EconomicsofOrganicFarmingWhatDoWeKnow.pptVIP

Purdue University is an equal access/equal opportunity institution Purdue University is an equal access/equal opportunity institution Economics of Organic FarmingWhat Do We Know? Corinne Alexander Department of Agricultural Economics Purdue University November 15, 2007 Program for Beginning Organic Farming Outline Comparison of returns between organic and conventional Field Crops Dairy Vegetables Transition Comparison to Conventional Returns Need to look at returns for production system Whole rotation for field crops, i.e. 3 to 4 years (SD budget) Whole farm for vegetables, dairy, livestock Need to update budgets with your information SD budget assumes yields are 75% conventional, which may not be accurate Returns= Revenue – Cost Cost Comparison for Field Crops(per acre variable costs, includes labor but not land rent) ? Corn Soybeans Conv (IA, 2007) $317a $181a Organic (IA, 2006) $229 $147 Organic (SD, 2007) $200 $140 Organic (IL, NAN) $268/$299a -- aIncludes grain storage, drying and hauling Revenue Comparison for Field Crops ? Organic Conventional Corn prices $6.83-$11.00 $3.35-$3.50 Corn yields 61-171 160 Corn Revenues $416-$1,881 $536-$560 Soybean prices (feed) $13-$15 $9-$9.70 Soybean yields 35-40 50 Soybean Revenues $455-$600 $450-485 *prices from (11/07) and corn yields from IA and OH, bean yields from IL Organic Dairy In 2005, certified organic cows accounted for about 1 percent of total cows (ERS-USDA). In July 2007, organic milk sales accounted for 2.7% of total milk sales, up from 1.7% in January 2006 (AMS-USDA). 2005 ARMS survey 1462 conventional, 325 organic, 18 transition, 9 mixed McBride, W. and Greene, C. 2007. “A Comparison of Conventional and Organic Milk Production Systems in the US” Selected Paper presented at AAEA meetings, Oregon. Organic Dairy--2005 Conventional Organic Milk Production (lbs per cow) 18,983 13,601 Price in 2005 (per cwt) $15.19