Financial implications of conversion to organic dairy S25
Padel, Susanne1; Kenworthy, Bruce2; Midmore, Peter1; Lampkin,Nicolas H.1
1) Welsh Institute of Rural Studies, University of Wales, Penglais,Aberystwyth, SY23 1DD, GB 2) ADAS, Picton Terrace, Camarthen, SA31 3BT, GB.
|The overall objective of this joint 3-year
project (1993 and 1995) was to monitor the physical, environmental and financial
implications of conversion to organic milk production on one research and ten commercial
farms in south west England and Wales, in order to provide policy makers and farmers with
more information. The monitored farms varied in type (specialist dairy or mixed), size (45
to450 ha), and the number of cows (33 to 320). Conversion to organic farming started
between 1989 and 1991, and lasted from the minimum two years, required by the standards,
to more than seven years until organic certification for the dairy herd. All farms were
directly monitored in the study period. The financial implications of the full conversion
period were assessed by analysing historic farm accounts and dairy costings and comparison
with conventional data from the national farm business survey, using cluster analysis for
the selection of a comparison group for each farm, so that general influences on the dairy
industry could be isolated.
The data of up to 6 years show initial reductions in milk yield and stocking rates, partly compensated for by increases in other dairy output and reductions in variable costs, but the variation between the farms was considerable. On average the farms suffered income reductions in the first two years of conversion, but achieved similar results in the third year compared with the period before conversion, and higher results in following years when most herds qualified for organic premium prices.
On the basis of the data it can be concluded that costs of conversion of approximately £50 per ha per year occurred in the first three years of conversion before access to premium prices could be achieved.
Padel, S., B. Kenworthy, P. Midmore, N. Lampkin and L. Langstaff (1995):Analysis of the financial performance during the conversion process. In:Final MAFF Report: Conversion to organic milk production (Project reference CSA 2268). IGER, Aberystwyth.