Wisconsin’s organic farmers are largely weathering the economic storm

February 24, 2010 By Bob Mitchell

The current financial downturn hasn’t spared Wisconsin’s organic farmers, but in general they have been able to ride it out, says a new report about the state’s organic sector.

“Organics has held its position as an area where all sizes of operations can find opportunities to meet a loyal consumer demand. Organic producers, with their systems-based, low input approaches to farming, are well-equipped to weather lower prices,” say Harriet Behar and Jerry McGeorge, members of Wisconsin’s Organic Advisory Council, in the introduction to “Organic Agriculture in Wisconsin: 2009 Status Report.”

The report, prepared by the Department of Agriculture, Trade and Consumer Protection and the University of Wisconsin–Madison Center for Integrated Agricultural Systems, will be available at the Organic Farming Conference this weekend in La Crosse, Wis.

The global recession has hurt organic product sales, the report notes. Surveys show that sales of organic foods likely declined by 0.3 percent in 2009 after increasing about 20 percent annually since the early 1990s.

Last year’s decline in conventional milk markets has crimped the organic dairy industry, the source of about two-thirds of Wisconsin’s $86 million in annual organic commodity sales. Plunging farm gate milk prices led to lower prices in the dairy case, luring customers from organic products, notes McGeorge, an executive with Organic Valley.

“While organic prices have always commanded a price premium, the reduced prices for conventional dairy products have widened that price differential. Increasingly, price-conscious consumers have opted for the cheaper conventional prices,” he writes.

Weak sales caused organic milk processors to reduce the prices they paid to farmers, and some set quotas limiting the amount of organic milk they would buy. Still, in general, established organic producers have fared better than those selling milk through conventional channels, notes Tom Kriegl, an economist at the UW–Madison Center for Dairy Profitability.

“(T)he combined impact of price reductions and quotas in 2009 was similar to reducing their milk price from about $25 to $22 (per hundredweight), which was far less than the decline of nonorganic prices,” Kriegl says.

But the year was disastrous for farmers making the switch to organic dairying, he adds. During the transition producers must meet organic standards but can’t sell milk in organic markets. In 2009 they “experienced the worst of all worlds: high production costs and dismal conventional prices,” Kriegl notes.

Wisconsin ranks second nationally in number of organic farms and fourth in the value of organic products sold. The state had 1,155 certified organic farms in 2009, up by 24 percent since 2007. It ranks first in number of organic dairy farms and second in dollar value of organic milk produced. It also has the most organic livestock and poultry farms.

“Wisconsin continues to lead in many sectors of organic agriculture,” says Erin Silva, organic research coordinator at the UW–Madison College of Agricultural and Life Sciences. “However, to maintain this leadership and ensure financial success for our organic farms, further research and education efforts will be critical. It will take support at the local, state, and federal levels to provide growers with the tools and information to help them make sound production and marketing decisions.”

“Organic Agriculture in Wisconsin: 2009 Status Report” is available online at http://www.cias.wisc.edu. To request a print copy, contact Laura Paine at the state Department of Agriculture, Trade and Consumer Protection: 608-224-5120, laura.paine@wisconsin.gov.