Organic farm profits jump

Last year was one of the best in history for Minnesota farmers, and organic farmers shared in the bounty.

The University of Minnesota’s Center for Farm Financial Management (CFFM) analyzed economic data from about three dozen organic farms around the state.   They showed a median net income for 2012 of just over $85,000,  more than double the $38,000 organic farms earned the year before.

Although that was a big jump, it fell far short of the state’s conventional operations, those operations that use things like chemicals and commercial fertilizers. The CFFM says a study of more than 2,000 conventional farmers showed an average profit last year of nearly $200,000 per farm.

Size was a big factor in the difference. Conventional farms in the CFFM study were on average more than twice as big as organic ones; 838 crop acres vs 322 acres. That meant they harvested many more bankable ears of corn and other crops than organic farms, yielding more revenue. Organic producers also typically harvest less per acre than conventional farms. Last year organic producers in the state averaged about 127 bushels of corn an acre, compared to 165 bushels an acre for conventional operations.

The one area where organic farmers beat conventional is what they’re paid for their crops. Organic farmers were paid nearly $13 a bushel for their corn last year, almost double what conventional farmers earned. That advantage extended to other organic products as well. Organic milk brought nearly $30 per hundred pounds last year, conventional dairy farms were paid just over $19.

Overall the higher prices for organic products were not enough to offset the acreage and yield disadvantage organics face with conventional farmers.

Meg Moynihan with the Minnesota Department of Agriculture says organic farmers can use the university’s financial analysis as a tool to compare how their spending on things like machinery and crop inputs lines up with other operations.

“This is a way to benchmark against a group of your peers and say for example, ‘Am I super high, am I really low, or am I about the same.’ And then that might be an indication of places that you need to spend more or less time making management decisions on your own farm,” Moynihan said.

Minnesota has about 700 certified organic farms.