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Organic Dairy Production Systems in Pennsylvania: A Case Study Evaluation

C. A. Rotz^*,1, G. H. Kamphuis, H. D. Karsten and R. D. Weaver

^* USDA, Agricultural Research Service, Pasture Systems and Watershed Management Research Unit, University Park, PA 16802
Farm Technology Group, Wageningen University, Wageningen, the Netherlands
Department of Crop and Soil Sciences, and
Department of Agricultural Economics and Rural Sociology, The Pennsylvania State University, University Park 16802

¹ Corresponding author: al.rotz{at}ars.usda.gov

The current market demand and price for organic milk is encouraging dairy producers, particularly those on smaller farms, to consider organic production as a means for improving the economic viability of their operations. Organic production systems vary widely in scale, in practices, and across agroclimatic settings. Within this context, case studies of 4 actual organic dairy farms were used to characterize existing systems in Pennsylvania. Based on data from these farms, a whole-farm simulation model (Integrated Farm System Model) was used to compare 4 production systems representing organic grass, organic crop, conventional crop with grazing, and conventional confinement production. The performance of each of these systems was simulated over each year of 25 yr of central Pennsylvania weather data. Simulation results indicated that farm level accumulation of soil P and K may be a concern on organic farms that use poultry manure as a primary crop nutrient source, and that erosion and runoff loss of P may be of concern on organic farms producing annual crops because more tillage is required for weed control. Whole-farm budgets with prices that reflect recent conditions showed an economic advantage for organic over conventional production. A sensitivity analysis showed that this economic advantage depended on a higher milk price for producers of organic milk and was influenced by the difference in milk production maintained by herds using organic and conventional systems. Factors found to have little effect on the relative profitability of organic over conventional production included the differences between organic and conventional prices for seed, chemicals, forage, and animals and the overall costs or prices assumed for organic certification, machinery, pasture fencing, fuel, and labor. Thus, at the current organic milk price, relative to other prices, the case study organic production systems seem to provide an option for improving the economic viability of dairy operations of the scale considered in Pennsylvania. To motivate transition to organic systems, the economic advantage found requires the persistence of a substantial difference between conventional and organic raw milk prices.

Key Words: organic dairy • farm simulation • economics • environment