Organic farmers not immune to economic downturn

Organic strawberries

An organic strawberry patch at a Hutchinson farm. (MPR Photo/Ambar Espinoza)

A report on organic farming found Minnesota organic farmers had a tough financial year in 2009 just as conventional farmers struggled financially, too.

“In previous years, such as in 2008, organic farms were slightly more profitable than conventional farms; in 2009 that was not the case,” said Meg Moynihan, Minnesota Department of Agriculture (MDA) Organic and Diversification Specialist. “The profit margins were down and the average net farm income was also down.”

Moynihan said those profitability drops were also true for farming in general. She says conventional crop, livestock, and dairy farmers also had a tough 2009.

“The dairy side did a little better than the crop side because dairy producers lock in a price for their milk a year ahead of time,” said Moynihan. “The major organic dairy buyer in Minnesota did supply management strategies that kept prices high, but other farms had some difficulties.”

For the past four years, the MDA has published information about the profitability of organic farms in the state. It’s a special project supported by the United States Department of Agriculture Risk Management Agency.

The data in the report come from 70 certified organic farmers voluntarily enrolled in Minnesota State Colleges and Universities (MnSCU) farm business management education programs. The data are compiled and analyzed by the Center for Farm Financial Management (CFFM) at the University of Minnesota. Moynihan says the information provided by the farmers, including identities and locations, is entered anonymously into the database to protect the farmers’ identities.

Moynihan said many assumptions about organic farming exist. “Either that, ‘Organic farmers don’t produce much in terms of yields, and they are all hanging by the skin of their teeth and how can they possibly stay in business?’ versus the other perspective that organic produce is much more expensive in the stores and so, ‘organic farmers must be making a killing and so organic farming must be hugely profitable.'”

These rumors kept swirling around, she said, and nobody had real data about how organic farms perform. This project attempts to fill those gaps of information.

The long-standing farm business management education programs run by MnScu have been used by many farmers, including non-organic farmers. In fact, about 2,000 farms participate in this program. The MDA offers organic farmers scholarships to enroll in the classes because few organic farmers participate in the programs. Each semester the scholarship money amount decreases to gradually wean the farmers off financial aid.

The farmers work with farm business management instructors to track economic activity on their farms. Instruction is tailored to the farmers’ interests and their individual farming operations. At the end of the year, the farmers get detailed data about their enterprises.

Moynihan said an independent evaluator who surveyed participating farmers collected positive feedback from farmers. Farmers reported that the detailed data about their farming operations were very helpful. Farmers can see what areas of their enterprises are profitable and what areas are not. The report also takes a look at statewide averages, not only at whole farm performance, but at the performance of different enterprises: dairy, corn, soybeans, wheat, hay, etc.

Moynihan said organic meat is not included in the report. The system that runs these numbers requires a minimum number of operations before it can generate an average, partly to ensure the statistical validity of numbers and partly to protect the identity of people. Moynihan said the program doesn’t have enough livestock producers who participate. “The dairy industry is advanced in the state. Organic livestock production is not quite as popular,” she said.

The 44-page report, Organic Farm Performance in Minnesota, is available here.

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