Study Touts Potential Economic Benefit of Organic Dairies

Union of Concerned Scientists releases calculation of economic value of organic milk; group says more farm bill investment in organic milk would benefit consumers

Published on: Nov 27, 2012

According to a report released this month by the advocacy group Union of Concerned Scientists, the organic dairy sector provides more economic opportunity and generates more jobs in rural communities than conventional dairies.

"Dairy farmers either had to expand dramatically and become large industrial operations or they went out of business," said Jeffrey O'Hara, agricultural economist for the Food and Environment Program at UCS and author of the report. "However, organic dairy production offers farmers another option – one that is better for the environment, produces a healthier product, and leads to greater levels of economic activity."

The study, "Cream of the Crop: The Economic Benefits of Organic Dairy Farms," calculated the economic value of organic milk production, based on 2008-2011 financial data from two major milk-producing states—Vermont and Minnesota.

UCS says more farm bill investment in organic milk would benefit consumers
UCS says more farm bill investment in organic milk would benefit consumers

Vermont's 180 organic farms contribute $76 million annually to the state's economy and support 1,009 jobs. In Minnesota, 114 organic farms add $78 million to Minnesota's economy annually and have created 660 jobs.

The report also compared the economic value that could be generated by conventional and organic farms in the two states if both experienced the same hypothetical level of increased sales. In Vermont, organic dairy farms under that scenario would be expected to contribute 33% more to the state's economy than conventional farms, and employ 83% more workers. Similarly, in Minnesota, organic dairies would increase the state's economy by 11% more and employment by 14% more than conventional dairy farms, UCS says.

Organic dairy farming is now a $750 million industry, and annual U.S. organic milk sales increased 12% in 2010, 13% in 2011, and 5% in the first seven months of 2012.

The group, which generally advocates organic methods, said USDA's farm programs and taxpayer subsidies favor large dairy operations, and that the farm bill currently provides little specialized support for organic dairies.

In response to the findings of their study, the UCS suggests that:

*The USDA should revise the federal milk marketing orders, which establish the minimum prices dairy processors must pay to farmers. The antiquated minimum-pricing order policies were written in the 1930's and fail to account for the ways that organic milk production differs from conventional dairy farming.

*Congress and the USDA should offer a subsidized insurance program that is customized to the needs of organic dairy farmers.

*Congress should increase funding for organic agriculture programs.

*Congress should fund and the USDA should implement programs that support regional food system development, such as rural development grants.

This modest federal support, UCS said, would help organic dairy farmers who are already contributing to and stabilizing regional economies, and support farmers who want to transition to organic farming.

"More and more consumers across the country are choosing organic milk, but Washington hasn't gotten the message," O'Hara said. "Investing in organic dairy production would pay off in multiple ways by keeping small farm businesses afloat, promoting local economic growth, reducing farm pollution, and meeting growing consumer demand."

Read the full report here.