On-farm financial margins have improved over the last year, and many organic dairy producers are feeling positive and optimistic thanks to lower inflationary pressure, higher mailbox prices and rising consumer demand.
“Inflationary pressures on organic grain prices eased significantly in 2024, giving organic dairy and livestock producers additional buying power in the year's second half,” says Miranda Leis, vice president of dairy pool, Organic Valley. “In addition, consumption of organic dairy products has seen a recent increase, leading to increased mailbox prices.”
Higher financial returns are welcome news after years of tight margins.
“As pricing is trending upwards, there is still a lot of headway to make for us to catch up and start being profitable again,” says Lia Sieler, executive director of the Western Organic Dairy Producers Alliance (WODPA). “We are finally seeing a paradigm shift where supply is shorter than demand and farmers are gaining some power over their market, and producers have the ability to negotiate with their processors.”
Other opportunities for organic dairy producers in 2025 include growing their operations and increasing revenue and profitability.
While many producers and industry leaders in the organic dairy sector are feeling optimistic, many challenges remain, including labor, immigration reform, tariffs, uncertainties regarding the new administration, increasing certification costs and the quantity of paperwork required to remain certified organic.
“Annual certification costs have increased between 10 to 20 percent for 2025,” says Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance (NODPA).
The paperwork required to remain certified is one of the greatest challenges, Sieler adds.
“There is so much paperwork. Changes to the USDA National Organic Program’s (NOP) rules recently have resulted in an increase in the records required by certifiers. In addition, most of our farms are also certified through an animal welfare certifier, which also increases the amount of paperwork,” Sieler says.
Although there is limited data available, Maltby estimates a loss of approximately 20% of organic dairy farms nationwide in the last five years, with higher losses in states with more small to mid-size operations.
“Of course, there are many reasons for [dairies going out of business], but they all center around a pay price that has been below the cost of production since 2018,” he says. “Other reasons include not having a next generation wanting to take over the operation, limited competition with few buyers and fewer hauling companies, no state or federal safety net programs that reflect increased organic cost of production, increased cost and complexity of certification and poor enforcement of regulations prior to 2024. There have also been few or no new entrants, as the cost of land essential for grazing is high.”
Maltby and Sieler both noted the need for organic dairy data equivalent to what is currently available for conventional operations.
“Not having this data presents many challenges for us, especially when it comes to promoting and securing legislation for the organic sector, as well as trying to advocate for programs specific to organic dairy. We are currently advocating primarily for two bills (House Bill 6937 and Senate Bill 3097) to be included in the next farm bill to support organic-specific dairy data collection,” Sieler says.
Maltby adds, “Without this independent data, farmers are unable to decide on who to contract with and unable to implement some risk management strategies. This data also would provide industry-wide information for lenders and accurate data for regulation and safety net programs.”
Additionally, the Strengthening Organic Enforcement (SOE) rule and Origin of Livestock (OOL) rule are having a major impact on the organic dairy sector. The new Organic Livestock and Poultry Standards (OLPS) is also increasing requirements, specifically as it relates to animal welfare on farms, Sieler says.
Federal Milk Marketing Order (FMMO) changes and global trade are two national policy issues top of mind for Organic Valley.
“The one with the greatest impact would be the new FMMO changes that are so detrimental to organic dairy,” Leis says. “We are trapped in a conventional dairy pricing regulation that has no recognition or benefit for organic dairy. The most recent changes, to be enacted June 1, create a situation that went from bad to worse and will cost us millions more every year. We are thinking over an action plan right now.”
Ongoing trade disputes are also worrisome.
“We have a strong domestic organic sector and promising consumer demand, but some farm inputs and broader business opportunities are on unsure footing,” Leis says. “This unpredictability creates a challenge to plan for the coming year at both the farm and co-op levels. Hopefully, it settles out and, more importantly, these disputes do not fuel inflation.”
