Growing Demand Creates Opportunities, Challenges

Wisconsin has experienced dramatic growth in organic agriculture in past 7 years.

Published on: Feb 29, 2012

Sales of organic food continue to rise despite the economic downturn, and that bodes well for Wisconsin, which has experienced dramatic growth in that sector since the enactment of the National Organic Program in 2002, notes a new report on Wisconsin organic agriculture.

Wisconsin has approximately 1,200 organic farms—up about 60% from 2005— and leads the nation in number of organic dairy farms. Milk accounts for about two-thirds of the value of the state's organic farm product sales, while 23 percent come from crops—including nurseries and greenhouses— and another 13 percent came from livestock and poultry and related products.

While organic products still claim a relatively small share of the U.S. food dollar, that share is growing, the report notes. Nationally, the U.S. organic food and beverage industry grew at a rate of 7.7% in 2010, while total U.S. food sales were all but flat. A 2011 survey by the Organic Trade Association found that more than three- quarters of U.S. families purchased organic food.

The fact that so much of Wisconsin's organic industry is based on livestock posed an extra challenge in 2011, due to extremely tight supplies and high prices for organic grain, according to industry sources cited in the 2012 edition of Organic Agriculture in Wisconsin, prepared by the UW-Madison Center for Integrated Agricultural Systems and the Wisconsin Department of Agriculture, Trade and Consumer Protection.

"We didn't realize how much influence organic grain farmers had on the organic market until now," says organic dairy farmer Mike Schulist, who is the marketing director for the Wisconsin Organic Marketing Association. "Right now, demand is high and supply is tight. It'll take some time to balance out."

Many of Wisconsin's organic dairy farmers grow their own feed, which helps them maintain their production and profits in this market, notes Kevin Kiehnau, regional pool manager for Organic Valley. However, these farmers can make more money selling organic grain at current prices than feeding it to a dairy cow, he says. Organic milk production is not keeping up with demand, and production per cow is down, because farmers are reducing the amount of grain in their rations to trim costs rather than feeding for maximum production.

The report also includes a snapshot of the state's organic vegetable farms. A 2011 UW-Madison survey shows that Wisconsin organic vegetable operations range from small market gardens growing a wide variety of vegetables to larger farms growing a few crops for processing. This labor-intensive business creates employment opportunities. The survey found that a typical Wisconsin vegetable farm employs two full-time employees and one part-timer, as well as seasonal help.

The state's organic food processors add value to the organic meat, milk, produce and other commodities raised here, enabling the state to capture a larger share of the $26.7 billion spent by U.S. consumers on organic food. A 2011 survey by the Department of Agriculture, Trade and Consumer Protection found that gross income from Wisconsin organic processing firms ranged from $10,000 to over $100 million. Most well- established organic processors said that sales grew from 2008 to 2011, despite the economic downturn.

Wisconsin's reputation for quality helps its organic products sell in a national market, according to the owner of one Wisconsin-based organic food processing firm.

"Wisconsin sells," says Ken Seguine, co-owner of Hay River Pumpkin Seed Oil, based in the Barron County community of Prairie Farm. "We have a wonderful reputation within the United States. People associate purity, quality, truthfulness and other good attributes with Wisconsin."

Organic Agriculture in Wisconsin: 2012 Status Report is available online at www.cias.wisc.edu.

Source: UW-Madison CALS