Small Organic Dairy Farms: Profitable?

This past weekend I had the pleasure (yes I’m bragging) of talking to not one but two farmers about organic dairy farming. Seriously, if  you’ve never shot the breeze with a couple of farmers, you’re missing out. Both Kent Hoehne of Silverleaf Dairy in Frazee, Minn. and Warren Shaw of Shaw Farm in Dracut, Mass. have a unique perspective on organic dairy farming. They were happy to share their experiences with their consumers—you.

Kent (full disclosure: Kent is a family friend) is currently in the process of switching from conventional to organic dairy farming. He was skeptical about organic farming, but decided to try it after seeing organic farmers he knows consistently make more money than conventional farmers. “I’m part of Farm Business Management, which compares how [all of the area farmers] have done. All the organic guys were grouped on top, and the rest of us were grouped on the bottom. The worst profit margin for the organic guys showed they were still making more than the best of the conventional guys,” Kent said.

It takes a full year of treating cows organically (no antibiotics and feeding them organic feed) to receive the USDA-organic certification. Kent is six months into the transition and said he loves the results. The cows look better, their eyes are brighter and they get sick less often. Organic Valley—the co-op that will receive Silverleaf Farm’s organic milk—pays Kent $2 per hundredweight (unit of measurement used in milk sales; equivalent to 100 pounds) to help with the transition cost. The milk is sold as conventional until it hits the one-year mark, but Kent pays organic production prices. For example, organic feed is twice as expensive as conventional feed because of its high demand, as well as the farmer’s inability to use cheap fertilizers and pesticides.

“Right now I ain’t making any money, I ain’t making a dime. I’d be better off sitting in the fish house. But my wife would shoot me in the head,” he said. We laughed, because knowing his wife Amber, he’d at least get a boot in the ass. “I really, strongly believe in what I’m doing; organic farming allows me to spend more time with the family. I’m really excited about what I see coming down the road. I’m absolutely sick of selling milk the way we are.”

In my typical, night-owl fashion, at 8:30 p.m. I called and woke up Warren Shaw of Shaw Farm to get his take on organic farming. The next morning I forced myself to get up at 8 a.m. and, after establishing I was not a stalker, discussed farming methods with Warren. He has a New England viewpoint on the profitability in organic farming, which is slightly different than Kent’s view. Warren’s farm produces both organic (since 2007) and conventional milk.

2010 Aerial Shot of Shaw Farm

“I don’t believe that the organic market is more profitable. I believe that the cost of production makes it every bit as challenging to make a profit as it does with conventional. We didn’t do it because there’s a lot of money in it; we did it because it’s another product we can offer to expand our business. We wouldn’t be in business if we weren’t marketing our product,” Warren said. Shaw Farm has a bottling plant on the farm, enabling the farm to pasteurize and bottle their product for direct sale to the consumer. It cuts out the middle-man, allowing the farm to increase its profit margin.

At a recent seminar hosted by the University of Minnesota-St. Paul, researchers compared the profitability of Minnesota and New England organic dairy farms. To represent New England, researchers used Vermont as a case-study. The Minnesota Department of Agriculture and the University of Minnesota took financial data from organic dairy farms in Minnesota and compared it to research done by guest speaker Dr. Bob Parsons, an Extension Economist at the University of Vermont. The average profitability in 2010—which was presented at the seminar—is as follows:

Net Income (per cow)

Minnesota

Vermont

Organic

Conventional

Organic

Conventional

$756

$212

$914

$925

This means that Kent and Warren are spot on; it all depends on where the farmers are farming. Production costs for organic farming are always going to be higher: for Minnesota farms it pays off, and for New England farms it is just meeting consumer demand.

For all you milk lovers, Warren claimed to have the best milk around, so it’s worth going local. He was even cheeky enough to suggest that his fat-free milk could turn me from my whole-milk ways. I told him the only way I’d try it is if he threw in some cookies. He upped the ante by throwing in their home-made ice cream. I tell ya, if Warren keeps sweet-talking me, he just might find himself a stalker.

Mmmmm. . . home-made ice cream.

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About samanthalainemn

Samantha Laine is a Minnesota farm expat who now resides in Somerville, Mass. She captures life in all its quirks through stories and photography as a reporter for boston.com and The Boston Globe. Realizing that a reporter’s brain never fully shuts off, she undertook blogging as a way to share her thoughts, observations, and snapshots as a reporter when she is off the clock and simply living life. View all posts by samanthalainemn

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