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Pasture-Based versus Conventional Milk Production: Where Is the Profit?

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  • Gillespie, Jeffrey
  • Nehring, Richard

Abstract

Costs and returns of pasture-based dairy production are compared with those of conventional production using matching samples. Both whole-farm and dairy enterprise-level estimates are made using the U.S. Department of Agriculture’s Agricultural Resource Management Survey data. Conventional farms are matched to pasture-based farms on the basis of operation scale, scope, region, and farmer demographics and adoption of technology. Results show for pasture-based production lower net farm income on per-cow, per-hundredweight milk produced, and total bases. On an enterprise basis, results show for pasture-based production, higher net return over operating cost and lower net return over total cost per hundredweight milk produced.

Suggested Citation

  • Gillespie, Jeffrey & Nehring, Richard, 2014. "Pasture-Based versus Conventional Milk Production: Where Is the Profit?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 46(4), pages 1-15, November.
    • Handle: RePEc:ags:joaaec:189084
    DOI: 10.22004/ag.econ.189084
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    1. G. A. Peterson, 1955. "Selection of Maximum Profit Combinations of Livestock Enterprises and Crop Rotations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 37(3), pages 546-554.
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    3. Gillespie, Jeffrey M. & Nehring, Richard F. & Hallahan, Charles B. & Sandretto, Carmen L., 2009. "Pasture-Based Dairy Systems: Who Are the Producers and Are Their Operations More Profitable than Conventional Dairies?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(3), pages 1-16, December.
    4. Carlos D. Mayen & Joseph V. Balagtas & Corinne E. Alexander, 2010. "Technology Adoption and Technical Efficiency: Organic and Conventional Dairy Farms in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 181-195.
    5. Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LLC, vol. 4(3), pages 290-311, September.
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    7. Jeffrey Gillespie & Richard Nehring, 2013. "Comparing economic performance of organic and conventional U.S. beef farms using matching samples," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(2), pages 178-192, April.
    8. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    9. Tauer, Loren W. & Mishra, Ashok K., 2006. "Can the small dairy farm remain competitive in US agriculture?," Food Policy, Elsevier, vol. 31(5), pages 458-468, October.
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    Cited by:

    1. Jonathan Walsh & Robert Parsons & Qingbin Wang & David Conner, 2020. "What Makes an Organic Dairy Farm Profitable in the United States? Evidence from 10 Years of Farm Level Data in Vermont," Agriculture, MDPI, vol. 10(1), pages 1-13, January.
    2. repec:ags:aaea22:335490 is not listed on IDEAS
    3. Nehring, Richard & Gillespie, Jeffrey & Erickson, Kenneth & Harris, J. Michael & Heutte, Silke & Sauer, Johannes, "undated". "Small U.S. Dairy Farms: Can They Compete? A Revisit," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266535, Southern Agricultural Economics Association.
    4. Nehring, Richard F. & Bonin, Daniel & Bailey, Samuel M. & Leibold, Kelvin & Dimitri, Carolyn, 2023. "The Economics and Productivity of GMO, NonGMO, and Organic Corn Production in Recent Years: Focusing on HT and Organic Trends in Corn Grain Production and Corn Production on Organic Dairies," 2023 Annual Meeting, July 23-25, Washington D.C. 335490, Agricultural and Applied Economics Association.
    5. Allison, John & Burdine, Kenneth H. & Dillon, Carl & Smith, S. Ray & Butler, David M. & Bates, Gary E. & Pighetti, Gina M., 2021. "Optimal forage and supplement balance for organic dairy farms in the Southeastern United States," Agricultural Systems, Elsevier, vol. 189(C).
    6. Nehring, Richard & Sauer, Johannes & Gillespie, Jeffrey & Hallahan, Charlie, . "United States and European Union Dairy Farms: Where Is the Competitive Edge?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(B), pages 1-22.
    7. Nehring, Richard & Gillespie, Jeffrey M., 2020. "The Economics and Productivity of U.S. Cow-Calf Production," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304363, Agricultural and Applied Economics Association.
    8. Qushim, Berdikul & Gillespie, Jeffrey, 2016. "Women Farm Operators in the U.S. Meat Goat Production: Who is More Productive?," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230004, Southern Agricultural Economics Association.

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    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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