What Makes an Organic Dairy Farm Profitable in the United States? Evidence from 10 Years of Farm Level Data in Vermont

Jonathan Walsh, Robert Parsons, Qingbin Wang and David Conner
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Jonathan Walsh: Department of Community Development and Applied Economics, University of Vermont, Burlington, VT 05401, USA
Robert Parsons: Department of Community Development and Applied Economics, University of Vermont, Burlington, VT 05401, USA
Qingbin Wang: Department of Community Development and Applied Economics, University of Vermont, Burlington, VT 05401, USA
David Conner: Department of Community Development and Applied Economics, University of Vermont, Burlington, VT 05401, USA

Agriculture, 2020, vol. 10, issue 1, 1-13

Abstract: Many U.S. dairy farms, especially small farms, are struggling to stay in business due to difficult economic conditions. While switching to organic milk production has been identified as one way to improve farm profitability, there are very limited economic data available on organic dairy profitability and the key factors contributing to its variation among organic dairy farms. This study analyzes a 10-year longitudinal dataset of Vermont organic dairy farms (2006–2016), collected by the University of Vermont Extension, to identify key factors influencing farm profitability and quantify their impact on farm return on assets (ROA) through a multivariate fixed-effects regression model. Results suggest that significant factors for organic farm profitability measured by ROA include feeding management, farm management, farm size, milk price and input costs. Such findings may help many organic dairy farms identify potential areas for improving their profitability and conventional farms evaluate the potential financial benefits of switching to organic operation.

Keywords: organic dairy; farm profitability; agricultural finance; return on assets (ROA); Vermont (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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