, in the case of dairying, per cow, said Nordquist, “and it can be very profitable,” he told Brownfield Ag News.

To produce organic corn, for instance, cost of production is about $5 per bushel, but the price is close to $9 per bushel, said Nordquist, with a $4 per bushel margin.  On an organic dairy, Nordquist says average organic production is about 14,000 pounds annually, compared to about 22,000 pounds annually for conventionally produced milk.  Partly because of lower production, the cost per hundredweight to produce organic milk is about $25/cwt., while the farm gate price is about $30/cwt.  That resulting $5/cwt. margin, said Nordquist, compares to a margin of only pennies for the conventional dairyman.  Those higher prices for organic products are also reflected in the price paid by consumers for organic foods at grocery stores and farmers markets.

The size and production volume of conventional farms are what make up the difference in income between organic farms and conventional farms.

AUDIO: Dale Nordquist (3 min. MP3)