With the accounts in for both farms, we are able to compare the fourth season of organics profitability against the conventional farm.
The first three years showed no substantial difference in financial outcomes, but last year the organic farm underperformed by about $1,400/ha operating profit. While the business is very profitable, over 70ha this is a big number.
Operating profit is the profit in the business before interest drawings and capital expenditure. Both are entered into Dairybase which analyses physical and financial performance against benchmarks. The main reasons for the difference were increased cow wastage and inability at low stocking rates to capture the higher milk prices through increased production.
Questions are being asked about how long we stay with the organics, particularly given the increasingly stringent standards and relatively high commodity prices. While there is a lot we like about organic systems, the issues around managing compliance make it difficult. The cost of production for every kg of milk-solids is a dollar higher on the organic farm but costs per hectare are lower, but not sufficient to offset the reduced production. There will be people who will not like what I am reporting but the numbers are the numbers.
The spring here has been kind to the district with many sunny days. Moisture and soil temperature for growth have been marginal. The cows have been milking in excess of 2.5kg/milks-solids a cow, which is a record for us. And the organic farm is producing 2.1kg. Both farms have had very good numbers of heifer replacements.
Farmer Focus Livestock: George Moss