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A Comparison of Conventional and Organic Milk Production Systems in the U.S

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  • McBride, William D.
  • Greene, Catherine R.

Abstract

Organic milk production is one of the fastest growing segments of organic agriculture in the U.S., but little is known about the relative costs and returns of organic and conventional dairies. This study utilizes a nationwide survey of dairy operations for 2005 that includes a targeted sample of organic dairies. Sample selection models were specified to isolate the impact of choosing the organic approach on various levels of milk production costs. Size and location of dairy operation were among the primary factors affecting choice of the organic approach and milk production costs. Organic dairies had production costs about $4 to $6 per cwt higher than conventional dairies and received an average milk price premium of $6.69 per cwt. Results suggest that there may be incentives for small conventional dairies to covert to the organic approach, but probably not for startup organic dairies unless they can enter at a much larger scale than the current industry norm.

Suggested Citation

  • McBride, William D. & Greene, Catherine R., 2007. "A Comparison of Conventional and Organic Milk Production Systems in the U.S," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9680, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea07:9680
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    File URL: http://ageconsearch.umn.edu/record/9680/files/sp07mc01.pdf
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    Cited by:

    1. Uematsu, Hiroki & Mishra, Ashok K., 2012. "Organic farmers or conventional farmers: Where's the money?," Ecological Economics, Elsevier, vol. 78(C), pages 55-62.
    2. Nehring, Richard F. & Sauer, Johannes & Gillespie, Jeffrey M. & Hallahan, Charles B., 2011. "Intensive versus Extensive Dairy Production Systems: Dairy States in the Eastern and Midwestern U.S. and Key Pasture Countries the E.U.: Determining the Competitive Edge," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98824, Southern Agricultural Economics Association.
    3. Bhuyan, Sanjib & Postel, Michael, 2009. "Determinants of Organic Dairy Farm Profitability: Some Evidence from the Northeast United States," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49934, Agricultural and Applied Economics Association.
    4. Funtanilla, Margil & Lyford, Conrad P. & Wang, Chenggang, 2009. "An Evaluation of the Organic Cotton Marketing Opportunity," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49359, Agricultural and Applied Economics Association.
    5. MacDonald, James M. & O'Donoghue, Erik J. & McBride, William D. & Nehring, Richard F. & Sandretto, Carmen L. & Mosheim, Roberto, 2007. "Profits, Costs, and the Changing Structure of Dairy Farming," Economic Research Report 6704, United States Department of Agriculture, Economic Research Service.

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    Keywords

    Farm Management;

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