public

Loading...

Integrated Organic Economics

published by Anton Bekkerman

Want to create a visual like this?

Get Started
Economic Potential of Integrated Organic Systems: Where Are We Today?
Analysis Objectives
Develop cost of production budget for three representative acres of Montana land cropped as:
Conventional
Organic Till
Organic Graze
Evaluate Profits: Which System Wins?
Transitional Period
Certified Period
Organic costs Conventional market prices
Organic costs Organic market prices
Two Scenarios for System Comparisons
Transitional Period
Conventional
Organic Till
Organic Graze
Five-year net present value system profit
Five-year net present value system profit
Five-year net present value system profit
$723 / acre
$741 / acre
$414 / acre
Analysis Notes
Net returns shown using cost and market price estimates in 2013–2015
Simulations using 60-year historical data provide similar relative relationships among systems
Wheat returns accounted for protein premiums and discounts
Yield data are from trials completed in 2013–2015
Certified Organic Period
Conventional
Organic Till
Organic Graze
Five-year net present value system profit
Five-year net present value system profit
Five-year net present value system profit
$901 / acre
$2,979 / acre
$2,382 / acre
Analysis Notes
Yield data for certified organic are from 2016
Net returns shown using cost and market price estimates in 2016
Wheat returns accounted for protein premiums and discounts
Insights and Challenges Going Forward
Why?
During both the transition and certified organic periods, grazed organic systems under-perform conventional and tilled organic systems.
Yields in grazed organic systems were not sufficiently high to compete with the alternatives. Developing production approaches that increase yields is necessary.
Grazed certified organic systems underperform tilled organic systems by approximately 20%. This difference would need to be made up by grazing fees, government incentive programs, or a combination.
Without government incentive programs or significant yield increases, the focus should be on identifying high grazing demand locations and increasing demand for grazing opportunities.
Why?
Why?
If yields in grazed organic systems cannot be improved, then either increased demand for grazing services or government subsidies would be necessary to ensure that farmers have sufficient incentives to use grazed organic systems.
The profit difference between organic systems will depend on sufficient demand for grazing. Developing informational and marketing campaigns would likely be necessary to generate this demand from livestock producers.
Questions and Suggestions
Anton Bekkerman [email protected] 406-994-3032