Organic dairy farming in Norway under the 100% organically produced feed requirement

Summary

The derogation to use a percentage of cheaper non-organic feeds in organic livestock diets for herbivores expired from January 2008. (In Norway, a maximum 15% of conventional feedstuffs per year was allowed until 24 August 2005, 5% in the interim.) This study aimed to assess changes in resource use and financial impacts for organic dairy herds of the 100% organic feeding rule (compared with 85% organic feeds) using a two-stage stochastic programming modelling framework. In this study, the objective function was to maximise expected net income. Two organic dairy farms in the lowlands of southern Norway, both having a milk quota of 100,000 litres but with varying farmland availability (37 hectares vs. 20 hectares), were examined. Furthermore, situations with and without possibilities to buy organic silage were studied. Milk production per cow was highest on the farm with the most strict land constraint. For farmers that fully utilise the non-organic feed allowance, the more expensive organic feeds determine the marginal feed cost. Hence, a removal of the non-organic feed allowance will not influence optimal farm practice (provided that marginal milk production still is profitable). A switch from conventional to organic concentrates as the only adjustment was found on the 37 ha farm and also on the 20 ha farm if there was no possibility to buy some organic silage. On the 20 ha farm with possibilities to buy organic silage, it turned out to be unprofitable to keep all the cows. Fewer cows resulted in several other changes in the model solution such as a lower milk yield per cow, less milk produced in total and more work off-farm. The financial gain from carrying out the optimal management changes was, however, very small. In all cases studied, the introduction of 100% organic feeds resulted in an economic loss of NOK 19,200-23,600 (or 7-12% of the expected net income with 85% organic feeds). The economic losses were due to the price premium of organic concentrates.