Jan Shepel
Associate Editor
MADISON
As organic farmers gathered in La Crosse last week for their annual convention, which has now grown to be one of the largest conferences of its kind in the country, the state released a report showing that the last year has been tough on organic producers but they have been able to weather it better than many conventional farmers.
The release of the report, prepared by the Department of Agriculture, Trade and Consumer Protection and the University of Wisconsin-Madison Center for Integrated Agricultural Systems, was scheduled to coincide with the 2010 Organic Farming Conference Feb. 25-27 in LaCrosse.
The worldwide economic downturn has hurt organic sales in the last year after annual increases of about 20 percent each year since the 1990s. According to the report, last year the sales of organic foods declined by about three tenths of one percent.
Even so, the report’s writers find that there is room for optimism in organic agriculture because despite declines, it is still one of the strongest performing sectors in agriculture – both in Wisconsin and in the U.S. overall.
Nationally, the report notes, there were $24.6 billion worth of organic products sold in 2008, which was 17 percent higher than a year earlier. The report cites a study done by the Organic Trade Association showing that nearly three-quarters of American families now purchase at least some organic products.
Wisconsin has about 1,440 organic farms – more than another other state in the Midwest – and is second only to California. Wisconsin’s organic producers create more than $80 million in farm gate sales, according to the report. The state leads the nation in organic dairy operations and poultry farms and ranks second for the number of organic beef farms.
“While organic farmers and processors are not immune to the recent economic downturn experienced by all facets of agriculture and our economy as a whole, organics has held its position as an area where all sizes of operations can find opportunities to meet a loyal consumer demand,” noted Harriet Behar and Jerry McGeorge in a forward to the report.
Behar, who works with Midwest Organic and Sustainable Education Service, and McGeorge, who works for Organic Valley, are both members of the state’s Organic Advisory Council.
“Organic producers, with their systems-based, low-input approaches to farming, are well-equipped to weather lower prices,” Behar and McGeorge also noted.
The report found that 2009 was a challenging year for the entire American economy, including the organic dairy industry. In response to flattening consumer demand, many organic businesses in Wisconsin stopped adding farmers, reduced pay prices to dairy producers and set quotas for the amount of milk they could take.
When organic milk is in too great a supply, that extra milk must be disposed of in conventional markets. With conventional dairy prices so extremely depressed for so long, the price plunge backed into the organics business. The report noted that it was the first time in many years that organic dairy producers experienced a price cut, but it was still less of a hit than the one taken by non-organic dairy producers.
Even with the recession, sales of organic produce were strong, the report noted. In 2009, the Organic Valley Produce Program grew from 120 to 176 farmers, 157 of whom are in Wisconsin. In 2009, the 35 organic farms endorsed by the Madison Area Community Supported Agriculture Coalition sold 5,900 shares of food – primarily produce – which represented a 69 percent increase over 2007.
Organic agriculture continues to be focused in the southwestern region of the state, the report noted, although growth is widespread throughout the state. Vernon County, home of Organic Valley, has the most certified farms, followed by Monroe County.
The report showed that sales of organic products soared throughout the 1990s averaging 20 percent each year. The growth slipped to 17 percent in 2008 and shrank last year. The recession that officially began in December 2007 which resulted in double-digit unemployment and tighter consumer spending was a major contributor to this decline, the report concluded.
McGeorge noted that as the price of non-organic dairy products went down in stores, following the very low prices being paid to those producers, there were doubtless some formerly organic consumers who spent less by buying those products.
Tom Kriegl, a farm financial analyst with the UW-Madison Center for Dairy Profitability, noted that dairy farmers who followed organic production practices but didn’t receive organic prices experienced the worst of all possible situations last year – high production costs and dismal conventional dairy prices. This situation applied to those who were transitioning into organic production.
During that time they must follow organic practices but can’t yet sell their milk into an organic market. “While this transition period is always expensive, it was economically disastrous in 2009,” Kriegl noted.
Some organic dairy producers had to cut back their production because of the market conditions, Kriegl noted in the report. He estimated that the combined effect of quotas and price reductions was similar to reducing their milk price from about $25 to $22 per hundredweight which was far less than the decline of non-organic prices.
Kriegl noted that Wisconsin’s organic dairy farmers who did okay in 2009 are likely to perform well in 2010. “The outlook is less certain for dairy farmers in the midst of the transition to organic production who are not yet receiving organic prices,” he said.
Organic Agriculture in Wisconsin: 2009 Status Report is available online at www.cias.wisc.edu. To request a print copy, call Laura Paine at the Department of Agriculture, Trade and Consumer Protection, 608-224-5120, or e-mail laura.paine@wisconsin.gov.
