Dive Brief:
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Organic dairy production in the United States has surged over the last three decades, reflecting expanding consumer interest in a category that has struggled with varied profits.
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Sales of organic fluid milk to consumers increased by 78% from 2009 to 2022, according to a recent report from the U.S. Department of Agriculture. Although growth has recently flattened, organic milk has made up an increasing share of overall sales.
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The number of U.S. organic dairy cows has also mushroomed from 2,265 to 352,289 from 1992 to 2021, according to USDA data, accounting for roughly 3.8% of all the dairy cows across the nation.
Dive Insight:
Over the past 30 years, organic milk production has grown in response to increased consumer demand, with conventional dairy farmers adopting certified organic practices and standards for health, sustainability and profitability reasons.
However, volatile milk prices and rising feed and operational costs remain a big barrier to organic dairies receiving a profit. Despite charging more for their products, organic milk producers experienced higher returns over similar sized conventional dairy farms in 2016 and 2021, according to USDA survey data.
Organic milk producers generated a rare profit in 2016, when organic dairy prices were nearly double what conventional growers were seeing.
Part of what is fueling higher expenses is finding organic feed grains. Less than 1% of all the corn and soybeans grown in the United States is certified organic, which has forced organic dairy farmers to import their feed from other countries or grow the grains themselves.
Organic feed costs, which make up more than 40% of total costs, were $16.35 for every 100 pounds of certified organic milk produced in 2021, according to USDA data. That is up 4% from 2016 and 28% from 2005. Labor and overhead costs have also expanded in recent years.
Although rising production costs have been challenging for organic dairy producers, the most difficult aspect of the job is meeting certification paperwork requirements, according to the USDA. Compared to conventional farmers, organic producers must maintain “readily auditable” records of their livestock, follow strict livestock living conditions, restrict animal diets to only organic feed and meet certain land requirements.
Texas has overtaken California as the top producing state for organic milk sales, and sales have grown considerably in states including Idaho and New Mexico, which have larger-than-average sized organic dairy farms.
The top organic milk producing states in terms of sales are the following: Texas, California, New York, Idaho, Wisconsin, Oregon, New Mexico, Pennsylvania, Vermont and Washington. In terms of number of dairy farms, New York had the most, followed by Wisconsin and Pennsylvania.
