The potential to collect a premium on milk has been an underlying factor for those just starting out in dairy, or for conventional dairy farmers seeking to transition to certified organic production. Even some skeptical of organic methods have been swayed to transition by the economic bottom line. 

But certified organic dairy production may no longer be the economic solution it once was. Organic dairy farmers are now feeling many of those same economic constraints which were at least part of the impetus for transition for many dairy farmers over the past 20 years.

Large organic dairies have increasingly entered the market, and the repercussions of the “economies of scale” have been arguably disruptive to the organic farming community, which has been characterized by small and mid-sized family farms.

Finding a market for organic milk today isn’t a sure thing, particularly for these family farms and particularly for those in locations distant from processing plants. Even when a market is found, quotas on production and higher pricing for certified organic feedstocks can mean that the cost of being certified organic outweighs the incentive of any organic premiums. 

While some certified organic dairies are forced to sell milk on the conventional market, an organic dairy farmer can’t substitute non-certified feedstuffs or practices and then transition the cows back to organic production when the cost of certified organic production decreases, or when an organic milk market is found. Going organic is supposed to be a commitment. 

For most producers, the decision to transition is not only an economic one but one which reflects intrinsic values. And once successfully transitioned, the positive changes many have experienced on the farm and in the herd keep them from returning to conventional practices. 

How are certified organic dairy producers managing to reduce costs? What changes in management have helped to increase profitability?

Managing organically

The Curvin Eby family of Green Acres Farmstead in Hagerstown, Maryland, is a member of the Organic Valley/CROPP Cooperative. The Ebys' dairy farm was once a confined dairy and row crop farm, owned by Glennis Eby’s family. They now milk 65 head, with 90 head total, on their 128-acre farmstead.

In 2007, the couple purchased cows from grazing herds, established perennial pastures complete with new permanent high-tensile electric perimeter fences, added movable polywire fencing for paddocks, installed pasture waterers and began their certified organic dairy farm.

They recently decided to capture the winter milk premium offered by their cooperative. To do so, they switched from spring calving only to freshening half the herd in the fall, boosting their income potential for the year. Having a bi-seasonal herd evens out cash flow due to the winter price premium, making economic sense, and decreases cull rates, Curvin Eby says.

“We had too many cows falling behind that were otherwise good cows. We decided to keep them and give them a second chance in the fall,” by opening a fall breeding window, he says.

Alvin and Marianne Peachy, owners of Saddlers Run Farm in Allensville, Pennsylvania, took a different approach to maximizing income from their dairy herd, which has been certified organic from the time it was established in 2010. They focus on pasture grazing and have eliminated all crop production and the expense of the equipment they would need to grow, harvest and store the feed. 

As the family is Amish, that would be the cost of maintaining and caring for horses as part of the dairy operation. Alvin Peachy says he believes that purchasing hay and maximizing pasture can work for farms that use heavy equipment, not only horsepower.

Opting to purchase all their certified organic feed and making their land available exclusively for grazing cows allowed them to double the herd size, thereby increasing overall herd productivity by 30% despite a per-cow milk production decrease. They also went grass-fed in 2018, eliminating all grains, although they were not able to ship milk to Organic Valley’s Grassmilk pool until 2021. 

The increase in herd size has positively impacted the pasture, leading to enhanced soil health, increased grass tonnage per acre and more nutritious forages, Peachy says.

The Peachys also produce hay and baleage on 550 acres, operating Triple TTT Farms, which is a separate business entity. Their dairy purchases hay from Triple TTT Farms at the market price. If they were making hay as part of the dairy, and the crop was poor, they would be forced to feed it, and cow nutrition and production would suffer. Instead, by feeding only high-quality, purchased certified organic baleage, Peachy says he is better managing operational risk.

At Tre-G Farms in Pompey, New York, the fourth and fifth generation of the Smith family transitioned the 190-head Holstein herd to certified organic production in 2017. They manage 200 acres of pasture, grow 80 acres of corn silage and 30 acres of triticale, with the remainder of the 600 acres farmed in hay. 

Without significantly changing rations – which consist of haylage, corn silage, high-moisture corn, roasted soybeans and mineral supplementation – they changed their feeding philosophy. The total mixed ration (TMR) is no longer seen as the primary feed. Instead, the fed TMR is a supplement to the pasture forages. 

“The cows do really well” with grazing, Ryker Smith says. Smith returned to the dairy after college, and credits the switch to certified organic as a primary reason for doing so. “We get as much as we can from out there on pasture” and balance the nutritional profile as the pasture forages change throughout the seasons. 

A focus on prevention, rather than treatment, of health issues is another change since going organic. Cows aren’t pushed for maximum production, are out getting exercise, are under less stress and are being fed less grain. They’ve seen a reduction in illness, with significantly less veterinary visits and expenses.

“We don’t have as many herd health issues” since transitioning to organic production, with decreases in lameness, retained placenta and displaced abomasum, Jim Smith says. “Conception rates have increased since the transition to organic.”

Originally embracing organic milk for the economic opportunity, third-generation dairy farmer Guy (pronounced “Ghee”) Choiniere opted to transition the family’s conventional high-producing, corn and grain-fed Holstein farm, located in Highgate, Vermont, to a certified organic grass-based dairy in 2005, after realizing the profit potential in the growing organic dairy market. 

One goal was to replace expensive purchased grains with homegrown feeds. By building soil health and fertility, he eventually was able to add enough energy to his pasture forages to fully eliminate grains and keep the herd robust and productive. He continued with Holstein genetics but began selecting for strong animals that could handle walking distances and produce milk. 

As he reduced grains and increased grazing, he realized that the retained placentas, hairy heel wart and mastitis that plagued the herd when it was managed conventionally disappeared, saving money of veterinary costs and culled cows. The Holstein herd is now 100% grass-fed. 

Organic dairy production isn’t a one-size-fits-all model. The answers to reducing costs and increasing profitability are unique to each farm. Although organic dairy farming today is economically challenging, and organic production is no longer the cash cow it once was, dairy farmers have many reasons to continue or transition to organic dairy production.